Consumers decry P1.73/kwh rates increase, call for cancellation of onerous IPP contracts

Members of Freedom from Debt Coalition (FDC) staged a picket today in front of the Energy Regulatory Commission office to protest the impending P1.73/kwh increase in their power rates due to recoveries applied for by Meralco at the Commission.


Meralco has filed two petitions at the ERC asking for collection of its "under-recoveries" in generation costs and system loss charges for the months of December 2006 and January 2007. So far, this is second highest power rate hike petition since 2004, when Napocor appealed for a P2/kwh increase in its generation charges. The ERC only approved P1.03/kwh.


The coalition noted that the recoveries for December 2006 alone would mean about P1.11/kWh increase in Meralco consumer's electricity bill once this is approved by the ERC. The increase resulting from two applications of Meralco will actually be higher than P1.73/kwh because Meralco also wanted to impose a carrying cost or interest equivalent to 91-day T-bill rates plus 300 points for the delay in the implementation of new charges and also because VAT would be imposed on the increase in generation rate and systems loss charges.


"The consumers had enough of these increases. We cannot take any more unjust increases. We are already charged about P9/kwh to P9.50/kwh for our electricity," said FDC Vice President Wilson Fortaleza.


Fortaleza explained that electricity rates remain high because of the continued passing on to the consumers of the costs due to the onerous "take-or-pay" provision in the IPP contracts which both the National Power Corporation and Meralco entered into.


"We continue to suffer because of paying for the overpriced contracted electricity from the IPPs even when this is actually not fully generated. It is unjust and immoral to be made to pay for electricity that one did not use, and which is not available in the first place," Fortaleza added.


FDC demanded that the government must make a decisive step towards reducing electricity rates. This can be done by either canceling the onerous IPP contracts or change its onerous terms such as the take-or-pay and the fuel guarantees. The coalition demanded further that VAT on power should be lifted to provide relief for electricity consumers.