By:
Ronnel W. Domingo - 05:26 AM January 10, 2018
Consumers of
electricity may see their monthly bills rise by 8 centavos per kilowatt-hour
(kWh) as early as next month, being the “most immediate” impact of the new tax
regime on the power industry, according to Manila Electric Co.
This means that a
typical household that uses 200 kWh a month will pay P16 more for electricity
services.
Meralco vice president
Lawrence S. Fernandez said in an interview that the newly enacted Tax Reform
for Acceleration and Inclusion (TRAIN) law, which took effect on Jan. 1,
reimposed the value-added tax on wheeling charges.
Wheeling charges—which
National Grid Corp. of the Philippines collects from utilities like
Meralco—cover services for the transmission of electricity from power plants to
distribution facilities.
Section 86 of the TRAIN
law or Republic Act No. 10963 repeals laws or provisions of laws that provide
VAT exemptions.
Such provisions include
Sec. 9 of RA 9511—signed into law in December 2008—which granted a franchise to
NGCP, allowing the company to engage in the power transmission business. NGCP
took over the management and operations of the assets that belong to National
Transmission Corp. or Transco.
Sec. 9 of the NGCP
franchise law states that “payment by grantee of the concession fees due to
PSALM (Power Sector Assets and Liabilities Management Corp.) under the
concession agreement shall not be subject to income tax and value-added tax
(VAT).”
“The reimposition of
the VAT on wheeling charges will translate to 7 centavos per kilowatt-hour,”
Meralco’s Fernandez said.
“As for the effect of
the coal tax and the excise tax on petroleum products, this will have [a
combined] effect of an additional one centavo per kilowatt-hour for our
customers,” he added.
Fernandez said the
projection of a one-centavo increase was based on Meralco’s supply mix in
November 2017. He said one-third of the distribution giant’s supply of
electricity was coming from coal-fired power plants.
Also, Meralco was
relying partly on oil-fired generators for supply when daily demand was at its
peak.
The TRAIN law raises
the tax on coal from P10 per metric ton previously to P50 per ton this year.
The coal tax would rise further to P100 per ton in 2019 and to P150 per ton in
2020.
As for the excise tax
on fuel oil used for industrial purposes including power generation—which
previously does not carry an excise tax—this will now be levied at a total of
P2.80 per liter including the 12-percent value-added tax (VAT).
The tax on fuel oil
will have an additional levy of P2.24 per liter in 2019 and a further P1.68 per
liter in 2020. Thus, in 2020, taxes on fuel oil—excise plus VAT—will be at
P6.72 per liter.
“We (Meralco) will
reflect the effects of the TRAIN program in our monthly bill to our customers
as soon as our suppliers put these in their bill to us,” Fernandez said,
referring to NGCP and power producers.
“If suppliers bill us
this January, Meralco customers will see the TRAIN’s effects in their February
bill,” he added.
Last week, the
Department of Energy said consumers might not feel the effects of higher taxes
on coal on electricity services until the start of the summer since companies
maintain stocks good for at least a month.
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