Hontiveros: NGCP, private distribution utilities should cut WACC, eliminate VAT on system losses

Senator Risa Hontiveros on Tuesday, October 3 urged energy officials to implement game-changing reforms to reduce energy costs and alleviate the burden of electricity consumers.

For one, Hontiveros said the National Grid Corporation of the Philippines (NGCP) and other private distribution utilities' (PDUs) should reduce the Weighted Average Cost of Capital (WACC) and eliminate the value-added tax (VAT) imposed on system losses and lifeline subsidies, both of which are important steps to achieving lower electricity cost.

Hontiveros has consistently urged the Energy Regulatory Commission (ERC) to implement energy sector reforms, particularly addressing NGCP's high 15% WACC, which she said has led to unjustifiable expenditures.

“Kung magagawa agad ito, magiging maagang pamasko sa ating mga kababayan ang agarang pagbaba ng kuryente sa bansa (If they can do this immediately, it would be an early Christmas gift to our people),” Hontiveros said.

“We should start making significant strides towards reducing the burden on Filipino consumers when it comes to their electricity bills,” she further said.

At the same time, the senator stressed the need for the immediate rollout of renewable energy (RE) to ensure universal access to modern electricity services, especially in social housing, and rural electrification.

During the Senate’s deliberation on the proposed budget of the Department of Energy (DOE) for 2024, ERC Commissioner Monalisa Dimalanta confirmed the completion of the fourth regulatory reset process (RP) for the NGCP and plans to initiate the RP for PDUs.

This reset, according to Hontiveros, is expected to tame NGCP's high revenues, unconscionable payout of cash dividends for its shareholders, and rationalize unwarranted operational expenses.

Hontiveros noted that NGCP has a whopping ₱2.3 billion budget for Public Relations and Corporate Social Responsibility, ₱1.67 billion for Representation and Entertainment, and ₱1.1 billion for Advertising.

The senator also questioned NGCP’s staggering ₱8,729,751,797-billion budget  for Security and Janitorial services by NGCP.

“Marami bang dumi sa loob ng NGCP na kailangang linisin ng linisin bakit ganito kalaki ang budget sa janitorial services (Does NGCP has so much dirt that has to be cleaned up that’s why they need a huge budget for janitorial services?” Hontiveros pointed out.

“May malaking banta din ba sa security ng transmission system at bakit konsyumer ang dapat kumarga nito sa pamamagitan ng transmission charge at hindi ang malaking intelligence fund ng Pangulo at ng ating security forces (Is there also a big threat to the security of the transmission system and why should the consumer be the one to take responsibility for it through the transmission charge and not the big intelligence fund of the President and our security forces)?” she asked.