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 consumers 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.
 
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 stand of not paying for undelivered power eventually led to the disconnection of his electricity service.
On the day of his death, Ka Bel would have had filed a bill in Congress to remove the value added tax (VAT) on electric power, which accounts for a little more than 10% of our electric bill.
As electricity rates rise amid the already high cost of food and fuel, government's solution is an Arroyo take-over of Meralco and the acceleration of Napocor's privatization. But will these solutions really stop ever increasing electricity rates?
Half of our electric bill is the generation rate, where part of the PPA Ka Bel refused to pay was hidden. That part includes take-or-pay 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 provisions account for more than 15% 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 in the part of the distributor, their in-house use of electricity and pilferages. Why are we paying for pilferage when any violator that will be caught is already 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 would amount to around 200 billion pesos will be collected from consumers.
All these charges add up to around 40 percent of our electricity bills. If you would 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 take over of Meralco, government could have immediately reduced our bill to half by removing the VAT and government taxes on power, the systems loss and the renegotiating to remove the take-or-pay provisions in IPP contracts.
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 passed during her presidency, consumers seem to be the perpetual milking cow of the government, distribution utilities, Napocor and independent power producers. Under government's plan to accelerate the privatization of Napocor, we can only expect the acceleration of rate increases as consumers absorb the losses incurred by these power industry players.
 
In addition, consumers must not 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 electricity rates can be realized if laws such as the EPIRA that are biased against consumers would be scrapped and basic utilities like electricity should be made accessible and cheap to the public. We cannot have band-aid solutions that only provide brownie points to government but will burden the people in the long run.