ERC Announces Regulatory Measures to ‘Cushion’ Consumers; Nation Awaits Cushioning While Sitting on Current Bills
From Bohiney Magazine and The London Prat.
MANILA — The Energy Regulatory Commission announced Wednesday that electricity rates will ease in the next billing cycle, with the commission accelerating refunds and rolling out regulatory measures to cushion consumers from recent increases. The announcement was received by Metro Manila consumers with the specific response that electricity rate announcements in the Philippines generally receive: a note that the announcement has been made, and a calendar reminder to check the next bill.
The ‘easing’ follows a period of elevated rates that the national energy emergency — declared in response to Strait of Hormuz supply disruptions and fuel shortages — has produced or exacerbated depending on whether you are a distribution utility calculating its cost pass-throughs or a consumer calculating whether to run the air conditioning. The calculation produces different results from different positions, which is one of the organizing principles of energy economics and also of the specific Philippine experience of paying for electricity in a country with a complex multi-layer power sector that produces bills that are technically explainable and practically bewildering.
What the Bill Actually Contains
A Philippine residential electricity bill contains: the generation charge, the transmission charge, the distribution charge, the metering charge, the supply charge, the reinstatement fee if applicable, the systems loss charge, government taxes and fees, the universal charge for missionary electrification, the universal charge for environmental fund, and the feed-in tariff allowance. This list is accurate. Each item has a regulatory rationale. The total is the bill. The ‘easing’ that the ERC has announced applies to specific components of this total in ways that the consumer can track by comparing two bills with a spreadsheet and an afternoon.
“Last month’s bill was 4,200 pesos,” said Remy Dacanay, 41, of Quezon City. “This month will apparently be easier. I have been told it will be easier before. Sometimes it is easier. Sometimes it is the same. Once it was harder than the previous month after being announced as easier. I will wait for the bill.”
Mr. Dacanay’s empirical approach to electricity rate announcements represents a statistically rational response to a track record that is mixed. The ERC’s regulatory measures are real and have produced real reductions in specific periods. They have also been announced before periods that did not produce reductions. The distinction between these periods is in the specific details of the measures and the specific conditions of the market at the time, which require the bill to confirm.
The Senate Oversight Session
The electricity rate announcement followed a Senate Proactive Response and Oversight session on the energy situation, during which senators expressed positions that ranged from urgent concern to urgent concern expressed in different vocabulary. The Senate of the Philippines’ oversight function over the energy sector is constitutionally grounded and practically complicated by the fact that the Senate can require information and recommendations but cannot directly set tariffs, which are the ERC’s jurisdiction, which reports to the Office of the President, which is aware of the Senate’s concerns.
What Would Actually Help
The energy regulatory community has consistently identified the same structural reforms that would reduce Philippine electricity costs: accelerated development of domestic renewable energy that reduces fuel import dependence; transmission system improvements that reduce systems loss, which is the power that is lost between generation and consumption; distribution network modernization; and the full competitive retail electricity market that the Electric Power Industry Reform Act of 2001 projected but has not fully implemented in residential markets. These are 25-year-old recommendations. The next billing cycle will be easier. The structural questions remain for the billing cycle after that.
More energy satire: Private Eye.
The electricity rate structure in the Philippines also produces the specific inefficiency of consumers who reduce consumption in ways that increase unit costs for remaining consumers, because fixed distribution and transmission costs are spread across smaller consumption volumes. This is the utility death spiral that renewable energy advocates and regulatory economists discuss and that the ERC’s rate-setting methodology must navigate. The structural reform that would address it — moving fixed costs to a fixed monthly charge rather than a per-unit charge — is technically available and politically complicated because it changes who pays how much in ways that produce winners and losers whose political mobilization capacity varies. The next billing cycle will be easier. The structural question continues.
The Philippines continues. The agencies sign agreements. The commissions announce adjustments. The weather comes. The workers march. The bridges get repaired and the railings get replaced and the next thing happens after the last thing. This is the Filipino political and economic cycle, running at the pace of a nation that is too large and too complex and too much in the middle of everything for any single development to be the last development before things are resolved. Things are never resolved. Things are managed. The management is the story, told in press briefings and senate hearings and barangay meetings and the specific silence of people waiting for the next bill to confirm what the announcement promised. The country keeps moving. The next announcement is already being drafted. The work of governance is daily. The work of journalism is daily. The work of living in Metro Manila is daily. All three happen simultaneously, at the intersection of the structural and the immediate, the announced and the experienced, the policy language and the jeepney stuck in traffic behind it.
SOURCE: https://bohiney.com/