Meralco, Gov’t Pocketed Billions from ‘System Loss’

Customers paid P84 billion for Meralco system loss from 2003-2007, gov’t gets P3.4 billion cut – POWER

MANILA — The consumer group People Opposed to Warrantless Electricity Rates (POWER) estimates that electricity customers have been paying P84.6 billion for Meralco systems losses from the period of 2003-2007.

It was in 2003 that electricity rates were unbundled and systems losses became apparent in the computations. By applying the VAT on power starting 2006, government also earned a hefty cut from the systems losses charge.

The systems loss charge is pegged at 70.55 centavos per kWh. If Meralco power sales from 2003-2007 is around 24 billion kWh a year, or 120 billion kWh in five years, that would mean customers have been paying a total of P84.6 billion in systems losses for the same period, according to the consumer group.

Systems losses include electricity lost due to pilferage as well as technical losses incurred in the delivery of electricity. Consumers have argued that such losses should not be passed on to consumers because these do not form part of electricity they consumed.

POWER also assailed the Value Added Tax being passed on to consumers. The group estimated that P3.46 billion has been collected by the Arroyo government in the form of VAT on systems losses in 2006 anfd 2007.

“If Meralco’s total sales from 2006 and 2007 would be around 51 billion kWh, that means systems losses Meralco collected P35.98 billion for that period. Since the VAT on systems losses is at 9.6034%, that would mean a VAT collection of P3.46 billion for the Arroyo government,” Power Convenor Engr. Ramon Ramirez said.

That VAT on power was only imposed starting 2006 yet it has resulted to windfall revenues for the Arroyo administration. POWER has argued that systems losses should not be subjected to value added tax because these do not form any part of electricity consumed, and are in fact losses sustained by the distribution firm. Meralco has agreed that systems losses should not be subjected to the VAT.

“If the VAT on systems loss is viewed as unjust from the very start, then consumers must be refunded the total VAT on systems loss that government has collected since 2006. That should be more than P3.46 billion by now,” Ramirez said.

“If systems losses are to be declared unjust, then Meralco consumers are also entitled to a refund of more than P84 billion,” he added. (Pinoypress.net)