POSTSCRIPT / May 26, 2011 / Thursday


Philippine STAR Columnist

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Eeek! China to start drilling oil this July?

ALARM: Sorry to disturb our laidback leaders, but we cannot ignore this report of reader Michael Caesar C. Ferreras, who emailed that Global Times, a Chinese newspaper, has headlined that Beijing plans to sail their biggest oil platform to the Spratly islands to begin drilling for oil this July!

Another reader, Ofelia C. Santos, referred to an article of businessman Joey Concepcion about his family’s vacation two weeks ago on Fortune Island. His nieces and nephews were driven away or not allowed to land by Koreans who seemed to have leased, bought or claimed the island as theirs.

Santos noted: “This is just a small island and yet we have no right to use it unless we pay these foreigners. How much more of the Reed Bank and other islands? Airport in Coron is named too with Busuanga (and Korea) Airport. Just can’t recall it now, but the Korean name added is alarming.”

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EPIRA FAILURE: Next month is the 10th anniversary of the Electric Power Industry Restructuring Act (EPIRA) of 2001 that promised much cheaper and more reliable electricity.

This objective has not been achieved. Consumers reel from rising power rates, which are among the highest in Asia, second only to those in Singapore. Recurring blackouts disrupt life and business and destroy appliances.

To top it all, Energy Regulatory Commission executive director Francis Juan said the other day that rates would soon go up since renewable energy, whose adoption is being fast-tracked, is more expensive than electricity generated using crude oil, coal, water (hydro) and natural gas.

Juan told the House committee on energy that electricity produced from ocean waves is likely to cost around P17.65/kilowatt-hour; from sunlight, P17.95; and from wind, P10.37. Compare these with the present average cost of about P11/kwh from a mix of conventional fuel.

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SUBSIDY EXTENSION: One bright item in the committee chaired by Batanes Rep. Henedina Abad was its extending by 10 years the “lifeline” power subsidy under EPIRA to users of 100 kwh or less per month. Senior citizens also get discounts.

The subsidy is to lapse next month, but Abad and other congressmen, notably Ben Evardone of Eastern Samar and Rufus Rodriguez of Cagayan de Oro City, pressed its extension for another 10 years.

Instead of charging more, Evadone said investors in renewable energy should be able to lower their rates since the law gives them incentives, including income tax exemption and duty-free importation of equipment.

Rodriguez noted that with electricity being a critical factor of economic growth, there must be cheaper and reliable power to sustain the momentum of development.

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SUBSIDY SLAP: But some consumers ask why they have to pay for the subsidy for small users. Such subsidy, they said, should be borne by the wealthy utility owners by dipping into their fat profits.

Emailer said: “You would think that your friendly electricity provider, the Meralco formerly of the wealthy Lopezes and now of the wealthy Manny Pangilinan, is giving you all the subsidies aka discounts from out of their pockets and absorbing them in the same way that the not-wealthy jeepney drivers, when they give the hefty 20-percent discount to students and senior citizens, absorb them, probably wondering why the rich have all the fund, este, fun.

“Meralco finances the subsidies from out of the pockets of their customers by charging them some items in their list of unbundled rates.

“For example, up to Nov. 2006 I had these subsidies in my bill: Lifeline rate subsidy of 10.25 centavos/kwh, or P17 based on 164 kwh consumption that month; and Interclass cross subsidy of minus (-)21.39 centavos/kwh or minus (-)P35.

“That means Meralco collected from me P17 to fund their discounts to poorer consumers. However, I also got subsidized by some P35, taken from a fund Meralco collected from the commercial and industrial consumers.

“Starting Dec. 2006 I was no longer receiving any Interclass subsidy. Starting Dec. 2009, Meralco charged me these subsidies: Lifeline rate subsidy of 11.25 centavos/kwh; Cross subsidy of 1.03 centavos/kwh; and Senior citizen subsidy of 0.01 centavos/kwh (added this year).

“So now, residential consumers like me using more than 100 kwh/month contribute to the three subsidies above.”

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EXTORTIONIST TAXES: In an earlier email, Monram said there are actually some things that could be done to lower power rates. He said:

“One is to remove the EVAT (Expanded Value-Added Tax). Check your bill:

“The government taxes you for the generated electricity (tax on the generation charge), then it taxes you for the electricity delivered through the transmission lines, again taxes the same electricity distributed to your home by Meralco.

“The system loss is also slapped a tax even if it is a system loss (can you imagine that?). Even your share in subsidizing poorer consumers and senior citizens is taxed. It also taxes the franchise tax and passes it to consumers!”

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DOUBLE TAXATION: Maybe our friends in Congress can remedy the damage wrought on captive consumers by this tax rampage?

Or a lawyer whose heart is in its proper place can file a taxpayer’s suit. From my layman’s point of view, there seems to be double (actually multiple) taxation here – the same electricity being taxed again and again.

The House energy committee can also look into a point raised by Sen. Ed Angara, who recalled that the EPIRA initially planned to reduce the power costs for end-users through the income from universal charge, which is included in electricity bills.

He said, “Under the EPIRA, the proceeds from the collected universal charges will be channeled into liquidating and compensating the stranded costs of the power companies, although we have yet to see this happen.”

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(First published in the Philippine STAR of May 26, 2011)

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