Press Release
July 31, 2009

ENRILE PUSHES FOR BILLS LOWERING ELECTRICITY COSTS

CLARK FIELD, Pampanga, July 31 - Senate President Juan Ponce Enrile today pushed for the enactment of two Senate bills sponsored by him which, he said, would essentially cut down the cost of electricity, benefiting industries, commercial establishments and individual consumers.

Addressing members of the Semi-Conductor and Electronics Industries of the Philippines at the Holiday Inn here, Enrile pointed out that the existence of electronics and other export industries in the Philippines are being threatened by the global economic crisis.

"The immense contribution of the electronics industry to the Philippine economy is underscored by its registered annual investment of over one billion US dollars. Moreover, it directly employs almost half a million Filipino engineers, technicians and operators," Enrile said.

"Given the alarming developments in the global economic arena, it is imperative for the Philippine government to do everything possible to shield our people from the crisis. The loss of jobs means more people going hungry, homeless, socially and financially insecure."

Hence, he said, he is now pressing on the immediate passage of his "twin power rate reduction bills.

The first is Senate Bill No. 3147 which seeks to revert to the old system of imposing a franchise tax on the distribution income of power distribution utilities, including Meralco and the electric cooperatives, and other distribution companies all over the country. The other is Senate Bill No. 3282, which is entitled the "Electricity Rate Reduction Act of 2009.

SB 3147 reverts back to the old system where a uniform franchise tax of 3% is imposed on distribution utilities.

"I find this old system more manageable, fair, and transparent as there will no longer be any suspicion that the utilities' income taxes and the other imposts that they are supposed to pay are being passed on to the consumers. The franchise tax is also in keeping with the principle that public utilities ought not and must not be used as sources of public revenue as these public utilities render public services to the taxpayers," Enrile said.

"We have already adopted the franchise tax regime for the private concessionaire of Transco. We must do the same for the distribution utilities. In fact, I would go even further and apply the same policy on other public utilities such as water."

Senate Bill No. 3282, on the other hand, entitled the "Electricity Rate Reduction Act of 2009," will grant a significant power cost reduction mechanism that will be made available immediately, said Enrile.

The bill seeks to reduce the share of the government from the net proceeds derived from the sale of indigenous energy resource from the present sixty percent (60%) to three percent (3%).

"I have always underscored the fact that lower electric power rates will spur development as well as ease the financial burden of Filipino consumers and entice foreign investors to the country," Enrile said.

He recalled that in 2001 he was the only one who voted against the Electric Power Industry Reform Act or the EPIRA because he was convinced then that it could not deliver its objective which is to lower the rates of electricity. The Purchase Power Adjustment Cost or PPA "is an additional and unnecessary burden imposed on our people."

The bill was the first measure approved on third reading by the Senate last week, upon its resumption for the Third Regular Session.

He pointed out that imported coal and crude oil used for power generation cost electric consumers no more than P0.22/kWh. The government royalty on natural gas that is produced from Philippine indigenous sources and used for generating electricity, on the other hand, costs domestic electric consumers P1.79/kWh, or eight times higher than imported fuel.

"This disparity has effectively made a local energy resource that is friendlier to the environment much more expensive than imported fuel sources scientifically associated with the problem of global warming. SB No. 3282 represents a most significant step towards correcting this anomaly."

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