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November 22, 2020
LKI PRESS STATEMENT 2020-073
Repeal Universal Charges for Missionary Electrification –Laban Konsyumer
Consumer Group Laban Konsyumer Inc. (LKI), recently spoke out against the National Power Corporation or NPC pointing towards mismanagement and inefficiency in their system and milking hapless consumers since 2003. The group said “for 2021 with a measly over 3 billion pesos projected revenues from sales in ME, NPC will spend 20. 7 billion pesos and those are consumers’ money. From our cross examination, it was claimed that they collect almost 6 pesos per kilowatt hour in the ME areas.”
LKI President Atty. Vic Dimagiba said, “ NPC seeks to avail from the UCME subsidy in the total amount of PHP20.730 BN and the resulting rate of 0.2055 pesos per kilowatt hour in ERC Case No. 2020-011. LKI actually opposed against an increase in universal charges for missionary electrification in an ERC virtual hearing held November 20, 2020.”
Dimagiba added that NPC is also claiming another 0.0720 per kwh shorfall in UCME collection for calendar year 2018 in ERC Case Mo. 2020-004 .
Dimagiba said Consumer Group Laban Konsyumer Inc. (LKI), actually recently joined a virtual hearing with the Energy Regulatory Commission (ERC) and manifested their concerns, saying “That the Commission should evaluate the above Petition of the National Power Corporation thoroughly and with impartiality , and after due hearing , Dismiss the Petition, stop and abandon the collection of UCME, as without merit and basis.”
During the virtual hearing, where ERC accepted the intervention and opposition of LKI , Dimagiba voiced out the failure of the Petitioner to disclose and inform consumers on why NPC is seeking an increase in UCME rate to continue funding their operational expenses of the missionary electrification areas of the country.
Dimagiba asked clarificatory questions to NPC on their year to date achievement in the electrification of barangays across the country that are on off grid areas. With hesitation, NPC declared that using 2015 data of 1.5 million households without electricity, only 24 % are without electricity.
Yet, Dimagiba believes that it is important that the Commission look into the petition of NPC’s in a more concrete way to reduce the UC-ME and for NPC to be required to consider the cheaper fuel cost in its estimates. The current UC-ME was set in 2015, when fuel prices were much higher than today. Thus, costs incurred have already been recovered under the existing rate.
Dimagiba explained that “The Missionary Electrification component of the Universal Charge is collected from end users in the main grid to subsidize electricity in areas not connected to the transmission system. Since 2003, the UCME has increased by around 318%, from Php 0.0373 per kWh to Php 0.1561 per kWh, and the latter set in 2015.” NPC petitions to increase the UCME to Php 0.2055 pkwh.
Dimagiba pointed out that “The total payments to NPC cover cost of electricity from oil fired plants in those areas, which account for about 94% of installed capacity (DOE list of existing power plants as of December 31, 2019). World oil crude prices have actually gone down since 2015 by about 23 % from an average of US $ 52 for Brent crude to US $ 40 as of July 2020 (US Energy Information Administration)”
Dimagiba provided the following table to demonstrate:
$/Bbl. Brent Spot
as of Jul 2020 40.37
Dimagiba highlighted “For Dubai crude, in 2015 average amount is US $ 50.94 and US$ 41.21 in July 2020, or a reduction of 19.1 % from 2015 (Opec.org). On the other hand, the Peso to US Dollar had depreciated by an average of 10.7% for the same period of 2015 to 2020 (bsp.gov.ph).”
Dimagiba expounded “Since fuel prices declined faster than the Peso depreciation, NPC fuel prices should still be almost 10% lower this 2021 versus in 2015. Thus, NPC is collecting ME in excess of the least cost, and upon computation, the Commission should order a refund of over recovery of UCME.”
Lowering the charge is “a good possible move to protect consumer welfare and sustain lower power rates,” considering that fuel costs of the Napocor went down “substantially” with the recent decline in fuel prices, he said. Since 2015, the average spot price of benchmark Brent Crude fell 23% to $40 per barrel this year. The consumer group estimates that the missionary charge has risen around 318% to P0.1561 per kilowatt-hour (kWh) from 2003. The present rate was set in 2015.
A total of P99.66 billion in universal charge payments were remitted to Napocor as of December 2019, data from the Power Sector Assets and Liabilities Management (PSALM) Corp. showed. In March, Napocor filed with the Energy Regulatory Commission (ERC) a petition to increase the missionary charges for 2021 by five centavos to P0.2055/kWh. The commission is still hearing the application.
Laban Konsyumer alleged that the government is “lacking compassion and leadership when many Filipinos are struggling to make ends meet.” It is about time to repeal the UCME, Dimagiba concluded.