Senators want new criteria for EPIRA lifeline users

The Senate Committee on Energy on Tuesday proposed to revamp the criteria for identifying lifeline beneficiaries under the Electric Power Industry Reform Act (EPIRA), which seeks to subsidize power rates paid by marginalized users. The current practice uses a catch-all 100 kilowatt-hour (kWh) ceiling for those who can benefit from the discount. "On a macroeconomic point of view, I'm bothered. There are many non-lifeline users who end up subsidizing up to 16 centavos per kWh. We'll be driving out investors," said Senator Sergio Osmeña III, chairperson of the energy committee. Osmeña is referring to safeguards put in place by the Energy Regulatory Commission (ERC), which sets the ceiling of 10 centavos per kWh as the subsidy paid for by non-lifeline users. "[But] since monthly consumption of lifeline users and non-lifeline users would vary, there would be instances where subsidies paid by non-lifeline users would exceed 10 [centavos]," explained ERC executive director Francisco Saturnino Juan. Juan said the ERC is fully supporting extension of the lifeline rate, which will expire on June 26, but is open to "refinements proposed to better target subsidies to benefit only marginalized end-users." "That way, there is a lesser impact on those customers [who] are paying for subsidies," he said. Senator Teofisto Guingona III, who was present during the hearing, said that in other countries, beneficiaries are identified by a functional equivalent of the Department of Social Welfare and Development. 100 kWh threshold The current criteria for determining lifeline rate users is a 100 kWh threshold, which means power consumers who use electricity lower than the threshold will get discounted power rates. The Manila Electric Co. (Meralco) said that in Manila, about 50 percent of their 4.5 million residential customers consume less than 100 kWh a month, which means they are subsidized by power users that are usually commercial and industrial customers. "Not all of these customers can be actually classified as marginalized," stressed Noemi Jimenez, head of rates and pricing at Meralco. "Transient houses or condo units of people from the A and B classes may qualify for subsidies whenever their consumption drops to 100 kWh. As such, they are also exempted from the social obligation of providing subsidy," she added. She also pointed out that not all electricity users are contributing subsidy to lifeline rate users, since there are firms which bypass distribution utilities and are directly connected to transmission grids. "By bypassing distribution utilities, they are also bypassing the obligation to pay the subsidy," Jimenez pointed out. Based on data from the Department of Energy, Jimenez said at least three billion kWh were consumed by these firms in 2009, almost double the total amount of electricity sold by other private distribution utilities in Luzon, excluding Meralco. Osmeña said doing away with an arbitrary number like the 100 kWh threshold would be beneficial for all, and proposed that a certain percentage of the consumers be the only ones subsidized. "It doesn't make sense that half of all residential customers are being subsidized," he said. — PE/VS, GMA News