Senator Francis Escudero expressed his frustrations at the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) for their “failure to perform their duties,” which resulted in power rate hikes.
Escudero pointed out that there was nothing in the energy plans of both agencies, nor their proposed amendments to the Electric Power Industry Reform Act (EPIRA), that said they would strive to lower the costs of electricity.
To his understanding, the reserve or excess power against the demand—brought about by the slow processing of applications for new capacity, approval of off-take agreements, lack of legal and market incentives for new capacity—triggered higher power costs.
“Low supply plus high demand equals increased prices,” Escudero said. He also noted that the DOE and ERC failed to focus on Variable Renewable Energy and just embarked on solar and wind, which are more expensive than coal.
The senator clarified he is not pro-coal nor anti-green energy, but he was aiming for cheaper power rates in the country.
Given the inadequacy of reserves, he pointed out that the DOE and ERC required the National Grid Corporation of the Philippines (NGCP) to provide “ancillary power,” which was secured by way of a “take-or-pay” contract. This means power consumers have to pay for it even if they don’t use it
“This is now an additional one to four percent of our bill, which means that for every 1,000 pesos, the ancillary fee is P10-40 per month. This does not lower the cost, but further increases it,” Escudero explained.
The senator also cited the absence or lack of an advanced regulatory regime for the power industry and experts in the government to supervise and regulate all the players.
Furthermore, Escudero argued that in the case of Meralco, ERC should have been stricter in supervising and regulating it as a distribution utility.
He said Meralco is one of the few entities exempted by EPIRA from owning both a distribution and a generation facility because of the obvious opportunities for abuse since all these charges are “passed on” to the consumers.
Meralco has recently announced it is increasing its power rates in May to PHP11.4139 per kilowatt hour (kWh) from P10.9518 per kWh in the previous month. This means that a residential customer consuming 200 kWh a month can expect an increase of P92 in electricity bill for May.
