Metro Manila, Philippines – A number of senators are pressing power distributor Manila Electric Company (Meralco) and the government to absorb part of the electricity costs passed on to consumers, including the controversial subsidy for low-income households.
Amid mounting complaints over “bill shock,” the issue was tackled during a hearing of the Senate’s PROTECT (Proactive Response and Oversight for Timely and Effective Crisis Strategy) committee on Wednesday, April 29. Meralco earlier attributed the rate hike to higher generation charges driven by a weakening peso.
Senator Imee Marcos raised concerns about the lifeline rate, which grants a 100 percent discount to qualified households consuming up to 50 kilowatt-hours per month.
The Department of Social Welfare and Development said around 135,000 households under the Pantawid Pamilyang Pilipino Program (4Ps) benefit from the subsidy, costing around ₱8 million monthly. This is shouldered by other consumers at about one centavo per kilowatt-hour.
“Ang liit-liit naman ng lifeline na iyan… hindi ba pwedeng i-absorb na ng Meralco iyan [That lifeline subsidy is very small… can’t Meralco just absorb it],” Marcos said, adding that this must also be done for subsidies for senior citizens.
The Energy Regulatory Commission (ERC) noted that under the Expanded Lifeline Rate Act, the subsidy is meant to be funded by other consumers. ERC Chairperson Francis Saturnino Juan said, however, that distribution utilities may choose to voluntarily absorb the cost.
Lawrence Fernandez, Meralco vice president and head of utility economics, said the issue requires further discussion.
“Maybe we need to discuss the mechanism kasi bakit ho iaabsorb ng distribution utilities lahat when the discount is applied also on the generation and transmission charges,” he said.
[Translation: Maybe we need to revisit the mechanism – why should distribution utilities absorb everything when the discount also applies to generation and transmission charges.]
Fernandez said Meralco would comply with any directive from the ERC.
Committee chairman Sherwin Gatchalian, principal author of the lifeline rate law, suggested that the government could now take on the subsidy, noting that stricter qualifications have reduced the number of beneficiaries.
“So ang nakikita ko dito dahil nga mas strict na ang gobyerno ngayon sa pagpipili ng kung sino pwedeng kumuha nitong subsidy at ₱8 million nalang, nakikita ko na posible na rin i-absorb ito ng gobyerno,” Gatchalian said.
[Translation: What I see is that since the government has become stricter in determining who qualifies for the subsidy, and the cost is now only around ₱8 million, it may already be feasible for the government to absorb it.]
Senator Bam Aquino earlier made a similar proposal. Meanwhile, Senator Rodante Marcoleta proposed expanding subsidies to households consuming up to 200 kWh per month.
Other charges, taxes
Lawmakers also scrutinized various components of electricity bills. Aside from generation costs, Fernandez said transmission charges rose due to ancillary service costs from backup power generators.
“E hindi pa naman ginagamit bakit kinukubra na sa consumer [“If they’re not even being used yet, why are consumers already being charged],” Senator Imee Marcos said.
Fernandez explained that these charges are billed to Meralco by the National Grid Corporation of the Philippines (NGCP).
Marcos also questioned system loss charges
”Grabe naman, patong-patong na ito. Yung generation charge may charge na tapos idodouble up pa sa system loss tapos yung ancillary charges na hindi naman ginamit nakatambay lang eh dinagdagan din,” she said.
[Translation: This is too much – charges are piling up. There’s already a generation charge, then it’s doubled through system loss, and even ancillary charges that aren’t being used are being added.]
When asked if these charges are subject to value-added tax (VAT), Fernandez said most bill components are. Several senators have been pushing for the removal of the 12 percent VAT on electricity amid the ongoing Middle East crisis.
Juan confirmed that taxes account for a significant portion of electricity bills. Marcoleta added that even local franchise taxes are passed on to consumers.
“Sabi ko nga sa Meralco one time, pati ba naman yung local franchise tax, kayo naman yun eh. Wala namang kinalaman yung mamimili ng kuryente,” he said.
[Translation: I told Meralco before—why pass on the local franchise tax? That’s your obligation. Consumers have nothing to do with that.]
“Pati nga po yung system loss merong tax. Dito lang nangyari sa bansa natin. Pati ba naman yung bagay na wala, nata-tax. Isipin po ninyo, lifeline rates, senior citizens discounts, at yung ancillary services. Kaya po tumaas ang singil ng Meralco ay dahil sa contributory factors na ito,” he added.
[Translation: Even system loss is taxed. This only happens in our country—even something that doesn’t exist is taxed. Think about it: lifeline rates, senior citizen discounts, and ancillary services—all these contribute to higher electricity bills.]
