DOE, ERC asked: Help plug electricity subsidy leakages
By Lenie Lectura – September 1, 2020
from Business Mirror
POWER industry stakeholders were asked on Tuesday to come up with solutions on how to plug leakages in lifeline electricity rate subsidy that has now reached P937 million.
“There is a lack of initiative from government that we see now P937 million in leakages that could have been avoided a long time ago… My assignment to DOE (Department of Energy) and ERC (Energy Regulatory Commission) is to craft the strategy as if we will implement this now,” said Senate Committee on Energy Chairman Senator Sherwin Gatchalian, who presided over a hybrid hearing on Senate Bill 1583.
The proposed measure seeks to extend the lifeline rate subsidy up to 2041. The lifeline rate is a subsidized rate given to low-income households or those consuming 100 kilowatt-hours (kwh) or less electricity monthly.
Gatchalian said at the hearing that lifeline subsidies reach P1.6 billion annually. Of the amount, he said P937 million went to consumers who are not poor and living in condominiums.
He cited two electricity bills of unoccupied condominiums in Makati and in Tagaytay City, which reflected electricity discounts since consumption was below 100kWh. However, Gatchalian noted, those living in condominiums are not marginalized end-users and yet they are provided with discounts.
“So these are the loopholes and this is the gap that I see in this law. Even after 20 years of enactment, it seems to me that [this was simply neglected and we didn’t do anything].
Obviously, 100kwh and below is imperfect and it’s leaving to a lot of leakage amounting to P937 million. So, any move to plug those leakages?” Gatchalian said. ERC Tariffs and Rates Division Chief Alvin Ortega assured the senator that the agency would turn in its proposal soon.
“We will study this issue very seriously. We will commit to submit a report,” said Ortega, who agreed that the matter should be addressed as soon as possible because the current assumption is “based on your consumption, if consumption is low especially in the rural area, that will be considered marginalized and would be extended a discount.”
For the DOE’s part, Electric Power Industry Management Bureau Director Mario Marasigan proposed a zonal evaluation on consumers’ poverty level. “In our proposed comments to extend the lifeline rate, we should be able to identify the poverty level of consumers in consultation with ERC, Neda and other government agencies that are handling the marginalized community, particularly the DSWD,” he said.
The Manila Electric Company (Meralco), which has 2.8 million lifeline customers in its service areas, said it fully supports Gatchalian in asking that the leakages be plugged.
“Perhaps this can be done by reviewing the threshold consumption by, for example, comparing this against Family Income and Expenditures Survey (FIES) data in the areas served by each DU. While other criteria may also be studied, e.g., location data as mentioned by the DOE Director Marasigan, we will also want a scheme that is also easy to validate and administer and provides minimal discretion on the part of the DU,” said Meralco utility economics head Lawrence Fernandez.
Meralo has provided almost P4 billion in lifeline rate subsidy last year.
