Thursday, March 01, 2007 Speak out: Power rates reduction By Freedom from Debt Coalition
THE Freedom from Debt Coalition (FDC) welcomes the recent decision of the Energy Regulatory Commission (ERC) ordering the National Power Corp. (NPC) to provisionally reduce its rates by 4.3 centavos for Luzon, 31.51 centavos for Visayas, 0.45 centavos for Mindanao following the strengthening of peso against the dollar.
But it cries for higher reduction in the electricity rates.
We view these reductions as short-lived as they depended on the peso-dollar exchange rates which fluctuate constantly. The strengthening of peso is thus far not sustainable.
The reductions only have “deodorizing effect” to the continually high power rates in our country for so many years now since the government admitted that it continues to charge the electricity consumers for the purchased electricity from the independent power producers (IPPs) even when this is not generated nor delivered.
The consumers are made to pay for this before through the purchased power adjustment (PPA) and now through the cost recovery mechanism called the generation rate adjustment mechanism (Gram) and the incremental currency exchange rate adjustment (Icera) under which NPC regularly applies for rates adjustment at the ERC.
Gram includes the incremental fuel and the power purchased cost of generation charge to the IPP while Icera includes the foreign currency exchange rate fluctuations.
Both applications were filed by NPC last year and provisionally approved last Tuesday, but still subject for a public hearing per decision of ERC.
We stress that for as long as the government continues to legitimize the onerous and anomalous IPP contracts, any reduction is palliative.
Ultimately, the consumer will always be burdened by the huge amount of guarantees which includes the take-or-pay provision, fuel cost and exchange rate fluctuations.
The consumers have suffered enough from high electricity rates. We want lower electricity rates. Cancel the onerous IPP contracts.
