Du30 drops the ball on electric rate relief

Credit to Author: BEN KRITZ, TMT| Date: Wed, 26 Jun 2019 16:23:33 +0000

BEN KRITZ

ELECTRICITY consumers in the country — which is to say, about 90 percent of the population — will soon be saddled with even higher costs, thanks to our wildly popular president’s having ignored the issue.

On Monday, the Power Sector Assets and Liabilities Management Corp. (Psalm) announced that it was seeking to recover P10.84 billion in stranded contract costs and debt from consumers. This would follow another Psalm-induced rate hike totaling P5.12 billion (or P0.0543/kWh) imposed earlier this month.

The new rate increase will be in two petitions to the Energy Regulatory Commission (ERC), which will almost certainly approve them in line with its understanding of its mandate to pass all possible costs, no matter how unreasonable, on to the consumer. The first, totaling P6.12 billion (P0.062/kWh) is to cover stranded contract costs, and the second, totaling P4.72 billion (P0.63/kWh), is to cover stranded debts. For those of you keeping score at home, this will raise electric rates by P0.6962/kWh for at least the next year, or about P278 per month for a typical customer consuming 400 kilowatt-hours.

Stranded contract costs are losses incurred by the National Power Corporation (Napocor) that come from selling less electricity than is provided by an independent power producer (IPP), or from selling the electricity at a lower price. Stranded debts are exactly what they sound
like, unpaid debts piled up by Napocor that cannot be paid off by any normal means.

Psalm, of course, is the bloated bureaucratic monster created by the Electric Power Industry Reform Act of 2001 (Epira) to liquidate government-owned electric power assets and sort out the massage financial mess left behind by decades of state mismanagement of the electric energy sector. In its nearly 20 years of existence Psalm has performed in a distinctly unimpressive way, which should be obvious by the fact that its default solution to most every problem is to dump the costs on the consumers.

In a rare display of collective wisdom, the recently-departed 17th Congress provided an excellent solution to relieve consumers of the extra costs stemming from Psalm’s lack of imagination and efficiency by passing the Murang Kuryente (Cheap Electricity) law. The measure provided for the use of the government’s royalties from the Malampaya gas field to cover the stranded costs and debts managed by Psalm. At the time, the bill would have saved the typical consumer about P254 per month; if applied now, not counting the new increases Psalm is proposing (which would be irrelevant under the law), the savings would be about P275 per month.

The law is not being applied now, however, because it has been sitting, unsigned, on President Rodrigo Durterte’s desk since being sent to his office by the bicameral committee that approved the final version on May 24. Apparently, the president has better things to do than to implement a law that directly addresses one of the biggest consumer complaints in the country, and would churn about P5.5 billion a month back into the economy in the form of money consumers could spend on something more useful.

Why the bill has not yet been signed has not been explained. If it is simply a matter of getting lost in the shuffle, that’s understandable; there are many things competing for the president’s attention, and some will inevitably be overlooked. In that case, he can simply fish it out of the inbox and sign it, and the problem is solved.

If, however, the delay in signing the bill is due to less creditable reasons, such as resistance from the administration’s economic managers, that is something Duterte must address a little more forcefully. One of the justifications for passing the Murang Kuryente law in the first place was to curb the tendency of government agencies (and far too often, unfortunately, some government officials) with access to the Malampaya royalties to treat them like a slush fund. At best, the result is inefficient use of resources, and at worst, outright graft. Diverting at least a part of the funds for a specific use by Psalm at least guarantees that the public will directly benefit from them in some way.

Whatever the case may be, the president must act on the measure quickly. Power costs are a bread and butter issue, and easy means to provide a popular and effective solution do not present themselves often. The opportunity should not be allowed to get away.

ben.kritz@manilatimes.net

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