The Energy Regulatory Commission (ERC) was urged on Friday to ensure that the looming increase in power rates is strictly implemented on a staggered basis to spare consumers from another price shock caused by the ongoing oil crisis in the Middle East.
Senator Win Gatchalian, vice chair of the Senate energy committee, said power firms must be strongly advised to refrain from imposing a so-called “one-time, big-time” price increase in electricity rates to prevent further financial distress for the consuming public, who are already grappling with persistently rising fuel costs.
“The electricity sector is a regulated industry, and the ERC should not allow one-time, big-time increases in electricity rates. Now is the worst time to increase electricity costs,” Gatchalian warned.
Electricity rates are expected to jump by as high as P4 per kilowatt hour in April, according to ERC chair and CEO Francis Saturnino Juan, citing the ongoing conflict in the Middle East caused by the Israeli-United States war on Iran, which has disrupted the global oil supply.
The Philippines sourced almost 98 percent of its oil from the Middle East, the global major oil exporter.
The Manila Electric Company or Meralco, has already advised consumers to brace for a sharp power rate hike as early as this month, citing higher transmission and generation costs.
The increase for March is pegged at P0.6427 per kWh, raising the overall rate for a typical household to P13.8161 per kWh from P13.1734 per kWh in February. This translates to an extra P129 for households using 200 kWh.
Gatchalian said the ERC must keep an eye out for these looming increases and ensure that any subsequent hikes in power rates are reasonable, gradual, and spread across several billing cycles.
While government intervention in electricity pricing has been clipped under the Electric Power Industry Reform Act of 2001, the government may intervene in case of a shortage of supply, Gatchalian warned.
Pending proposals in Congress suggest suspending the excise tax and value-added tax (VAT) on petroleum products to cushion the inflationary impacts of the ongoing conflict in the Middle East. The Department of Finance warned that this will cost the government a whopping P136 billion in projected revenue shortfall until year-end, although this move will also "tame" inflation, according to the Department of Economy, Planning, and Development (DepDev).
DepDev Undersecretary Rosemarie Edillon projected that the inflation for March is poised to climb sharply to 4.5 to 5.1 percent from 2.1 percent in February, if the Dubai crude oil reaches $100 per barrel.
The inflation rate, she added, could further spike to 6.3 to 7.5 percent if the Dubai spot price hits $140 per barrel.
However, Edillon said if pending proposals to suspend the excise tax were to be passed into law, it would temper the possible inflationary effects of the oil crisis, keeping the inflation between 3.6 and 4.2 percent under the first scenario, while between 5.4 and 6.6. percent under the second or the “worst-case” scenario.