ESTIMATING ELECTRICITY PRICE HIKES RESULTING FROM TRAIN
TRAIN 1 made a big mistake of raising the cost of energy in the country.
Electricity and energy means development. So an increased electricity supply at a lower, more stable, and more competitive price results in increased development.
Increased development means more businesses and job creation and less unemployment and poverty.
As a result, it is anti-development to impose new or higher taxes that will make electricity prices more expensive.
The new tax law called Tax Reform for Acceleration and Inclusiveness ( TRAIN) did just that.
It imposed new taxes or raised existing taxes on oil products, coal, and electricity transmission. But TRAIN played favoritism by exempting from tax hikes natural gas and intermittent energy like wind and solar.
The Philippines inflation rate jumped to 4% in January 2018 from 3.3% in November-December 2017. Other Asian countries experienced flat or lower inflation last month. Why?
The most proximate explanation is the TRAIN law, even if various pass-through costs have yet to take effect. For instance, the hikes in coal tax, bunker fuel tax and VAT on transmission charge will be felt starting February billing. The expected inflationary pressure especially for oil price hikes contributed to this situation.
The table below is an attempt at quantifying the projected electricity price hikes because of TRAIN.
These estimates are made on certain assumptions that are based on available data. Changes in assumptions and more comprehensive, national data will change the results, upward or downward but the numbers will not be significant.
Based on these estimates, paying an extra 14 centavos/kWh this year, 21 centavos/kWh in 2019, and 27 centavos/kWh in 2020 might appear small for those consuming only 200 kWh/month. This consumption level implies that a household doesn’t have any aircon but maintains a small refrigerator and a few electric lights may have to pay an extra P28/month, P42/ month and P54/ month in 2018, 2019, and 2020, respectively.
But that is only for direct household electricity consumption. People who live in those small houses may work and/or purchase services in factories, schools, and universities, shops and malls, hotels and restaurants, hospitals and airports, etc.