Power rates could increase due to rising coal prices


Electricity rates may continue to increase as an effect of the continuous rise of international coal prices.

Estimates from the Philippine Independent Power Producers Association (PIPPA) showed that the effect on the fuel price alone may reach Php9 per kilowatt-hour based on the current price of coal, which is at $446 (around Php23,000) per ton. 

To address the situation, the Department of Energy (DOE) met with power generation companies (gencos) on Friday to discuss the impact of international coal prices and address the possible increase in power rates. 

During the meeting, PIPPA member-gencos have asked the DOE to explore the possibility of suspending excise and value-added taxes (VAT) on oil, coal, and other electricity-related products

The Department of Finance had rejected calls for the suspension of the fuel excise tax, arguing that it could deplete the government’s funds for its COVID-19 response. 

Gencos have also suggested the possibility of suspending the secondary price cap in the Wholesale Electricity Spot Market. 

Apart from the suspension of rates, PIPPA member-gencos have also called for the government to issue subsidies for consumers through the Malampaya Fund

The DOE was also asked to ease up the 30-day coal inventory requirement to allow gencos to “better manage the scheduling of their coal deliveries.” 

Energy Sec. Alfonso Cusi said that he will raise PIPPA’s recommendations on VAT exemption and excise tax suspension in the meeting of the National Economic Development Authority-Economic Development Committee set for today, March 7. Cusi has also asked PIPPA members to submit a formal document on their price simulations, as well as their recommendations to help address the anticipated price increases. 

The gencos also took the opportunity to push for the fast-tracking of the Mindanao-Visayas Interconnection Project (MVIP), which the National Grid Corporation of the Philippines had said would be completed this month.

Cusi also met with downstream oil industry players on Friday ahead of Tuesday’s big-time oil price hike to come up with a collective strategy to address the continuing increase in pump prices.