SENATE President Sherwin Gatchalian called for a comprehensive audit of electricity generation charges, saying closer regulatory scrutiny of the component could help lower electricity costs.
Gatchalian said the generation charge accounts for the largest share of monthly electricity bills, making it the most critical area for regulatory oversight. ”If we want to reduce our electricity bill, we should focus on the largest charge on the bill, which is the generation charge. We need to ensure that the pass-on charges passed on to consumers are correct and reasonable,” the senator said. During a Senate hearing on electricity pricing and regulation, Gatchalian pressed the Energy Regulatory Commission (ERC) to intensify its review of fuel pass-through charges imposed by power generation companies. Gatchalian directed the ERC to submit a timetable for its fuel pass-through audit, along with a detailed audit plan and an updated list of distribution utilities and generation companies that have failed to comply with the commission’s regulatory requirements. The ERC assured lawmakers that existing regulations authorize the commission to order refunds if audits determine that consumers were overcharged for fuel or other pass-on costs. Following President Ferdinand Marcos Jr.’s fifth State of the Nation Address, Gatchalian filed the proposed System Loss Charge Abolition Act, which seeks to remove system loss charges from consumers’ electricity bills. At the House of Representatives, Navotas Rep. Tobias Tiangco pushed for the passage of House Bill (HB) 10548 that mandates the exemption of residential consumers using 400 kilowatt-hours or less from the 12-percent value-added tax (VAT) on electricity.This comes after the ERC approved a higher feed-in tariff allowance rate starting this month’s billing period. Under HB 10548, qualified households would automatically receive the VAT exemption, covering electricity charges from generation, transmission and distribution utilities, including electric cooperatives. ”Electricity is not a luxury — it is a basic necessity. Every peso a family saves on its electricity bill is another peso they can use to put food on the table, buy medicines, pay for school expenses or simply make ends meet,” Tiangco said. He said the measure would also benefit middle-income families that are not covered by the government’s Lifeline Rate program but continue to face rising electricity costs. Meanwhile, Marikina 2nd District Rep. Miro Quimbo and Senior Deputy Speaker Ferdinand Hernandez filed HB 10602 seeking to exempt electricity consumers from paying the 12-percent VAT on recoverable system loss charges. ”While we recognize that electric utilities and other industry participants invest substantial capital to build, maintain and operate the country’s power system, we believe that electricity is unlike an ordinary commercial product. Because it is foundational to modern life, the charges imposed on consumers should be just, fair and reasonable,” Quimbo said in his explanatory note. ”An electricity bill today already contains numerous charges, from generation, transmission, distribution, universal charges to taxes. Among these, one of the most difficult to justify is the imposition of the 12-percent VAT on system loss charges,” he added. The bill, filed on Aug. 4, seeks to remove the VAT only on ERC-approved recoverable distribution system loss charges reflected in electricity bills. Quimbo said the measure complements efforts in the House of Representatives to reduce electricity costs without undermining the country’s power distribution sector.
