TRAIN taxes to hike off-grid power rates by P1.74/kWh

Published January 21, 2018, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/01/21/train-taxes-to-hike-off-grid-power-rates-by-p1-74kwh/

Consumers in off-grid areas, including tourism-drawing islands and far-flung areas, will suffer a punitive tariff hike of P1.74 per kilowatt-hour (kWh) on the rates to be passed on for the Small Power Utilities Group (SPUG) service domain of the National Power Corporation (NPC).

That has been based on the calculation of the Senate Committee on Energy, relative to the cost-impact triggered by the newly enforced Tax Reform for Acceleration and Inclusion (TRAIN) excise taxes, chiefly on the fuel use for electricity generation in SPUG areas.

On another tier, the increase in SPUG rates will also raise the universal charge for missionary electrification (UCME) that all Filipino consumers will shoulder in their electricity bills.

According to Senate Committee on Energy Chairman Sherwin T. Gatchalian, the total rate hike in the UCME charge will be P0.011 per kWh – that is a separate line item in the monthly electric bills dispatched to consumers.

For households in the 100-kWh consumption bracket, that will be an increase of P1.14; and for those in the 200-kWh usage band, it will redound to P2.27 per month cost escalation in their bills.

Most SPUG areas depend on diesel-fed generating sets or bunker fuel-fired power plants on their electricity service, hence, they will be hit generally by the higher taxes levied on petroleum products.

But before these rate adjustments will be reflected in the bills, state-run NPC will have to go through the usual route of approvals at the Energy Regulatory Commission (ERC).

The UCME charge in the electric bills is currently at P0.1561 per kWh and NPC still has pending application with the ERC for cost recoveries of roughly P10 billion, chiefly to recoup fuel cost adjustments.

The Senate energy committee in a hearing last week had scrutinized the level of fuel inventories of energy facilities, including those on coal and oil for power generation to assess cost impact on consumers.

Gatchalian explained that “the legislative inquiry was necessary to monitor and evaluate electricity and fuel prices,” as well as to gauge the Department of Energy’s efforts “to prevent and defer possible abuses in the form of premature increases in generation charges and pump prices.”

Based on numbers crunched, electric bills of on-grid Filipino consumers will likely go up by P0.07 to R0.09 per kWh on the combined effect of the increases in transmission, generation and subsidy charges.