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Populist energy policies to put Philippines in dark ages

It has been a month since these distribution utilities and electric cooperatives have been collecting payment from their customers. Some pay in installment. But the bills continue to accumulate and their bills will just continue to grow. It might get to the point it would be more difficult for them to pay because the bills have just added up.”

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Two populist policy proposals could have a profound negative impact on the country’s energy sector and possibly “put the Philippines in the dark ages,” many industry insiders fear.

The first proposal was to further extend the “No Disconnection” policy beyond the voluntary 31 January postponement by the country’s dominant power distributor firm Manila Electric Company (Meralco), and the call to investigate the ill-conceived Universal charges and the Feed-in Tariff Allowance (FIT-All), which are both remitted to the government as a form of taxes.

Power for people Coalition and other allied leftist groups. Emply anti-government rhetoric devoid of sustainable solutions.

In a recent Senate hearing, Senator Rita Hontiveros has asked Meralco to consider extending its payment terms to help consumers amid the pandemic.

Meralco vice president and head for Utility Economics Lawrence Fernandez quickly stated it is studying suggestions to extend installment payment terms for its consumers.

“Currently, we are guided by the (Energy Regulatory Commission’s) October 2020 advisory. But even beyond that, we already extended the disconnection moratorium for consumers using 200-kilowatt hours or less,” Fernandez told the senators.

“We can consider, we will study the suggestion to extend payment terms for our customers. We just have to note that out of the total bill, the actual distribution portion is the portion that goes to Meralco and the rest are passed through charges, which we have to settle in full and on-time,” he added.


The no-disconnection policy was scheduled to end last 31 December 2020, but the power distributor extended the deadline until 31 January 2021, acting on the request of former House Energy Committee chair and now House Speaker Lord Allan Velasco.

Debt quagmire
In a separate press statement, Hontiveros said it is not “asking too much to further extend the no disconnection policy” and allow customers that consume less than 200kwh monthly not to settle their accumulated and upcoming electricity bills, arguing that “power suppliers and their banks can manage their debts better.”


But her position was immediately countered by Energy Regulatory Commission (ERC) chair and CEO Atty. Agnes VST Devanadera who said in a radio interview that “the distribution utilities and the electric cooperatives also need to sustain their power supply.” She added, “We also need to help them if we can afford to pay. And, often, we can.”

Obviously, Meralco and the rest of the electric cooperatives across the country are also facing financial challenges because of the pandemic and uncollected electricity bills from their customers because of the no-disconnection policy. However, these energy utilities continue to pay their suppliers, as well as the generation and transmission costs to continue providing power to the public.

Meralco has been shouldering this cost for over 10 months since the onset of Covid-19 in 2020.

Asked if the ERC would recommend the extension of the no-disconnection policy, Devanadera replied, “We always study what can be done because we are all in the same situation. And, since (the economy) is now opening, many have returned to work. If our citizens expect the ERC to order a ‘No Disconnection’ policy, it’s up to the distribution utilities because the situation is different.”

In an article by Fine-Tuned Finances, the author pointed out that adding more debt to an already indebted individual is like trapping that person in a debt hold or a debt quagmire that it would be more difficult for them to get out of.

To lift a person from the debt hole, you must teach them to stop digging and develop a debt repayment plan, the article said.

An independent study by Canada-based insurer Manulife Financial Corp. showed that despite strong day-to-day financial discipline, a majority of Filipinos have relatively high levels of personal debt (excluding mortgages) which could jeopardize their long-term financial security.

The Manulife Investor Sentiment Index (MISI) also found that many Filipinos remain largely reliant on debt for their day-to-day living despite having a strong savings record.

Power bills continue to accumulate
According to Devanadera, the Commission is now leaving the disconnection policy to the discretion of distribution utilities.

“It has been a month since these distribution utilities and electric cooperatives have been collecting payment from their customers. Some pay in installment. But the bills continue to accumulate and their bills will just continue to grow. It might get to the point it would be more difficult for them to pay because the bills have just added up.”

“With us, we see that even electric cooperatives are really finding ways [to alleviate the plight of Filipinos to the best of their ability,” Devanadera added.

Rates lowest in three years
Meralco customers enjoyed the lowest power rates in three years in 2020 with a total P1.39 per kWh net overall rate decrease for the entire year. Although the January 2021 overall rate for a typical household increased by P0.2744 per kWh to P8.7497 per kWh from last month’s P8.4753 per kWh, this month’s overall rate is still more than P0.70 per kWh lower than January 2020’s rate of P9.4523 per kWh.

Ironically, despite the drop in the overall rates, Bayan Muna Rep. Carlos Zarate, questioned Meralco’s compliance with the Department of Energy’s competitive selection process (CSP), which requires power distributors to bid out their power supply to electricity suppliers that offer the lowest rates.

Zarate wrongly described CSPs as “proving useless in stopping” the customizing of the power supply bidding process to favor a select generation company.

But power distributors have been pointing to the CSP bidding, done in compliance with the DOE, is responsible for the reduction of the overall rates last year.

What is notable is Bayan Muna’s silence in the recent increase in FIT All subsidy to a few select renewable energy plants. Zarate’s group is waving the flag of CSP, but is silent about the FIT plants, all of which gained eligibility without CSP and are guaranteed expensive rates (that were set without the benefit of competitive bidding) for 20 years.

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