LKI 2020-061 PRESS STATEMENT – Lower Power Rates

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September 10, 2020


Consumer Group Laban Konsyumer Inc. (LKI), in a statement, said “the Department of Energy ( DOE ) and the Philippine Electric Cooperatives (Philreca) may be taking to much time before action, but positioning themselves in favorable light, similar to the Energy Regulatory Commision ( ERC). It strikes me that both the government and the regulator are somewhat ambiguous with their direction. It is good then that the Commission on Audit ( COA ) is showing resistance and strict authority with these groups in government.”

Laban Konsyumer President Atty. Vic Dimagiba explained “we read from the DOE budget deliberations that the Missionary Electricification Universal charges ( U C ) will be funded via the Murang Kuryente Act. This may be misguided, because what DOE should do is instruct the National Power Corporation ( NPC ) to reduce its UC-ME claims, since NPC fuel costs should have gone down substantially with recent decline in fuel prices, a good possible move to protect consumer welfare and sustain lower power raates. These statements by Laban Konsyumer are in response to DOE saying force majeure invocation on power deals up to contracting parties.
This is lacking in leadership being shown by the government right now during a crisis like the pandemic and lockdown when many Filipinos are struggling to make ends meet. ERC can also order to remove the subsidy being paid by non life consumers to lifeline beneficiaries”.

Laban Konsyumer said invoking “force majeure is working well, we have seen some good news as announced by the distribution utility like Meralco of five straight months overall rate reduction and six straight months of generation charge reduction mainly brought about by the invocation of Force Majeure, which is consistent with the consumer group advocacy right from the start of the quarantine period , but it was essentially snubbed and ignored by DOE, ERC, the asssociation of power plants ( PEPOA ) and PHILRECA. They should be more proactive in developing schemes and plans to better benefit the customers, like the FM claims which lowered generation charge being charged to consumers. And other DUs must follow Meralco’s example bearing in mind consumer interest while government does minimal or hands off action .”

Dimagiba pointed out based on press statements, “MERALCO continued to invoke the Force Majeure provision in some of its Power Supply Agreements (PSAs). This September, the Force Majeure claim totaled about P463 million, equivalent to customer savings of P0.1710 per kWh in the generation charge. Without the Force Majeure claims, the generation charge and the total rate would have increased by 13-centavos and 14-centavos per kWh, respectively. Year to date savings from Force Majeure claims is Php 2.4 Billion which were passed on to the consumers”.

The 2.4 billion pesos savings, otherwise, will go to the pockets of the PEPOA members. Right now the other distribution utilities and electric cooperatives can be the peg for the rest of the energy sector, and this can prod DOE, ERC and other private entities to do the same. This can be sustained further if there is movement by the government and regulator to do their part as well.

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