Sep 19, 2020

Removal of ‘UCME subsidy’ can increase power rates, PALECO says

He said that the removal of the UCME subsidy will bring “tremendous negative effects to the operations of island electric cooperatives” like PALECO. Rule 10 which particularly orders the “rationalization of tariffs and phase-out of UCME subsidy in missionary areas” will impact their cooperative.

The removal of the Universal Charge for Missionary Electrification (UCME) subsidy to more than 30 electric cooperatives in the country will bring negative effects to member-consumers, the Palawan Electric Cooperative (PALECO) said.

PALECO chair Jeffrey Tan-Endriga said electric cooperatives expressed their opposition to no avail to the Department of Energy’ (DOE) Circular No. 2019-01-0001 entitled “Prescribing the Omnibus Guidelines on Enhancing Off-grid Power Development and Operation”.

He said that the removal of the UCME subsidy will bring “tremendous negative effects to the operations of island electric cooperatives” like PALECO. Rule 10 which particularly orders the “rationalization of tariffs and phase-out of UCME subsidy in missionary areas” will impact their cooperative.

“Almost 36 [ang affected electric cooperatives], malaki ang impact nito, hindi lang sa Palawan bagkus sa buong bansa. Ang mga electric coop na deprive sa serbisyong kuryente ay entitled supposed to be sa ganitong subsidiya and yet mukhang hindi makatao ang ginagawang hakbang ng Department of Energy upang alisin ang subsidiya sa mga Small Power Utilities Group or SPUG area,” he said.

Under the Republic Act 9136 or Electric Power Industry Reform Act (EPIRA) on June 8, 2001, the law prescribed the UCME which institutionalized the provision of subsidies in areas not connected to the main grids.

This was done “so development and progress in these areas could happen”.

High electricity rates

Currently, the UCME subsidy to Small Power Utility Group (SPUG) areas is P0.1544 per kWh. If it is removed, Endriga said the generation charge will increase from the current P5.6404 per kWh to P10.1429 per kWh to as high as more than P37.0160 per kWh.

The removal of UCME and charging the True Cost Generation Rate (TCGR) would mean high electricity rates beyond the affordability of residential consumers.

The electric cooperative fears that this would likely result in bankruptcy and store closures in most small and medium industrial commercial establishments and other small businesses.

“In general, yong generation cost na sina-subsidize ng UCME before ay almost 40 percent. Ngayon ay hindi na, ang proposal ng DOE ay kailangan bayaran na ng buo ng mga kooperatiba na nandyan sa SPUG. Ito ay direktang apektado ang ating mga konsimidores, sinasabi natin na ito ay labas sa batas ng EPIRA,” he said.

“Dahil malinaw sa provision ng EPIRA na binibigyan ng ayuda ang mga hindi konektado sa backbone ng bansa, tayo iyon,” Endriga added.

Endriga said that Mindoro and Palawan have the largest part of the subsidy as these provinces also even cater to resorts.

The phase-out of UCME will not only affect member-consumers but also the entire Palaweños as the result might manifest into next-generation, Endriga stressed.

Effect to member-consumers

Acting general manager and project supervisor Engr. Nelson Lalas said that the current residential rate of P9 may increase to P13 kilowatt per hour if the plan of removing UCME will succeed.

“Ang epekto nito kung sakali ang subsidy ay mawala, meron itong karagdagan na P4.57 per kWh. Kung ang taripa natin ay P9 magdadagdag yan, so magiging P13.94 per kilowatt hour ang babayaran natin,” Lalas explained.

“Bakit tayo nagkaroon ng subsidy, ang reason talaga ay we are talking about the rural electrification, paano mapapunta ang tinatawag natin na industrialization kaya tinulungan itong mga island para lumago,” he added.

Lalas said that as PALECO is distributing diesel power, the removal of the subsidy will be greatly felt due to the expense of the power used.

“Kung titingnan natin ang UCME na ito, ang katunayan ang nagsu-subsidized dito ay itong Luzon pero the only purpose of this is to extend assistance sa mga island grid kasi kawawa talaga tayo,” he said.

No response yet from DOE

Endriga said that DOE has not yet responded to the appeal of PALECO and Philippine Rural Electric Cooperative Associations, Inc (PHILRECA).

He said their appeals started after the department circular was released in 2019.

Even the DOE has no response yet, Endriga said that PALECO needs to prepare for this possible result and said that the electric cooperative has no means to stop its effect which would manifest to the billing of member-consumers owners (MCOs).

“Sa ngayon wala pa sagot ang DOE pero kahit hindi pa sila sumasagot ay kailangan natin paghandaan ito. Sa tingin ko wala tayong ibang paraan na pagkunan ng pondo kasi una cash-flow [method] tayo, lahat ng expenses ay nanggagaling kung ilang porsyento lang ang kinikita ng ating kooperatiba,” he said.

“Ano pa man ang gastusin ay magmumula ito sa ating konsimidores, alam niyo naman na itong kooperatiba ay hindi mag-i-exist kung walang miyembro,” he added.

Share your vote!


How do you feel about this post?
  • Happy
  • Sad
  • Angry