Cusi orders Meralco to explain P0.08 per kWh power rate increase

By Alena Mae S. Flores – January 12, 2018 at 07:40 pm

Energy Secretary Alfonso Cusi has asked Manila Electric Co. to explain its computation of a P0.08 per kilowatt-hour increase in electricity rates following the implementation of the Tax Reform for Acceleration and Inclusion, or TRAIN, tax package.

“… I asked Meralco how did it  arrive at P0.08 per kWh,” Cusi told reporters.

Cusi directed Energy Undersecretary Jesus Posadas to study the impact of the TRAIN on the power sector.

“That is the role of DoE, we set the policy, we make sure that everybody will follow the policy,” the energy chief said.

Meralco head of utility economics Lawrence Fernandez said early this week the company was waiting for the billing of National Grid Corp. of the Philippines to reflect the lifting of the value added tax exemption that would increase rates by P0.07 per kilowatt-hour.

Fernandez said the impact of the higher excise tax on coal was around P0.01 per kWh.

Cusi said the department was also studying the impact of the TRAIN on the Small Power Utilities Group, or the missionary areas of National Power Corp.

“These people are scrutinizing all of those to make sure that the consumers are protected,” he said.

Cusi said he had a responsibility to the public to ensure the rates passed on the utilities were accurate.

Fernandez said NGCP was previously exempted from the VAT on transmission wheeling charges until it was repealed by the TRAIN.

“For NGCP, the TRAIN is in effect January 1. We expect them to apply the VAT on transmission wheeling charges, Fernandez said, adding a 12 percent percent VAT would add P0.07 per kWh to the electric bills of consumers.

He said the earliest Meralco could pass on the TRAIN impact to consumers would be in the February billing.

“If NGCP incorporates it in their January billing, we should expect by February that it will be effective,” Fernandez said.

He said the impact of higher excise tax on coal on Meralco customer was estimated at P0.01 per kWh.

“For generators, it will depend on their stock of coal if they bought it new or in stock. Our expectations is they will stagger the implementation of the coal tax,” he said.