Pending hike on coal tax prompts Meralco unit to eye wind energy

THE power-generation arm of Manila Electric Co. (Meralco) is “seriously” looking at venturing into wind energy amid an impending rise in coal taxes.

“We’ve been asked to look at wind proposals,” Meralco PowerGen Corp. (MGen) CEO Rogelio Singson said. “When coal tax kicks in, wind will be competitive.”

The two chambers of Congress recently agreed on a compromise tax rate of P150 per metric ton (MT) on coal, divided into tranches over the next three years upon its enactment. This means the excise tax would be P50 per MT in 2018, P100 in 2019 and P150 in 2020. The original Senate version proposed a 100-200-300 hike scheme.  At present, coal is imposed a tax of P10 per MT, a rate that has been imposed since 1977.

Sen. Sherwin T. Gatchalian, chairman of the energy committee, opposed the proposal, but eventually voted for the ratification of the Bicameral Conference Committee version of the Tax Reform for Acceleration and Inclusion bill. Gatchalian said the excise tax would become a pure pass on charge resulting to an additional P13.2-billion in electricity costs that consumers inevitably would have to shoulder.

“The tax hike up to P150 after three years will result in an average monthly rate increase of P14.348 for a 200-kWh [kilowatt-hour] household served by a 100-percent coal contracted distribution utility,” Gatchalian said. “This is equivalent to the price of half a kilogram of rice for 2.7 million households.” MGen Executive Vice President and General Manager Dan Niel said MGen has been looking at wind power for a number of years now.