Power industry warns of further rise in electricity rates

Power industry warns of further rise in electricity rates

The country’s electricity rates, already one of the highest in Southeast Asia, may rise further in the days to come.

The president of the Philippine Independent Power Producers Association (PIPPA) Ernesto B. Pantangco warned of this grim scenario once the government withdraws its tax incentives.

Testifying before the Senate ways and means committee during a hearing to harmonize 180 tax incentive-related laws, Pantangco said the country’s residential rates are already the highest in Asia while the industrial rates are second to the highest in Asia.

He warned that any deletion of the incentives granted would further increase the power rates of the country. He said that the incentives granted with respect to the BOI (Board of Investments) and RE (Renewable Energy) Act should be retained. PIPPA will pass on whatever savings they get as a result of these incentives. In the case of the RE Act, the incentives granted enables the IPPs (independent power producers) to pass on approximately P0.16 per kilowatt hour (KWH) from whatever is the proposed tariff.. He further added that newly built coal-fired power plants, the BOI incentives of income tax holiday (ITH), tax and duty- free importations result in savings of P0.27 kwh are passed on by the IPPs to consumers..

Sen. Ralph G. Recto, committee chairman said his committee will study Pantangco’s position because he wanted to know whether the supposed benefit to be enjoyed by consumers if incentives are not withdrawn represents additional profits for the IPPs. He added that the fiscal incentive program had indeed perked up the economy but the tax holiday has resulted in an annual revenue loss of P200 billion to P400 billion a year.

Kim Henares, Bureau of Internal Revenue (BIR) Commissioner, told the Recto committee the BIR agrees with the Department of Finance’s (DOF) proposal to harmonize the current tax incentive holiday.

Henares said the laws that grant tax exemption has become very unruly to manage as the government doesn’t know for certain how much revenue it has lost.