5.7 M consumers seen to benefit from 20-year extension of subsidy

By Myrna M. Velasco – June 8, 2020, 10:00 PM
from Manila Bulletin

Roughly 5.7 million marginalized Filipino household consumers are expected to benefit from the targeted 20-year extension of the subsidized electricity rates bestowed to end-users that are in the consumption thresholds of 100 kilowatt hours (kWh) and below.

Senate Committee on Energy Chairman Sherwin T. Gatchalian, the principal author of Senate Bill 1583, said by stretching the subsidy provision, financial relief to marginalized household consumers can be guaranteed.

In the franchise area of Manila Electric Company (Meralco) alone, it was noted that the low-income households that are benefiting from the discounted lifeline rate stood at more than 2.4 million as of 2019; while the balance are served by other private distribution utilities and the electric cooperatives.

This is already the second extension for the lifeline rate subsidy in the electric bills – the first one was for 10 years and that will be enforced until 2021. The new extension being sought is to last until 2041.

Based on figures crunched by the Senate energy committee, Meralco consumers in the lifeline rate level reaped savings of roughly P3.8 billion last year – or an equivalent of P1,576 savings per household annually.

The subsidy for the ‘less power-consuming households’ are done via discount rates levied based on the scale of their usage on a monthly basis.
That portion in the electric bills accounting for the subsidy discounts is then passed on to the segment of consumers who have higher consumption – in effect, cross-subsidizing their marginalized counterparts.

In particular, lifeline users with average monthly consumption of 21-50 kWh are entitled to a 50-percent discount; those in the 51-70 kWh usage band can avail of 35-percent discount; while the ones with higher 71-100kWh consumption will have 20-percent discount.

Gatchalian’s new bill will further amend Section 73 of the Electric Power Industry Reform Act (EPIRA) or Republic Act 9136; as well as the subsequent Republic Act 10150 or the law that first extended the lifeline rate when it expired in 2011.

“The spirit of this measure is to really cushion the blow of power rate increases to marginalized households who cannot afford to pay the full cost of their electricity bill,” the lawmaker said.

Gatchalian emphasized he filed the measure “to continue the much-needed assistance to low income electricity consumers,” which would then effectively ease their access to electricity service and could prospectively improve their quality of life.