News Release
May 4, 2008
 
POWER wants gov’t to remove VAT on electricity
Savings of P206 for consumers of 200 kWh
 
Consumer groups today challenged Gloria Macapagal Arroyo to remove the Value Added Tax on electricity if it is really serious in lowering power rates.
 
Engr. Ramon Ramirez, convenor of the People Opposed to Warrantless Electricity Rates said that a family consuming 200kWh a month can easily cut their electricity bills by around 10%.
 
POWER cited customers consuming 200 kWh a month will be saving at least P206 from their monthly bills that reach more than P2000 when VAT is included. .  
 
“This reduction is significant and will provide consumers with more purchasing power for other needs such as rice and food,” Ramirez said.
 
“The removal of the VAT on power, a charge that was not included in electricity bills before 2006, will be the fastest and most direct form of relief from higher electricity rates that the administration can do. We wonder why the government has not seen this before?” asked Ramirez.
 
POWER said there are pending bills before the House of Representatives and the Senate calling for the abolition of the VAT on power and petroleum products. There have been no significant movements regarding these bills because the administration has gone on record opposing the removal of the VAT on power and petroleum.
 
VAT computations on electricity rates of consumers of 200 kWh/month
 
Generation charge of P981.46, VAT  is P102.44
Previous month adjustment of P33.24, VAT  is  P3.0979
Transmission Charge of P198.44, VAT is  P21.21
Systems loss charge of  P161, VAT is P16.889
Distribution Rev and Subs VAT is P 526.27 x 12% or P63.15
 
 
Bayan questions Arroyo sincerity in bringing down power rates
 
Bayan secretary general Renato M. Reyes, Jr. also assailed the Arroyo administration for not focusing on the anomalies involving the National Power Corporation, Power Sector Assets and Liabilities Management, and the Wholesale Electricity Spot Market so that rates could be lowered significantly.
 
“The Arroyo government wants to pin the blame on Meralco but conveniently disregards the anomalies and questionable practices of Napocor, PSALM and the WESM which also drive up power rates. This double standard puts serious doubts on the government’s purported drive to lower power rates,” Reyes said.
 
Bayan pointed out that Napocor has bought coal at exorbitant prices through questionable emergency purchases thereby driving generation rates up. Napocor has also been accused of abusing its market power at the WESM by artificially bringing up generation rates of NPC controlled plants. This has resulted in P9 billion worth of questionable generation charges from August to November 2006. The PSALM has written the Energy Regulatory Commission asking the amount to be passed on to consumers despite government finding of price manipulation, according to Bayan.

Cases are pending before the Ombudsman and the ERC regarding these issues.
 
“While it is true that we have long questioned Meralco’s practice of buying power at the WESM duing peak hours, as well as Meralco’s practice of charging consumers with their systems losses, the Arroyo government cannot just turn a blind eye to the anomalies in the NPC, PSALM and WESM,” Reyes added.
 
“The government shouldn't just focus on Meralco to get populist pogi points. The bigger problem here is the whole power sector structure, and the policies of deregulation and privatization brought about by the Electric Power Industry Reform Act under the Arroyo regime,” Reyes said. ###.