Enough broken vows

Enough broken vows | Daily Tribune

The loudest applause came when Marcos pledged to remove system loss charges from consumers’ monthly electricity bills, drawing a standing ovation from lawmakers and guests.

Whether that promise can be translated into concrete policy will likely be one of the key tests of the administration’s follow-through during its final years.

That, in many ways, summed up the one-hour-and-26-minute speech, which was filled with pledges that now join a long list of promises made in previous SoNAs.

Removing the dreaded system loss charge from monthly electricity bills would require amending the Electric Power Industry Reform Act.

The system loss charge covers the cost of electricity lost before it reaches consumers. This includes technical losses arising from the transmission and distribution network, as well as non-technical losses such as electricity theft and pilferage.

Under current rules, a portion of these costs is passed on to consumers through their monthly electricity bills.

Adding to the burden, the charge is subject to the 12-percent value-added tax, meaning consumers pay tax on electricity they never consumed.

This has long fueled calls for reforms to ensure the cost of inefficiencies and power theft is not disproportionately borne by paying customers.

Jomar Lacson, head of macroeconomics and impact investing at ATR Asset Management, said the removal of subsidies and the system loss charge would inevitably raise one question: Who will shoulder the cost?

“While President Marcos raised a fair point on why consumers pay for systems loss, if utilities are going to be asked to bear the loss, they are likely to ask for higher rates to compensate and keep their returns stable, which means consumers will still pay,” he said.

Lacson added that the President’s goal would likely require a cost-sharing mechanism that is fair to both consumers and utility firms.

“This is why system loss recovery mechanisms of utilities are performance-based,” he said.

Sonny Africa, executive director of think tank IBON Foundation, said the President’s address confirmed how little the Marcos administration has achieved on the economic and anti-corruption fronts and “why it deserves its weakened public standing.”

He said the speech showed no ambition beyond “micro measures too small for the economic hardship of tens of millions of Filipinos,” while arguing that invoking Pax Silica reflected “no imagination for Filipino industrialization beyond foreign manufacturing exploiting the country.”

Lacson also said the long list of ayuda programs suggested the administration would continue relying on cash assistance.

“There are two ways to look at the subsidies. On a positive note, they are important because inflation has reduced purchasing power, but the possible negative effect is that the additional income may lead to more consumption, which will lead to persistent inflation,” he said.

He added that part of the additional income from subsidies should instead be converted into investments.

Former University of the East College of Law dean Amado Valdez said Marcos’ remarks on the flood control controversy heightened public pressure on the Office of the Ombudsman to act decisively.

“Marcos does not have much time, especially if the administration’s impeachment agenda collides with the need to prosecute senators who are its allies. That could create a serious dilemma,” Valdez said.

The President’s fifth SoNA could have served as an opportunity to account for commitments made in previous years before he delivers what is expected to be his final SoNA next year.

Instead, the speech offered another round of promises that may resonate politically but whose credibility will ultimately be determined by implementation.