December 8, 2023

A more rapid deployment of renewable energy is among the game-changing reforms the energy sector needs to alleviate the burden of high power rates on consumers, according to a senator.

Senator Risa Hontiveros on Oct. 3 also emphasized the need to reduce the National Grid Corporation of the Philippines (NGCP) and other private distribution utilities’ (PDUs) hefty weighted average cost of capital (WACC) and eliminate the value-added tax (VAT) imposed on system losses and lifeline subsidies to achieve more affordable electricity.

“We should start making significant strides towards reducing the burden on Filipino consumers when it comes to their electricity bills,” Hontiveros said in a news release.

She said more rapid deployment of renewable energy would ensure universal access to modern electricity services, especially in social housing, rural electrification, and addressing energy poverty.

These proposals, she added, are in line with the strategic framework outlined in the 2023-2028 Philippine Development Plan, aimed at reducing electricity rates for consumers.

During the recent budget deliberations of the Department of Energy, Energy Regulatory Commission Commissioner Monalisa Dimalanta confirmed the completion of the fourth regulatory reset process (RP) for the NGCP and plans to initiate the RP for PDUs.

“This reset is expected to tame NGCP’s high revenues, unconscionable payout of cash dividends for its shareholders, and rationalize unwarranted operational expenses, including the P2.3 billion for public relations and corporate social responsibility, P1.67B for representation and entertainment, and P1.1B for advertising,” Hontiveros said.

Aside from these unwarranted operational expenses, she said the NGCP has allocated a staggering P8.73 billion for security and janitorial services.

Hontiveros has previously urged the ERC to implement energy sector reforms, particularly addressing NGCP’s high 15 percent WACC, which she believes has led to unjustifiable expenditures.

Dimalanta, however, noted the 50 percent reduction in the ERC’s 2024 budget will hinder their ability to review and comprehensively audit utilities, prompting Hontiveros to support the restoration of ERC’s budget.

ERC also revealed it has also engaged in discussions with the Bureau of Internal Revenue regarding VAT on electricity, a move Hontiveros supported to address issues like system losses and subsidies that are still subject to the 12 percent VAT.

Hontiveros said swift implementation of reforms would protect consumers’ interests and ensure utility companies operate in the public’s best interest. – PNA