In a letter to President Ferdinand Marcos Jr, National Center of Electric Cooperative Consumers, Inc. or NCECCO submitted its proposals and recommendations for short- and long-term workable solutions that should address increasing costs of electricity.
The consumer group appeals to the President to “address the plight of electricity consumers amidst the unstoppable energy price hikes due to international market situations and other factors.”
The group explains that governments around the world have supported and continuously provided subsidies (direct and indirect) to research and development of all sources of energy, be it renewable or not.
NCECCO identified the generation charges as the one that significantly affects the consumers’ monthly electric bills and such component is “about 60% or more than half of the entire amount that a consumer pays in his or her electric bills”. The group added that transmission and distribution charges, taxes, and subsidies pale in comparison to the generation charge.
EPIRA law allows generation companies to pass these costs to the consumers. The charges are passed through using the fuel cost adjustment mechanism which is embedded in the Power Supply Agreement of the generation company and the distribution utility.
Having said that, NCECCO “appeals on the government’s very significant role in protecting the public and ensuring the continued flourishing of the economy and entry of investors.”
The group proposes three workable solutions that the government can consider to address this problem.
Firstly, NCECCO recommends that “local and national governments study the possibility of being allowed to enter into generation sector once again.” It must be noted that with the EPIRA, the generation sector was placed in the hands of the private sector and was made competitive.
Secondly, NCECCO recommends that “the government prioritize proposals that will remove multiple taxations across the entire energy supply chain. The possibility of reducing the cost of electricity is easily achievable by removing multiple taxations being applied to generation, transmission, and distribution sectors.”
Along this, the group also recommends the removal of the imposition of value added tax to the sale of electricity by power generation, transmission, and distribution companies.
And lastly, NCECCO recommends that the government should “consider subsidizing the generation charges in a consumer’s electric bill, as this is the only component that clearly and significantly affects the consumer’s bill.”
NCECCO, together with other advocates and leaders in the industry, expresses its willingness to discuss these proposals and recommendations to the government.
The group explains that governments around the world have supported and continuously provided subsidies (direct and indirect) to research and development of all sources of energy, be it renewable or not. While our very own government have GOCCs like the PSALM and NAPOCOR, the group claims that this has minimal impact to consumers.
NCECCO therefore appeals for the government to “take a proactive approach by directly subsidizing at least the generation component of an electric consumer’s electric bill… as subsidizing the generation component will significantly lower the cost of electricity.”
The group asserts that “until the law [EPIRA] is amended such that it would give more protections to the consumers this time, we will always be vulnerable to market imperfections.”
NCECCO, together with other advocates and leaders in the industry, expresses its willingness to discuss these proposals and recommendations to the government. The consumer group is composed of more than 4 million members nationwide.
