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Solons move to reduce high electricity rates

MANILA, Philippines - Two lawmakers today filed a bill seeking to reduce the high rates of electricity in the country.

Cagayan de Oro City Rep. Rufus Rodriguez and Abante Mindanao Rep. Maximo Rodriguez filed House Bill 4501, which seeks to remove disparities in tax and royalty treatment between indigenous energy resources and imported fuels, which is not covered by the Renewable Energy Act of 2008.

"If taxes and royalties were to be removed on both indigenous and imported fuels, the rates of electricity generated using indigenous energy resources would be substantially lower," the Cagayan de Oro congressman said.

He added: "Instead of enjoying lower electricity rates, the Filipino is effectively being penalized for utilizing his own energy resources. It's about time that the Filipino people should fully benefit from their energy resources..."

The congressman said that government royalties or share from indigenous natural gas rates at P1.46/kWh, which was five to eight times more than the taxes imposed on imported fuels such as coal (P0.17/kWh), oil (P0.20/kWh) and liquefied natural gas (P0.29/kWh).

Rodriguez said between indigenous petroleum, which is intensively used for generating electricity and other local extractive industries such as mining, the former is being subjected to royalties of about 60% while the latter enjoys a much lower tax rate of 3%.

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He said that there is a need to look into alternative sources of energy in order to lessen the county's dependence on oil due to the incessant increase in gas and diesel prices imposed by oil companies for the first two months and a half of 2011 in the country.

Rodriguez said while the country is endowed with alternative or indigenous energy resources that are relatively abundant, certain government impositions associated with making available such resources for electricity generation are more burdensome than those applied on imported fuels such that rates of electricity generated using indigenous energy resources are rendered artificially high.

"This will result in reducing the commodity prices of these energy resources as they are utilized for electricity generation, which reduction will translate into lower electricity rates to the Filipino consumers," Rodriguez said.

Under the measure to be known as the "Electricity Rate Reduction Act of 2011," the government share shall be utilized to reduce the commodity price of the indigenous energy resources.

"This will reduce the commodity price of the indigenous energy resources sold by a service contractor for generation of electricity such that the government share is effectively reduced to three percent (3%) of the net proceeds from the sale of the energy resource over the life of the relevant service contract," Rodriguez said.

He said that under the bill, the commodity price reduction should be fully reflected as a reduction in the price of electricity produced by generation companies utilizing the indigenous energy resource. It shall be subject to annual adjustment or reconciliation to ensure that such reduction shall be revenue-neutral to the service contractor.

The bill provides that any distribution utility obtaining supply from said generation company shall pass on the full reduction in electricity price to its end-user customers, thereby lowering the rates of electricity.

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