Electric Coops Cut Power Rates

To Reflect P18-B Debt Condonation

Manila Bulletin

By MYRNA M. VELASCO

September 15, 2011, 11:21pm

MANILA, Philippines — To reflect the P18 billion debt condonation executed by the Power Sector Assets and Liabilities Management Corporation, the rates of the electric cooperatives were able to go down by average P0.48 per kilowatt hour (kWh), according to data of the National Electrification Administration.

NEA administrator Edita S. Bueno noted that the individual reductions range from P0.08 to P.179 per kWh depending on the scale of debts written off.

The debt condonation mandate under the Electric Power Industry Reform Act (EPIRA) has been intended to help prop the financial viability of the country’s electric coops – which at the time of the passage of the law, have been widely-perceived to be on the “weaker side” of the power sector’s spectrum.

At the same time, the policy aimed to help ease the burden of rural consumers over soaring electricity rates.

With the debt condonation program, the ECs are also expected to gain better preparation on the advent of competition in the deregulated power industry.

“Based on NEA’s official records, total amount condoned is P17.978 billion. As a result, 118 ECs implemented rate reduction according to the ERC’s (Energy Regulatory Commission) approval,” Bueno stressed.

She added that “based on final rate reduction orders by the ERC, the national average had been at P0.48 per kWh from P0.08 to P1.79 per kWh.”

The ERC, in its own report, indicated that “final loan condonation orders were already superseded” by the rulings issued on the ECs’ wheeling rates.

“The debt amortization components for the condoned loan were already excluded in the determination of the revenue requirement allowed for the ECs,” the regulatory body has noted.