Earlier this year, our country’s legislators have acknowledged that the Philippines now holds the infamous record of having the highest residential energy rates not only among its closest Asian neighbours but possibly the entire world.
The skyrocketing cost of electricity that goes beyond the affordability levels of the average Filipino family is one that we can try to consider as another “great social equalizer”, since the rate of electricity affects not only the cost of living of individuals but also the cost of doing business which powers the economy in general.
Data from the Department of Energy reveal that the Philippines has overtaken JAPAN now the 4th largest economy in the world -in terms of electricity rate for residential use. Congressman Ben Evardone, who initiated an inquiry on the issue through House Resolution No. 106, said that the residential power rate here is 18 US cents per kilowatt-hour, while it is only 17 cents in Japan, 15 in Singapore, 8 in Thailand, 7 in Malaysia,S in Indonesia and about a mere 3 cents in Vietnam. Our own research reveals the same, and this we find very alarming.
This makes the cost of electricity in every Filipino household six times more than what families in Vietnam would have to pay, when it is a sad fact that the two nations are the closest and most comparable as far as per capita income and minimum workers’ wages are concerned.
In terms of commercial rates however, it is 14 cents in Singapore, the Philippines comes in second at 12 cents, 12 in Japan, 8 in Thailand, 7 in Malaysia, 6 in Vietnam and 5 cents in Indonesia.
There is no surprise why the general business climate in the Philippines remain unfriendly to potential foreign investors by beating developed countries and large economies like Japan, Singapore, Malaysia and Thailand in terms of power rates.
This is not to mention the corruption, red tape, peace and order and political issues that continue to plague the bureaucracy to the consternation of the local and international business community.
This protracted state of affairs denies the country a huge potential and opportunity to benefit from increased economic activities that will redound to business, employment and fiscal revenues for government. It likewise denies the ordinary businessman with minimum capital the chance for a level playing field that will encourage healthy competition.
To implement a “socialized pricing mechanism for the marginalized end-users,” the ERC has implemented a lifeline rate discount for those who cannot afford to pay at full cost. MERALCO customers with an average monthly consumption of 0-50 kilowatt-hour pay 50% less, those with 51-70 kilowatt-hour average monthly consumptions pay 35% less and those who consume 71-100 kilowatt-hour get 20% discount.
However, these discounts are recovered by charging higher rates for big users, who in turn, input the added costs to be borne by the consumers of their products and services creating a vicious cycle of discounting and back-charging, putting citizens’ spending power in peril.
It behooves the government to review its recent policies that have failed the very intention of the legislative measure enacted more than 10 years ago -which had been reduced from being EPIRA to a mere question of “pera” -and find out means to regulate and stabilize the cost of electricity.
We can begin by learning from our ASEAN neighbours. We must finally be able to redeem ourselves from the debts NAPOCOR has incurred to the tune of several billion dollars. How it ever reached such staggering proportions only government can tell us. But I believe most, if not all of us, taunted by the EPIRA-turned-“pera” solution know the real answer. And maybe, our most able-minded representatives in Congress can consider lifting the 12% VAT on power consumption and finally unleash the Filipinos from the shackles of high-cost electricity.
Published in the Manila Bulletin September 2011
