October 1, 2018 | 12:30 am
THE OPERATOR of the Wholesale
Electricity Spot Market (WESM) has projected ongoing tax reform to increase
overall electricity prices progressively until 2020, when the price hike could
be as high as P0.1311 per kilowatt-hour (/kWh).
Francis Saturnino C. Juan, president
of the Independent Electricity Market Operator of the Philippines, Inc.
(IEMOP), placed the increase this year with the imposition of new or higher taxes
on fuel at P0.0904/kWh, increasing to P0.1111/kWh in 2019.
“This is the price impact, say, on
Meralco (Manila Electric Co.) or a utility given a set of assumptions — they
are getting (electricity) from certain suppliers that will be running on this
fuel pero (but) they will also get a portion of their requirement from
the spot market,” he said in an interview after an energy forum last week.
IEMOP took over WESM operations from
the Philippine Electricity Market Corp. (PEMC) last week.
“There is no one-to-one correlation
of the increase in the tax rate and the increase in the electricity rate of a
particular utility. It will all depend also on the sourcing of that particular
utility,” he clarified.
He said the simulation for the
estimated incremental increase in power prices used actual data from Meralco.
“That is the incremental (rate
increases)… since the prices of fuel have already gone up, then that will add
to the increase in the electricity rate,” Mr. Juan explained.
“That will be passed on also to the
consumers of these distribution utilities.”
Of the projected overall power rate
increase this year, the IEMOP computation expects generation charge to account
for P0.0204, or 22.6% of the total. The corresponding figures for 2019 and 2020
are P0.0411 or 37% and P0.0611 or 46.6%, respectively.
The market operator placed Meralco’s
average supply mix that makes up the generation charge at 31% coal, one percent
oil, 15% WESM and 53% other energy resources, which it did not break down.
Republic Act No. 10963, or Tax
Reform for Acceleration and Inclusion Act (TRAIN), this year added P2.65 per
liter to the price of gasoline as excise tax, P0.32 per liter as value-added
tax (VAT), or a total of P2.97 per liter, the Department of Energy had said.
For diesel, the law resulted in an
increase of P2.50 per liter in excise tax and P0.30 in VAT, or a total of P2.80
per liter. Diesel — consumed by public utility vehicles — used to be free of
VAT and excise tax.
A succeeding tax reform tranche will
add P2.24 per liter to the price of gasoline and P2.24 per liter for diesel in
both excise tax and VAT. For 2020, the price increases for gasoline and diesel
are P1.12 and P1.68 per liter, respectively.
RA 10963 also raised the excise tax
on domestic and imported coal starting Jan. 1, 2018 to P50 per metric ton (/MT)
from P10/MT. The tax will increase up to P150/MT on Jan. 1, 2020. — Victor
V. Saulon
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