Palace urged to use Malampaya funds to subsidize power rate hikes

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Sunday, December 8, 2013

SENATOR Sergio R. Osmeña III on Sunday urged Malacañang to utilize a small portion of the Malampaya fund to subsidize the estimated P10 billion in additional generation costs that households in Metro Manila and neighboring areas are expected to pay over two months to cover the P4.15 per kilowatt-hour (kWh) increase in the generation charge of the Manila Electric Co. (Meralco).

Osmeña, who is the chairperson of the Senate committee on energy and co-chairman of the Joint Congressional Power Commission (JCPC), said President Aquino could tap the more than P130 billion balance in Malampaya funds to cover the amount.

“The Malampaya Fund has gotten very fat. It is time that it is used to ease the burden of power consumers,” Osmeña said.

Osmeña has for years proposed that government lower the royalty collected on the Malampaya gas to lower power rates.

“It is better to spend the Malampaya Fund to subsidize power rate hikes rather than lose it to PDAF scams,” Osmeña added, noting reports that hundreds of millions of pesos in Malampaya collections have reportedly been diverted to unscrupulous and even non-existent Non-Government Organizations (NGOs) supposedly with the connivance of government officials and lawmakers.

He also said, “If the law establishing the Fund (Presidential Decree No. 910) has to be amended, we can do that in 2 weeks. All the President has to do is to certify the bill for prioritization.”

Meralco has announced a total increase of P4.15/kWh (inclusive of transmission charge, VAT, local franchise tax and system loss) in its generation charge this December following the shutdown of the Malampaya natural gas plant from November 11-December 10. The Malampaya facility fuels three power plants in Luzon, which use the natural gas supplied by the fields in offshore Palawan. It has a combined output of 2,700 megawatts, the bulk of which is under contract with Meralco.

The increase would jack up Meralco's generation charge to over P9/kWh in December from P5.66/kWh in November. With the projected generation charge adjustment, a Meralco customer with a monthly average use of 200 kilowatt-hours currently paying P2,000 per month, will now pay P2,830 per month, or a monthly increase of P830 in his electricity bill.

Meanwhile, Ricardo Reyes, president of the Freedom of Debt Coalition (FDC) said that Meralco's passing the burden to the consumers showed the disadvantages of privatizing the electric industry under the Electric Power Industry Reform Act (Epira).

“At a time when our country reels in one of the worst disasters in our history, and when Filipinos all over the country and abroad as well as the international community for that matter are engaged in a massive outpouring of solidarity with our devastated compatriots in the Visayas, Meralco is more engrossed in protecting, even increasing its profits - a whopping P16.2 billion net earnings in 2012 and an average increase of 60.3 percent in annual earnings from 2009 to the present," Reyes said.

Reyes said that Epira "has shown its dark side as private corporations like Meralco should not be entrusted with controlling areas of the economy with public interest like electric power."

Reyes suggested the adoption of the performance-based regulation (PBR) by the Energy Regulatory Commission (ERC) where profits and prices are based on estimates and projections like the anticipated impact of the Malampaya maintenance shutdown.

He noted that under the scheme there is no ceiling on rate of return on capital unlike the previous rate on return Bbse (RORB) regime where cost recovery is based on investments already made and profits are limited to 12 percent. (Camille P. Balagtas/Third Anne Peralta/Sunnex)

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