TRAIN 1 hits 50% of power supply – DOE

By Myrna M. Velasco – April 1, 2018, 10:00 PM
from Manila Bulletin

The percentage of the country’s power supply that shall be levied with excise taxes under the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) Act of the Duterte administration would hover at more than 50-percent; and this will likely come as a punishing one-two punch in the consumers’ electric bills these summer months.

According to the power bureau of the Department of Energy (DOE), if referenced on last year’s power capacity, the share of coal-fired plants in the mix had been at roughly 37-percent (as of end-June 2017); while the diesel and bunker fuel-fed generating plants had combined share of 14.4-percent nationwide.

Gauging from last year’s power mix figure, it is seen that the power facilities to be enforced with TRAIN taxes would reach as high as 51-percent for on-grid installations – that is excluding yet the off-grid facilities which are dominated by diesel generating sets.

Rising power rates are major turn-off to investors – yet it is the reverse track that the Philippines has been taking because it is incessantly injuring its energy sector with heavy taxes, while most of its Asian neighbors are subsidizing their energy sector so they can attract massive stream of foreign direct investments.

In the Revenue Regulations issued by the Bureau of Internal Revenue (BIR) in January, it specified that diesel and fuel oil used in power generation shall be levied with TRAIN-mandated excise taxes. For diesel, it will have a tax rate of P2.50 per liter.

For the biggest power grid of Luzon, the share of coal and oil-fired plants last year had been at 49.6-percent aggregate (37.7 percent share for coal and 11.9-percent for oil-fired facilities); Visayas had 50.9-percent (at 35.7-percent coal and 15.2-percent oil); while Mindanao had 61.3-percent (with coal share at 35-percent and oil at 26.3-percent). It is worth noting that most of the capacity additions this year will also be coal-fired generating plants.

The energy department as well as Manila Electric Company (Meralco) had already given calculations of P0.01 per kilowatt hour (kWh) cost impact of the initial P50 per metric ton excise tax of coal being used as fuel for electricity generation.