Power hike looms – DOE

Published January 4, 2018, 12:10 AM  By Myrna Velasco, Alexandria San Juan, and Anna Liza Villas-Alavaren

https://news.mb.com.ph/2018/01/04/power-hike-looms-doe/

Power rates are certain to go up as a consequence of the excise taxes enforced on diesel and bunker fuel used for power generation under the Tax Reform Acceleration and Inclusion Act (TRAIN) of the Duterte administration, the Department of Energy (DOE) said.

With TRAIN, transport groups are also set to seek fare increases to cushion the impact of the looming fuel price increase due to the excise tax.

Energy Undersecretary Felix William Fuentebella said the power rate hike will be a “pass-on charge” to the consumers, especially for end-users along the marginal off-grid areas.

NO TRAIN YET – The Department of Energy said the recent increase in fuel prices must not be attributed to the impending fuel excise tax, which does not apply to old fuel stocks. (Kevin Tristan Espiritu)

“There would be an increase, but just ‘a little’,” he stressed, adding that there are power plants running on petroleum products (i.e. diesel and bunker fuel), and it will mostly hit the island areas.” Fuentebella was referring to the Small Power Utilities Group (SPUG) served by the National Power Corporation (NPC).

Cost impact of diesel and bunker fuel used for power generation is certain to affect consumers on two fronts – one, a direct hit on consumers on the island-grids and far-flung areas who are already struggling at paying P14 to P18 per kilowatt-hour (kWh) on their power consumption; and two, the universal charge for missionary electrification (UCME) or the subsidy component that all Filipino power consumers would have to shoulder in their respective electric bills.

Higher power rates could also cripple the potential of any area or the country to progress economically.

It won’t help that the NPC recently issued a tender notice for its procurement of additional 124 generating sets to be deployed in off-grid areas. These generating sets will apparently run on these newly taxed fuel products.

Fuentebella, however, could not provide actual figure on the cost impact on power rates, only stressing it was only minimal.

Undersecretary Donato D. Marcos did a study and presented it to Congress. “I have to check the figures, but it’s not that big. That’s what has been coming out in our market development study,” Fuentebella said.

Nevertheless, such assumption could be negated by the actual UCME disbursement figures of the Power Sector Assets and Liabilities Management Corporation (PSALM), the administrator of the UCME fund, which already reached a whopping P67.67 billion.

PSALM data also showed that total UCME subsidy costs to SPUG areas disbursed to NPC from January to June, 2017, alone already amounted to P5.6 billion.

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

“For the period January to June 2017, PSALM disbursed P5.595 billion to NPC-SPUG to fund (its) missionary electrification functions, chargeable against the UCME Fund,” the state-run company added.

The other universal charge components in the Filipino consumers’ electric bills are those on environmental charge, stranded contract cost, stranded debts and renewable energy developer cash incentive, which now yielded collections from consumers’ pockets at a whopping P123.031 billion.

Jeepney fare hike sought

With fuel prices set to increase due to excise taxes under TRAIN, transport groups are all set to seek fare hike.

Obet Martin, president of transport group PASANG MASDA, said in interview Wednesday that his group will seeking a P12 minimum fare for public utility jeepneys (PUJs) by filing a petition for a P4 fare increase. The current minimum fare is P8.

“Kailangang maintindihan tayo ng mga mananakay dahil kaakibat ito ng pagtaas ng [presyo ng] petroleum at gas (The riding public must understand that the fare hike is associated with the increase on prices of petroleum and gas),” Martin said.

Under the TRAIN law, Martin said a P2.50 per liter excise tax will be imposed on diesel this year and will gradually increase to P6 by 2020.

“Sa P2.50, assuming na ang driver ay consuming 30 liters a day, more or less P80 a day ang mababawas. Dalawang kilong bigas na ‘yun, (In a P2.50 increase, assuming the driver consumes at least 30 liters a day, then his take-home income will be P80 less. That’s already equivalent to the price of two kilos of rice),” Martin said.

Grab joins fray

Likewise, Transport Network Vehicle Service (TNVS) Grab Philippines is also set to ask for a fare hike of around six to 10 percent or additional P10 to P13 due to TRAIN.

Grab Philippines head Brian Cu said they will file their petition before the Land Transportation and Regulatory Board (LTFRB) next week.

According to Cu, the excise tax on petrol would impact the daily expenses and monthly earnings of their partner operators.

A Grab driver spends P800-P1,000 per day on gasoline and P600-P800 for diesel.

“Our biggest worry is the day-to-day operations with regards to fuel they (drivers) need. If a fare adjustment is not made, it will affect their income and potentially reduce the number of TNVS in the streets,” said Cu.

Moreover, Miguel Aguila, Grab legal head, said the excise taxes on automobiles and lubricating oils would also affect their TNVS partners.

“If you compute the average income of full time driver, he needs to make a sustainable P3,200 to P3,600 in fare. Of that amount, P900 to P1,100 is spent on gas,” said Cu.

Should the LTFRB approve their petition, Cu said the fare increase would only take effect when the increase in fuel prices happen.

Taxis to raise fare

Newly appointed Philippine Charity Sweepstakes Office (PCSO) director Bong Suntay, president of the Philippine National Taxi Operators Association (PNTOA), said in a separate interview that his group will be implementing a P50 flag-down rate, P13.50 per kilometer rate, and P2.50 per minute waiting time “in order for operators and drivers to survive the TRAIN law.”

Only last year, the LTFRB increased the taxi fare – P40 flag-down rate, P13.50 per kilometer rate, and P2 per minute of waiting time.

Lawyer Aileen Lizada, LTFRB board member and spokesperson, warned transport groups that they should go through the process before implementing any the fare increase.

“If there is any request for a petition for a fare hike, it has to go through a process. The petition must be filed by a petitioner first,” Lizada said.

“If there is a petition filed for fare increase by any transport group for that matter, they need to justify why the board should grant a fare increase, and likewise, we need to hear the side of the commuters’ group before the board will issue any order,” she added.

Lizada also reminded both operators and drivers that if there will be a fare increase, there should also be a “levelling up” of their services.

Oil firms warned

Meanwhile, the country’s oil industry players are being warned against profiteering or making excessive profits out of the despicable added cost burden on consumers.

Energy Secretary Alfonso G. Cusi said they will be “keeping a close watch over the oil firms to prevent profiteering over the implementation of the TRAIN.

The Department of Energy (DOE) met with the oil firms on January 3 following confusion on when the new taxes would really take effect for prices that will eventually be purchased by consumers at the pumps.

“The DOE and other relevant government agencies would conduct random audit and monitoring activities on the compliance with TRAIN, both in the depot/refinery and the retail level or gasoline stations,” Cusi said.

The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) had earlier directed the concerned oil companies and other industry players to submit “duly notarized inventories of all petroleum products and denatured alcohol/biofuels as of midnight of December 31, 2017.”

The BIR expounded that “these inventories of petroleum products taken prior to each date of effectivity shall be liquidated and accounted for on a ‘first-in, first out’ (FIFO) method of inventory.”

Cusi stressed that “the additional excise taxes on fuel under TRAIN should not affect the prices of old stocks of oil firms, including their stocks under the 15-day minimum inventory requirement.”

Brace for tough times

With TRAIN, Senator Paolo “Bam” Aquino IV warned the public to brace for tough times ahead this year as the imposition of excise taxes on petroleum products would have a domino effect and jack up the prices of goods and other services in the long run.

“Nakakabahala ang pagtaas ng presyo ng bilihin dahil sa pagpataw ng buwis sa langis. Dagdag gastos nanaman ito sa pamilyang Pilipino (The surge in the prices of basic goods and commodities is worrisome. This would be an additional burden to Filipino families),” said Aquino in a statement. (With a report from Hannah L. Torregoza)