Power rates’ socialized pricing to be tweaked for lifeline users

Philippine Daily Inquirer

2:02 am | Saturday, June 18th, 2011

THE ENERGY Regulatory Commission plans to revise the socialized pricing mechanism that provides subsidized electricity prices to small power users, to further ensure that the so-called lifeline rates would be used for intended beneficiaries.

According to ERC executive director Francis Saturnino Juan, the commission was just waiting for Congress to approve a pending bill that sought to extend the implementation of lifeline rates beyond June 26 this year.

“We’ll review the existing [lifeline rates]. Whatever will be the changes, if any, to the implementing rules and regulations, we will adopt. But we’ll also make the necessary revisions to the lifeline program to make it more targeted,” Juan explained.

Under the law, the level of consumption and the rate covered by the socialized pricing mechanism are determined by the ERC.

“Until we approve a different lifeline program or different rates, then we will continue what is being implemented by the distribution utilities,” Juan added.

The ERC official was optimistic that the lifeline program for small power consumers would continue, disclosing that he had heard from the Joint Congressional Power Commission that the pending bill was already approved by the lawmakers.

“We have heard from Congress that they have already approved [the bill], but we’ll just wait for the action of the President. We will just abide by what is in the law,” Juan said.

Pending bills

There were earlier three pending House bills seeking the extension of the lifeline rates. These were House Bill Nos. 4169, 4529 and 4629, whose principal authors are Representatives Henedina Abad, Rufus Rodriguez and Ben Evardone, respectively. Rodriguez sought to extend the implementation of the subsidies by another 10 years. It was not made clear whether these bills were consolidated.

The implementation of the lifeline rates is set to lapse on June 26, as stipulated under the Electric Power Industry Reform Act (Epira). This meant that consumers with monthly electricity consumption of 100 kilowatt-hours or less may soon have to pay for the true cost of electricity, unless the government moves quickly to extend it.

Section 73 of the Epira provided for a lifeline rate for the marginalized end-users that was set by the ERC. It was exempted from the cross-subsidy phaseout, which was provided in the Epira law for a period of 10 years, unless extended by law. The Epira was passed in June 2001, which means that the 10-year period provided for lifeline rates will also expire this month.

Lifeline rates refer to the subsidized rates given to customers with a 0-to-100 kWh consumption every month. The discounts given to these consumers are shouldered by those with higher electricity consumption.

Under the lifeline structure of Manila Electric Co. (Meralco), the country’s biggest power distributor, customers using 0-20 kWh a month are free of charge. Those using 21-50 kWh are enjoying a 50-percent discount in rates; 51-70 kWh users are getting a discount of 35 percent; and 20 percent for 71-100 kWh consumers.

There is, however, a fixed monthly metering charge of P5, in accordance with a 2008 decision of the Energy Regulatory Commission. Amy R. Remo