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Thursday, March 28, 2024

DoE: Higher coal tax to lift power rates

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The Energy Department on Monday warned that a higher excise tax on coal will push up electricity rates and affect the Philippines’ global competitiveness.

“Coal tax…will make our tariff higher and make the Philippines more uncompetitive,” Energy Secretary Alfonso Cusi said.

“It’s a problem that we are facing because we all know that our tariff is one of the highest, if not the highest in Asia. With the passage of additional tax for coal, that would really have an impact,” the energy chief said earlier.

He said while the Philippines had a very minimal carbon footprint and was a leader in renewable energy, this resulted in higher power rates. “We are ahead in terms of RE but the penalty is we have high electricity prices. We have become uncompetitive in our region,” Cusi said.

The energy chief said investments were going to other countries with lower power rates, or those using mostly coal or nuclear plants.

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“Can we also not ask the Climate Change Commission to say that manufacturing countries, better go in countries where energy is cleaner, power source. Industries [should] also locate in countries where power generation source is cleaner or renewable. So we can become competitive,” he said.

The Senate approved on third and final reading the Tax Reform for Acceleration and Inclusion  last week.  The Senate version sought to increase the excise tax on coal from the current P10 metric ton to P100 per metric ton in the first year, P200 per metric ton in the second year and P300 per metric ton in the third year.

Senator Sherwin Gatchalian earlier said the higher coal tax would only be passed on to and unduly burden power consumer.

Gatchalian, who heads the Senate committee on energy, said while he was not pro-coal, he believed that the move to increase the coal tax from P10 to P300 per metric ton would be anti-consumer.

“Unfortunately in our regime right now, coal is a direct pass-on cost to the consumers so any increase in the cost of coal, it goes directly to the  pockets of the consumer. That’s why in the past few days, we have been talking on how to lessen the burden of our consumers, of the taxation of our consumers,” he said.

Gatchalian said the Philippines sourced 50 percent of its power requirements from coal, which meant the higher coal tax would directly impact power rates.

“At 50 percent supply of coal, the impact of a P100 increase in excise tax on coal will have a P4.78 increase on the bill of an average consumer consuming 200 kilowatt hours every month,” he said.

“At 200, it will increase by P9.57 pesos and at P300, it will increase P14.35. At 600, you multiply it by two which I think is almost P29. This is a 50-percent coal-supply from the country,” Gatchalian said.

He said around 27 electric cooperatives, or a fourth of the total in the country, were getting their 100 percent of their electricity from coal power plants. 

“If you look at the number of household they serve, they serve around 2.7 million households in the 27 electric cooperatives, that is 10 percent of the total households of the entire country,” Gatchalian said.

“This 2.7 million families, being supplied by 100 percent of coal, will feel a P10 increase at P100 per metric ton excise and will feel P20 increase at P200  and P28 increase at P300,” Gatchalian said.

 

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