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Power rate increase

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Power rate increase

Friday, January 12, 2018

Excise tax on coal imports due to tax reform to impact power rates

THE Mindanao Power Monitoring Committee (MPMC) said an increase in electricity rates will be expected as the Tax Reform for Acceleration and Inclusion (Train) Act imposes an increased excise tax upon import of coal.

Under the Train Law, excise tax on coal has been increased to P50 per metric ton (MT) for 2018. In 2019 excise tax will be increased to P100/MT and then P150/MT by 2020.

Prior to the tax reform, excise tax on coal was only at P10/MT.

However, Mindanao Power Development Program (MPDP) technical consultant engineer Glenn Jay Reston told SunStar Davao in a phone interview that the increase will only be minimal as Mindanao's power distributors still get chunk of its supply from the 982 MW Agus-Pulangi Hydroelectric Power Plants.

Reston said because of the unique power supply mix of Mindanao-based power distributors, wherein around one third of the electricity requirement is coming from the hydropower plants, the power rate increase are being cushioned by the government owned hydroelectric plants, which have lower generation rates.

Reston said the increase per kilowatt hour (kwh) will be less than P1, estimated around P0.02/kwh for the first tranche.

"For a household that has a monthly consumption of 200kwh will only have an increase of around P4 in their monthly bill," he said, adding that this is only part of their initial computations.

Data from the Department of Energy showed that installed capacity from grid-connected and embedded coal-fired power plants in Mindanao as of June 2017 are at 1,070 megawatts (MW) or 34% of the total capacity of the island. Mindanao has a total installed capacity of 3,141 MW from grid-connected and embedded non-renewable and renewable energy plants.

Reston also said in order to further cushion the possible increase of power rates in the future, power distributions should have a balanced power supply mix from both renewable and non-renewable energy sources.

He pointed out that while the initial generation of renewable energy sources are much higher at the beginning it will become cheaper a couple of years later once the power investor has achieved its return of investments.

At present, based on the monitoring of MPDP, no Mindanao-based power distributor has increased its rates due to the Train Act.

The MPDP of the Mindanao Development Authority serves as the technical secretariat of MPMC, a multi-agency committee tasked to monitor the power sector of Mindanao.

Published in the SunStar Davao newspaper on January 12, 2018.

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