Govt subsidy best defense vs. rate hike

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A lawmaker wants the government to subsidize power consumers to spare them the brunt of power rate increases.

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Rep. Reynaldo Umali of Oriental Mindoro, chairman of the House Committee on Energy, said the government can use the Malampaya funds to shield electricity users from the P4.15 per kilowatt-hour increase charged by the Manila Electric Co. (Meralco).

He made the proposal after the Philippine Independent Power Producers Association (PIPPA) warned that if power distribution firms like Meralco are not able to pay power generators, then they would not have enough cash to pay for fuel, a situation that could result in blackouts.

The PIPPA issued the statement after the Supreme Court stopped Meralco from implementing the unprecedented P4.15 rate hike.

“What PIPPA said is the reality of business. That is why subsidy from the government thru the Malampaya fund is the best solution here. Meralco may have the resources to pay their dues without the hike, but the law allows them to pass on charges to consumers. Why would they shoulder the dues if they are allowed to pass it to consumers? The law is on their side,” Umali said, referring to the Electric Power Industry Reform Act.

The Malampaya fund comes from the payments of oil companies Caltex and Shell for extracting natural gas in Malampaya oil field in Palawan province. Under the law, the Malampaya fund should be used to finance energy resource development and exploitation, as well as other energy related programs and projects of the government as may be directed by the President.

The Supreme Court blocked the use of the Malampaya fund amid the filing of plunder and graft-related complaints against incumbent and former government officials over the alleged misuse of the P900-million natural gas fund.

The Palace also wants to tap the Malampaya fund as a source of a subsidy for power consumers. While a government subsidy would be a presidential discretion, Umali is convinced that consumers’ interest carries a greater weight.

“When you govern, you have to take risks. And that [using the Malampaya fund as subsidy]is the risk that the government has to take now,” he said.

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3 Comments

  1. My suggestions:
    1) Classify power users in two: a) Residential b) Industrial and Commercial
    2) Further classify residential users into 3 groups based on monthly kw-hour usage:
    a) Low-income b) Middle-income c) High-income. The cheapest rate will go to
    (a), The little higher rate goes to (b).
    3) Group (c) gets no discounts, they must even be charged additional higher rates.
    4) Subsidy for (a) and (b) will come from Malampaya revenues and the extra rates paid by group (c, high-income group)
    5) When using pre-approved energy-efficient equipments (aircons, LED lights, solar generators, wind generators, etc.), industrial and commercial users are to be given incentives….like tax-incentives, etc.
    6) Giving subsidies across the board wil not only be counter-productive, it is also anti-poor.

  2. The energy set up here is bad for the consumer where the generation and distribution of power are owned by the same people so that among themselves they can control the price of electricity by constricting the supply and the distributor (Meralco) asking for a rate adjustment to be able to afford the higher cost which the government regulator (ERC) is constrained to approve and which is in turn passed on to the consumer. The ideal set up is for the generators to be separate from the distributors where the generators compete among themselves in the wholesale market and the utilities selling the power on retail to the consumers can buy at the lowest price. What happened recently in the energy spike is not as they claim a “market failure” it is a deliberate collution among the same owners of generation and distribution where the same people stand to earn at the expence and hardship of the consumer. The ERC should share in the fault because it is doing nothing to prevent the collution it merely gives the excuse that the law favors this greedy cabal like this Umali who does not know what he is talking about. Instead of using the Malampaya fund to subsidize the greed of these oligarchs the government should set up power plants that use the natural gas from the malampaya it is cleaner fuel and it is indigenous to the country, i.e., not imported like crude and coal. Why cannot Umali think this way or is he also a lackey like ERC of the greedy cabal just pretending to be concerned about the welfare of the consumers.

  3. Ricardo Harina on

    Again I say that our Nation can never and will never attain the economic progress that Filipinos and Non-Corrupt government officials are dreaming or hoping for if our Nation’s economy is controlled by few greedy and crooked power providers and businessmen in collusion with corrupt government officials and corrupt elected representatives of the people.

    Our government with the cooperation of our Congress should sit together and plan for building State of the Art Combined Cycle Power Plants for Luzon, Visayas and Mindanao that will provide enough and stable power, reduce the power rates, address environment concerns, attract and encourage foreign and local investors that will provide economic impetus, job and business opportunities that will prevent Filipinos seeking jobs abroad and encourage those working abroad miserably return back because they will see a better Philippines in the near future and alleviate the sufferings of poor Filipinos because of government’s failure to provide affordable and stable power to propel us to economic progress that we are still dreaming and hoping for.

    This is were we should put into better use the PDAF declared by the Supreme Court and putting up Elevated Water Pass along Pasig River that will mitigate flooding in Metro Manila during rainy season and can be use also as Express Way to lessen traffic problems in Metro Manila.

    If we can do this, Filipinos working together with a better and clean government may realize the dream they are hoping for in the near future and alleviate the sufferings of Filipinos especially the poor.