Justify price hikes, power, oil firms asked

By Gil C. Cabacungan Jr. Philippine Daily Inquirer First Posted 02:32:00 04/07/2011 Filed Under: Electricity Production & Distribution, Oil & Gas - Downstream activities, Consumer Issues, Congress MANILA, Philippines—Lawmakers Wednesday asked power and oil companies to justify the new round of price increases amid complaints that these were based on flimsy reasons. Eastern Samar Rep. Ben Evardone, a member of the House committee on energy, said consumers did not deserve the early Holy Week suffering forced upon them by power and oil firms. “Oil companies should not exploit the crisis in the Middle East to further increase their profits. On the part of Meralco (Manila Electric Co.), it should not use the onset of summer as an excuse to increase the monthly bills of their captive consumers. It has become a vicious cycle for Meralco and power generation companies to increase their rates every summer,” Evardone said in a text message. Meralco, the country’s biggest electricity distributor, is raising its generation charge by 20.13 centavos a kilowatt-hour (kWh) to P5.0474 per kWh this month. Oil firms raised on Tuesday gasoline prices by 25 centavos a liter, the 11th increase since the start of the year. Other factors The Department of Energy Wednesday said prices of petroleum products could further rise if conflicts in oil-producing countries in the Middle East and North Africa worsened. The country imports 100 percent of its transport fuel requirements. In a statement, the energy department cited other factors helping push up domestic pump prices to near record highs, such as the increased consumption of fuel in China, improvement in the US economy and uncertainties in demand for fuel to be used for rehabilitation efforts in Japan. Challenge increases Evardone said Congress would urge regulatory agencies to challenge the series of fuel and power rate increases and compel the companies to explain the increases thoroughly to the public. Bayan Muna party-list Rep. Teodoro Casiño said Congress should address the power rate and fuel price increases with both short-term and long-term solutions. Casiño said Congress should slash the value-added tax (VAT) on electricity or at least on systems losses, and forego or reduce the royalty on natural gas. “Congress should use its oversight powers by replacing the Energy Regulatory Commission’s performance-based pricing scheme to a more equitable return on rate base system,” he said. Casiño said Congress should act, even during the ongoing break, to remove the VAT on petroleum products to ease the fuel spike while seeking long-term reforms through an amendment to the Oil Deregulation Law, specifically giving more teeth to the Energy Regulating Commission and nationalizing the oil industry. ‘Greedy monopoly’ Akbayan party-list Rep. Walden Bello was emphatic that Meralco had no basis for the power rate increase. “No. No. No. Meralco itself admits that the cost of obtaining electricity from its suppliers has declined and that it posted a huge 61-percent rise in profits in 2010. This is simple price gouging by a greedy monopoly,” Bello said in a text message. Cavite Rep. Elpidio Barzaga, a House energy committee member, said the government had to put more pressure on Meralco and other power distributors to further reduce systems losses to help ease the burden on consumers. Barzaga said the government should also consider extending to the poorest electricity users direct subsidies or cash transfers similar to the fuel subsidy to be given to jeepney and tricycle operators. Fuel subsidy Malacañang released on Tuesday the executive order providing a P450-million subsidy to jeepney and tricycle operators. The Department of Energy said jeepney and tricycle drivers could avail themselves of fuel subsidies of not less than P2 a liter in three to four weeks. Pamalakaya, a militant fisherfolk group, said the P450-million fuel subsidy was a small donation. “And this is done like a one-shot deal in the name of popularity ratings and image building,” said Salvador France, vice chair of Pamalakaya. In a statement, Pamalakaya urged the government to tap the P100-billion Malampaya fund to finance bigger oil subsidies. The amount represented the revenue the government had earned from gas fields off Palawan since 2002. Pamalakaya said it had filed a petition with the Department of Agriculture asking the government to allot annually at least P32 billion in oil subsidy for the fisherfolk to cushion the impact of oil price increases. With a report from Amy R. Remo