Enrile insists: Power reform bills remain LEDAC priorities

Senate President Juan Ponce Enrile came out strongly today to clarify that Senate Bills 3147 and 3148, or the Uniform Franchise Tax Act and the Electricity Rate Reduction Act, respectively, remained to be priority legislative measures after last week’s Legislative-Executive development Council (LEDAC) meeting. Enrile debunked as inaccurate earlier news reports indicating that he has, in fact, agreed to the deferment of the twin power reform bills he has authored. “Nothing can be farther from the truth, I shall never agree to the deferment of these twin bills which I know are critically needed not only to provide much-needed economic relief to electricity consumers, but more importantly, to serve as an economic stimulus that will make our industries more competitive during these very trying times.”

“The LEDAC remains committed to the enactment of Senate Bills 3147 and 3148 into law before the year ends,” said Enrile in a statement. Representative Exequiel B. Javier, Chair of the House Committee on Ways and Means, shares the Senate President’s advocacy and has, in fact, set into motion the House version of Enrile’s proposed bills. House Speaker Prospero C. Nograles also confirmed this by saying that he will “work for the bills’ passage” noting that these are already in the pipeline.

The Senate Leader also clarified that discussions on the possible deferment of his Senate bills were not broached by President Gloria Arroyo, as earlier reported, but only by Finance Secretary Margarito Teves and Energy Secretary Angelo Reyes. Enrile clarified, however, that all the concerns raised by Secretaries Teves and Reyes during the LEDAC have long been addressed in the deliberations before the Senate Committee on Energy. “The Senate Committee on Energy has established that the Department of Energy’s claim that the impact of the power reform bills will not significantly impact on the industrial sector is inaccurate and based on erroneous data. The Department of Finance, on the other hand, will oppose any legislative measures that will in anyway reduce existing government revenue sources.”

Enrile stressed that the power reform bills will directly result in significant power cost reduction which will range from P1.34-P2.00 per kWh for business or industrial users, and at least P1.00 per kWh for residential consumers.

Enrile’s power reform bills have earned multi-sectoral support. The removal of excessive taxes on electricity consumption has been consistently advocated by the Gabriela Women’s Party and the National Association of Electricity Consumers for Reform or Nasecore.

Other business groups have been pushing for immediate government action on Enrile’s power reform bills. Philippine Chamber of Commerce and Industry (PCCI) President Edgardo Lacson has expressed particular support for Senate Bill 3148 which he said will enhance the competitiveness of business enterprises. Lacson expressed optimism that the proposed bills will be passed, saying that “we will make a last appeal to the President [Arroyo]”. The PCCI, together with the joint Foreign Chambers, the Philippine Exporters Confederation and the Employers’ Confederation of the Philippines have previously presented to the LEDAC a list of policy recommendations for immediate adoption that included Senate Bill Nos. 3147 and 3148.

In a separate statement, the Semiconductors and Electronics Industry of the Philippines, Inc. (SEIPI) urged President Arroyo to certify the power reform bills as priority bills to ensure immediate passage. “We hope that Malacañang and Congress will certify these proposed measures as priority bills for power rates in the country to be lowered and to result in making our industries more competitive against neighboring Asian countries,” SEIPI President Ernie Santiago stated.

Public clamor for passage of power reform bills escalates

Malacañang urged to certify the proposed measures as priority bills

The global financial crisis is already on a downturn, but not after leaving the local economy weak, with the country’s gross domestic product or GDP registering almost nil year-on-year growth at 0.4 percent, while per capita GDP declined by 1.5 percent.

A frail and volatile economy coupled with the high prices of goods and services remain as major threats to economic recovery, with exorbitant electricity prices in the country – one of the highest in Asia, being cited as one of the major roadblocks.

Addressing the heightened clamor for lower electricity rates, legislators have recently been proactively crafting measures to ease the burden of high power costs in the country.

Of all the proposed measures, Senate Bills 3147 and 3148 of Senate President Juan Ponce Enrile are the most prominent. Supporters of the twin power measures are urging Malacañang to certify these as priority bills to ensure speedy deliberation, passage and enactment into law.

Enrile’s bills and its counterparts in the Lower House, House Bills 6208 and 6207, bravely ask for a change in government’s treatment of public service, including services provided by public utilities, as major source of revenue. In the case of the power sector, the bills seek to reduce the layers of taxes imposed on this industry to lower electricity prices.
Once passed, the twin bills stand to grant the much-sought economic relief of electricity consumers, especially the power intensive industries. According to Enrile, businesses and industries will have their power costs reduced from a low of P1.34 to a high of P2, while electric bills of residential consumers will go down by P1 at the very least.

Business groups openly support SB 3148, in particular, which aims to reduce the royalties collected by government from indigenous energy sources from 60% to 3% of net proceeds from the sale of such energy sources to lower electricity rates.
In a statement, Philippine Chamber of Commerce and Industry (PCCI) President Edgardo G. Lacson said that they support the redirection of government share of royalty for the reduction in electricity rates to end-users as stipulated in SB 3148. If passed, PCCI also hopes to see an adequate percentage of the fund from the royalties supporting energy efficiency initiatives to enhance the competitiveness of business enterprises.

Accounting for about two-thirds of total Philippine exports, the Semiconductors and Electronics Industry in the Philippines (SEIPI) has also been asking government to reduce the royalties in indigenous energy sources, like the natural gas of Malampaya, so that foreign investors will not transfer to other ASEAN countries which have more competitive power rates.

SEIPI President Ernie Santiago urged Malacanang to certify Enrile’s twin power bills as priority bills to ensure immediate passage.

“We hope that Malacanang and Congress will certify these proposed measures as priority bills so that the power rates in the country will be lowered, thus making our industries more competitive against neighboring Asian countries,” Santiago said.

The Foreign Chambers of Commerce through its chairman, Petteri Makitalo, likewise supports measures that will bring down electricity rates in the country. Makitalo says, “Aside from bringing down taxes which only get passed on to consumers, government should also remove barriers to entry for those who wish to harness alternative sources of energy.”

At the consumer front, groups such as National Association of Electricity Consumers for Reform (Nasecore) and Gabriela Women’s Party have been calling for the removal of the excessive taxes on electricity to ease the burden of residential consumers.

About half of Filipino families have reduced electric consumption in the face of double-digit inflation rates for basic necessities, according to Pulse Asia July 2008 Nationwide Survey on Coping with Double-Digit Inflation Rates.

“Malacañang can very well reduce our electric bills significantly and give much needed respite by removing taxes imposed on the power industry. Removing the VAT on electricity is by itself a form of direct subsidy to consumers,” said Gabriela Representative Liza Maza in a prior statement.

For his part, Nasecore President Pete Ilagan said, “Electricity costs would be lower if Enrile’s power reform bills are passed. The lower costs will be reflected in our monthly bills.”

Currently, government is charging power utility firms with a 12% value added tax (VAT) on top of a 32% corporate income tax, and a local franchise tax imposed on their gross receipts which they simply pass on as additional charges to consumers.

Under SB 3147, government will instead charge a uniform 3% franchise tax on the distribution income of distribution utilities in lieu of all national and local taxes.

Enrile said that both power reform bills will serve as an economic stimulus which will not only make industries more competitive, but will also contribute to more purchasing power to the consuming public.

The call for lower electricity cost has even spread into cyberspace. In a comment in the blogsite, www.murangkuryenteparasapilipino.wordpress.com, poster Jimmy Peña said, “Good news ito sa lahat ng mga Pilipino dahil malaking tulong ‘to lalo na sa ordinayong tao! Pag naisabatas ito, siguradong giginhawa tayong lahat. (This is good news to all Filipinos because it will be a big help especially to ordinary citizens. If the bills will have been passed, everybody will surely benefit from it.)

It also found its way into social networking sites such as Facebook where consumers have created a Murang kuryente para sa Pilipino page, where about 500 users have signed up as members.

Paradigm shift on taxation of DUs, gencos needed – Enrile

Paradigm shift on taxation of DUs, gencos needed – Enrile
Gov’t asked to treat electricity as a public service, not as a major revenue source

The Philippine government earns billions and billions of pesos from taxing power utility firms as well as power generation companies when this should not be the case.

According to Senate President Juan Ponce Enrile, “All over the world, public utilities are never sources of revenues for government coffers. In the Philippines, however, the government imposes taxes on public utility firms which are so burdensome that utility firms have no choice but to pass these on to consumers.”

The senator stressed that given the hard times and the decreasing competitiveness of Philippine industries, it is high time that the Philippines emulate other more progressive countries in their treatment of basic needs such as electricity as a public service – not as a major source of revenues.

Consumer group supports passage of power reform bills

A consumer group has expressed its support for the immediate passage of twin power reform bills, saying it will have a positive impact on consumers’ electricity bills.

Senate Bills 3147 and 3148, authored by Senator Juan Ponce Enrile, aim to reduce electricity costs in the country by lowering the taxes levied to electric utilities and reducing the royalties collected by government from the development, exploration, and utilization of indigenous energy sources, respectively.

Experts say that electricity cost in the Philippines is one of the highest in Asia, second only to Japan.

“We support the twin bills’ passage. Mababawasan na ang binabayaran natin sa kuryente kapag naipasa ang panukalang ito (Electricity costs would be lower if these bills are passed),” said National Association of Electricity Consumers for Reform (Nasecore) President Pete Ilagan.

“The lower costs will be reflected in our monthly bills,” he added. According to Enrile, SB 3147 proposes a 3% franchise tax on distribution utilities’ gross distribution income in lieu of all national and local taxes. Consumers will no longer shoulder the burden of paying for additional pass on charges as a result of the imposition of value-added tax, corporate income tax and local franchise tax in the current system.

SB 3148, meanwhile, would reduce government royalties to lower electricity rates. With the passage of the two bills, consumers would be able to save “at least one peso per kilowatt-hour across the board, nationwide,” according to Enrile.

“Say, if a family consumes 200 kwh per month, that would translate to a savings of P200.00. It could mean at least 5 more kilos of rice, or at least 16 cans of sardines,” Enrile added.

“Sa ibang bansa, serbisyo publiko ang kuryente. Sa atin, hindi. Kaya pro-consumer itong mga bills na ito, (In other countries, electricity is a public service. This is not the case in the Philippines. So these bills are pro-consumer)” Ilagan added.

Enrile echoed Ilagan’s statements. According to the senator, “Allover the world, public utilities are never sources of revenue of government. Public service yon, serbisyo publiko, kaya kumokolekta siya ng buwis sa taong-bayan para you can perform that public service to the people. “

“The government now is treating distribution utilities as sellers of goods and piling up taxes on them. But they are not. The distribution utility should not be a major source of revenue for the government. The distribution of power is a public service because it is really the function of government to provide for this facility.”

Senator Enrile also welcomed the consumer group’s show of support, saying, “The show of support is a big boost for the passage of both bills. This shows that consumers are united in clamoring for lower electricity costs in the country.”

“I hope that these bills would be passed without any problems and before Congress goes into recess,” Enrile added.

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Business groups call for lower electricity costs

Lower RP power rates to be competitive with ASEAN countries – SEIPI, FCCP

Currently recuperating from the effects of the recent onslaught of the global financial crisis, the country’s electronics and semiconductors industry is now preparing for an upturn.

Semiconductors and electronics Industries in the Philippines, Incorporated (SEIPI) has held that all economic indicators point to a better market starting in the second quarter, as the industry had already hit bottom during the first quarter, and demand has started to pick up since March of this year.

According to SEIPI President Ernie Santiago, “We are posting month-on-month improvement in export performance. We have seen the bottom of the ocean, so to speak, and there’s no way but up.”

Enrile pushes for passage of twin bills lowering electricity costs

Enrile pushes for passage of twin bills lowering electricity costs
Senator says consumer savings from the proposed measures should be treated as stimulus package

Power reform bills pending in the Senate stand to grant the much-sought economic relief  of electricity consumers.

This is what Senate President Juan Ponce Enrile, principal author of Senate bills (SB) 3147 and 3148, has been reiterating in an effort to drum up support for the power reform bills currently pending at the committee level. These twin bills intend to lower power costs in the country, one of the highest in Asia, by reducing government taxes and royalties on distribution utilities and power generation companies, respectively.