Power sector wants subsidies cut off for non-poor electricity consumers

THE energy industry called for a review of the government’s policy subsidizing poor consumers after indications that some non-poor households with low power usage are benefitting from the aid.

In a Senate energy committee hearing, the industry backed Senate Bill No. 1583, which extends for another 20 years the subsidy policy to so-called lifeline consumers, or those consuming below 100 kilowatt-hours of power.

However, it wanted to resolve the issue of non-poor customers receiving subsidies for low power consumption.

An in-house study by the office of Senator Sherwin T. Gatchalian, the proponent of the measure, revealed that around 3.45 million household beneficiaries that are not necessarily poor got an estimated P973 million from the collected lifeline subsidy component in 2019 bills alone.

The P973 million forms a significant portion of the P2.195 billion in total subsidies generated from all power utilities in the period.

“The spirit of this lifeline rate subsidy is to give it to our poor constituents, not the ones living in condominiums and other high-end residential areas,” the legislator said.

The lifeline rate is set by the Energy Regulatory Commission (ERC), which also determines the group of consumers who will benefit from the subsidy based on their low usage, said Alvin M. Ortega, the commission’s chief energy regulation officer.

For Metro Manila consumers, non-lifeline households are charged 1% of their total bills or six cents per kilowatt-hour of consumption.

“There have been leakages that were detected throughout the years. I am just surprised after 20 years, we haven’t plugged these leakages,” Mr. Gatchalian said.

Section 73 of the Republic Act. No. 9136, or the Electric Power Industry Reform Act, authorizes a cross-subsidy mechanism, which will end next year after being extended in 2011. It was first enforced in 2001.

The ERC told Mr. Gatchalian it will come up with a report addressing the matter.

The Department of Energy (DoE), which also expressed its support for the extension of the subsidy, said there must be “accurate” targeting of beneficiaries eligible under the usage threshold set by the government.

“We want to recommend… a provision that provides a mechanism for the accurate targeting of the true beneficiaries of this lifeline rate program,” said Mario A. Marasigan, director of the DoE’s Electric Power Industry Management Bureau.

“Only end-users falling within the nationally or regionally accepted level of poverty threshold as provided by the National Economic and Development Authority (NEDA) or other duly-authorized government agencies shall be qualified for the lifeline rate,” he added.

Asked about how to resolve discrepancies in the subsidy allocation, Mr. Marasigan said the poverty level of power consumers should be considered. He said the urban poor should benefit from the aid, while those people in high-income residences should pay for the lifeline rate.

Consumer group Laban Konsyumer proposed that the government itself should cover the cost of the subsidy.

The National Electrification Administration (NEA) took the position that electricity aid be a component of the conditional cash transfer program. The government can allocate P3.5 billion each year for such a subsidy, NEA Administrator Edgardo R. Masongsong said.

According to the Philippine Rural Electric Cooperatives Association, there were about 3.6 million poor customers in the countryside as of March.

The association of 121 electric cooperatives proposed reducing the usage threshold to 50 kilowatt-hours to qualify as a lifeline consumer.

Manila Electric Co., the country’s biggest distribution utility, is also in favor of reviewing the lifeline threshold, according to Lawrence S. Fernandez, its utility economics head.

Mr. Gatchalian, who heads the energy committee, asked the DoE and ERC to conduct a study and map out a strategy for preventing the flow of subsidies to unintended beneficiaries.

There were three million households earning less than P10,756 per month in 2018 or about 12% of all Filipino families, according to the Philippine Statistics Authority. — Adam J. Ang