P3.5-B yearly subsidy eyed for lifeline power consumers

By Myrna M. Velasco – September 2, 2020, 6:00 AM
from Manila Bulletin

Consumers served by electric cooperatives (ECs) that are classified as ‘lifeliners’ had been proposed to receive discounts worth P1,000.00 annually on their electric bills–  or for all 3.5 million of these customers to be funneled with P3.5 billion subsidy on a yearly basis.

That was stated by National Electrification Administration (NEA) chief Edgardo R. Masongsong in a Tuesday virtual public hearing called by the Senate Committee on Energy, which discussed prospects of 20-year extension on the lifeline rate subsidy for marginalized consumers.

The propounded rate discount or subsidy for the consumers, according to the NEA Administrator, shall be allocated by the national government – and that’s a shift from the current practice of charging the subsidy from the bills of the non-lifeline consumers.

In a span of the targeted 20-year extension or from June 26, 2021 to June 25, 2041; it is seen that the total worth of subsidies to be earmarked for the EC customers alone would hover at a mammoth P70 billion.

“Government will extend the subsidy, it will no longer be taken out from other non-lifeline consumers,” Masongsong said, while expounding that the scheme could be patterned with the 4Ps or the Pantawid Pamilyang Pilipino Program of the Department of Social Welfare and Development (DSWD).

On determining and verifying the lifeline consumer-beneficiaries of the subsidy, Senate Committee on Energy Chairman Sherwin T. Gatchalian asked if the Listahanan of the DSWD could be used as a reference by the electric cooperatives, but Masongsong said “there are identified lifeline consumers that are not beneficiaries under 4Ps.”

For the Philippine Independent Power Producers Association Inc. (PIPPA), the group proposed that the lifeline subsidy extension be shortened instead of the targeted 20 years – and Gatchalian expressed concurrence with that recommendation.

Manila Electric Company (Meralco), for its part, indicated that in subsidizing its lifeline end-users last year, the remaining 60-percent of its customer base with higher usage paid an average 8.8-centavos per kilowatt hour (kWh) as add-on cost in their electric bills.

Meralco Vice President Lawrence S. Fernandez emphasized their 2.8 million lifeline customers last year “received the equivalent of almost P4.0 billion in discounts under the subsidy scheme.”

Nevertheless, he raised the concern of subsidizing customer sub-segments, like the businesses, that “the lifeline subsidy add-on has contributed to making them uncompetitive in the international market.”

Fernandez highlighted the argument, especially of businesses, that “while electric service in countries like Thailand, Malaysia and Indonesia are subsidized by their governments, companies in the Philippines are burdened by a subsidy for other electricity consumers.”

The subsidizing groups include all residential customers that are utilizing more than 100 kWh of electricity monthly; as well as the non-residential customers such as commercial establishments, domestic manufacturers, exporters, business process outsourcing (BPOs) and other segments of end-users.

Instead of extending the subsidy prescription, Meralco recommended that the “leakages be plugged” in the subsidy mechanism and one way to do that is by reviewing threshold consumption – and that may require comparing it against family income and expenditures in the areas served by each distribution utility or electric cooperative.

Fernandez added “given the weight and validity of the concerns of each group, the extension of the lifeline subsidy scheme is a matter of state policy that will have to consider the concerns of various stakeholders.”