Multi-sectoral groups hold protest rally

to reduce power rates and oil price


Elliptical Road, Quezon City


June 6, 2008




"Ka Bel" with Anakpawis Secretary General Cherry Clemente (left), and with a BAYAN member (right)



Using a variety of noise-making devices protesters staged a noise barrage at the Elliptical Road to call attention to the ever-increasing prices of electricity,oil and basic commodities



BAYAN news release


Hundreds hold noise barrage on eve of new round of oil price increases, more protests being readied

Hundreds of protesters staged a noise barrage at the Elliptical Road in Quezon City just hours before an expected new round of oil price increases. The umbrella group Bagong Alyansang Makabayan said more protest actions are being readied as a response to government’s failure to curb oil prices and protect consumers.

“The nation is facing a grave crisis. The relentless price hikes have become unbearable. Government must step in now to stop the weekly round of prices increases and to remove the oppressive value added tax on oil and power,” said Bayan secretary general Renato M. Reyes, Jr.

Bayan said that in a time when oil prices worldwide are artificially being raised because of massive speculation, the national government must all the more step in to protect consumers.

“The speculative nature of the increases, wherein it is estimated that up to 60% of the prices are due to speculation, should compel the Arroyo government to stop these oil companies from raising their pump prices. These multinational oil companies must be stopped from preying on consumers,” Reyes said.





The group also assailed what it called “the oppressive taxation under the VAT on oil”, saying the government has long enjoyed windfall revenues at the expense of poor consumers.

“The protests will not stop until the VAT on oil and power is removed. This is a demand that the Arroyo government can no longer ignore. Because of the VAT, the government is no different from the oil companies who prey on consumers. Government’s tax take goes up when oil prices go up,” he added.

The Kontra-KulimVAT campaign has kicked off a signature drive aimed at raising awareness and gathering support for the removal of the VAT on oil and power.
The group also said that people are demanding more than just one-time subsidies from government.

“Government should stop treating people as if they are all beggars. People demand immediate economic relief and a change in policies, not just dole-outs and band-aid solutions,” Reyes added.






Thursday, May 29, 2008

By Giovanni Tapang, Ph.D.

Ka Bel's electric dream

Crispin Beltran was laid to rest yesterday. The labor leader and advocate of the poor was 75 when he fell down a ladder while fixing their roof. He has been the consumer's champion against high electricity rates inside and outside of Congress. He went to the Energy Regulatory Commission (ERC) to petition against unwarranted rate increases and joined pickets and rallies on power related issues. On the day of his death, Congressman Beltran would have had filed a bill to remove the value added tax (VAT) on electric power, which accounts for a little more than 10 percent of our electric bill.

Ka Bel has taken the adage of "practicing what you preach" seriously in his advocacy for lower electricity rates. In 2001, he refused to pay the Power Purchase Adjustment (infamously known as the PPA) which accounted for more than half of his bill. His refusal to pay for undelivered power led to the disconnection of his electricity service.

As electricity rates rise amid the already high cost of food and fuel, the government's solution is an Arroyo take-over of Meralco and the acceleration of Napocor's privatization. Will these really stop ever-increasing electricity rates and reduce our electricity bill?

Half of our electric bill is taken up by the generation rate where part of the PPA that Ka Bel refused to pay was hidden. It includes the take-or-pay provisions in the contracts of independent power producers (IPP) with distributors and Napocor. It ensures guaranteed returns for the IPPs even in cases where no power is delivered to our homes. One estimate is that these take-or-pay provisions account for more than 15 percent of our total bill.

Government taxes account for another ten percent of our power bill. There is VAT applied on the generation, transmission and distribution components of our bill. There is even VAT on systems loss and subsidies for the lifeline rates taken from customers using more than 100 kWh per month. Subsidies and franchise taxes add another 1.35 percent to the total.

Systems-loss accounts for another nine percent. It is mainly due to any technical inefficiency on the part of the distributors, their in-house use of electricity and pilferages. Why are we paying for pilferage when a violator is required to pay consequent fees under the Anti-Pilferage Act?

Additional pass-on charges include the metering charge and universal charges. In the future, stranded cost and debt recoveries of Napocor and distribution utilities which amount to around P200 billion will be collected from consumers.

All these charges add up to around 40 percent of our electricity bills. If you include other government royalties, these pass on charges could rise to about half of our power costs. This means that only the remaining half of our electric bill is electric power that you have actually used. The rest are due to pass-on charges, taxes and undelivered power due to inefficiencies and take-or-pay contracts. This is the same problem that Congressman Beltran pointed out in 2001 and only shows that the PPA remains embedded in our electricity rates.

Instead of waging an advertisement war and staging a takeover of Meralco, the government could have immediately reduced our bill to half by removing the VAT and government taxes on power, the systems loss and renegotiating to remove the take-or-pay provisions in IPP contracts.

The government could have moved to repeal the Electric Power Industry Reform Act which allows passing on these charges to consumers. Under the EPIRA, one of the first laws Mrs. Arroyo signed during her presidency, consumers seem to be the perpetual milking cow of the government, distribution utilities, Napocor and independent power producers. Under the government's plan to accelerate the privatization of Napocor, we can only expect more rate increases as consumers absorb the losses incurred by the power industry players.

In addition, consumers must not be made to shoulder other recoveries such as the P14 billion Napocor-Meralco settlement and the P9 billion in generation charges from Napocor's "market-power abuse" in the WESM in 2006. Both cases are pending in the ERC.

Ka Bel's electric dream of reducing power rates can be realized if laws such as the EPIRA that are biased against consumers are scrapped and cheap and accessible utilities like electricity are made available to the public. We cannot have band-aid solutions that only provide brownie points to the government but will burden the people in the long run.




The Meralco Electric Bill Equation *


(based on April 2008 bill for a 101-200 kwh customer class)


Let :
G = Generation charge
Gtx = Tax on Generation charge
T = Transmission charge
Ttx = Tax on Transmission charge
SL = System loss
SLtx = Tax on System Loss
DMS = Distribution, Metering and Supply charges
LLS = Lifeline rate subsidies
DMSLLstx = Tax on distribution, metering and supply charges

and lifeline rate subsidies
LFtx = Local franchise tax
UC = Universal charges

Total Electric Bill = [G + T + SL + DMS + LLS] + UC + [ Gtx

+ Ttx + SLtx + DMSLLstx + LFtx]


Gtx = 0.1044G
Ttx = 0.1069T
SLtx = 0.1049SL
LFtx = 0.0057[[G + T + SL + DMS + LLS]
DMSLLstx = 0.12[DMS + LLS + LFtx]


The multiplying factors vary from month to month except

the 12% of the Distribution charge tax


Final equation:


Total Bill = 1.1044G + 1.1069T + 1.1049SL + 1.12DMS

+ 1.12LLS + 1.12LFtx + UC


As you can see, it is not really such a complicated formula. But what

gets into the variables, especially G, T and SL, is what makes life for

the ordinary consumer complicated and which often leads to the

problematic disconnection notice.


For a TV7 news report on the electric bill and the picket rallies

at NAPOCOR and Meralco offices, click here:


http://www.gmanews. tv/video/ 22652/Signature- drive-vs-


* From: The Meralco Electric Bill equation




Tax on power every step of the way to your home *

Let us say you used 122 kwh of electricity last month.

1. A NAPOCOR or IPP plant produced that electricty.

Before it got out of the plant, you were slapped a tax of P62.50, or 51

2. The electricity was transported by a TRANSCO transmission cable to your distribution utility like Meralco.

The government again taxed you, this time P12.94, or 11 centavos/kwh.

3. Meralco got the electricity, put it into their lines and delivered it to your home.

The government again taxed you, this time P22.72, or 19 centavos/kwh.
This even included a tax on a tax, the franchise tax, amounting to P5.67.

4. Since you also pay for the system loss (technical and administrative

The government again slapped you a tax, this time P10.33, or 8 centavos/kwh.

That is why, when you intend to flick on a switch, think twice, because once you let the current pass to light your room, you will be paying all those taxes enumerated above, and it is on a per hour basis!

Last April all those taxes amounted to 93 centavos/kwhr. It used to be about 70 centavos at the start of the Arroyo regime’s Epira.

Arroyo can easily reduce our electric bill if she wants to by removing the VAT which was not there before 2006.


* From:  Tax every step of the way to your home




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