ERC supports suspendsion of fuel excise tax 

THE Energy Regulatory Commission (ERC) is supporting the proposal to suspend fuel excise tax that, its chief said, could immediately and effectively bring down power rates, according to a report by BusinessMirror.

ERC Chairman Agnes VST Devanadera, who announced that her term will expire on July 10 this year, told reporters in a news briefing that the suspension of excise tax on coal and petroleum products can be immediately felt by consumers, and with the least impact to stakeholders other than electricity consumers.

Devanadera explained that the current generation rate of the Manila Electric Co. (Meralco) due to the increasing coal and fuel prices is at P5.8724 per kilowatt hour (kWh). Prior to implementation of the next excise tax rate under Republic Act 10963 (Tax Reform for Acceleration and Inclusion, or Train, law), the generation rate is P5.8623/kWh.

If excise tax rate under the TRAIN Law will be temporarily suspended, the rate reduction that can be felt will be at P0.0101, the ERC official said.

Meanwhile, for missionary areas which are considered the poorest of the poor, where 100 percent of its power supply is coming from diesel or bunker fired power plant, the impact of the excise tax pursuant to the TRAIN LAW is significant.

It shows that the P1.50/kWh will be reduced in the generation rate if the P6/liter excise tax is removed. This, however, will be seen as a reduction in subsidy since customers in the missionary areas pay a subsidized generation charge (SAGR) and the difference in the actual cost is source through the “universal charge.”

The suspension of excise taxes will likewise have an impact on the transportation sector that rely 100-percent on fuel products.