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LEGAZPI
CITY, Dec. 3 (PNA) -- Electric consumers would be unburdened of paying
for system losses and Value Added Tax (VAT) charges by power utilities
once Congress passes two bills setting a cap on system losses and
removing the EVAT on system losses.
House
Bills (HB) 4838 and 4839 authored by Albay Rep. Al Francis Bichara
seeks to amend Sec. 43 of the “Electric Power Industry Reform Act of
2001” or Republic Act 9136 and Sec. 108 of the National Internal
Revenue Code, respectively.
The two bills have been submitted to the House Energy Committee for deliberation and endorsement.
Bichara,
vice chair of the House Energy Committee, said HB 4838 seeks to set a
cap on system losses which the Energy Regulatory Commission (ERC) may
impose, in order to alleviate the effects of increasing electricity
costs which have already reached monumental heights.
The
bill, once passed, would stop the unfair practice of distribution
utilities of passing administrative losses, including “own use” charges
to electric consumers, the Bicol solon pointed out.
Bichara
said “it is so unfair for electric consumers to pay for something that
the power utilities should have absorbed because of their inefficient
operations.”
One
of the main reasons for high electricity costs is the “system loss”
component which the distribution utilities pass on to their consumers.
Under
the present law, the ERC is given a free hand to determine the cap for
recoverable system losses. Until today, however, the ERC has not yet
issued a regulation setting the new cap, thus the high percentage of
recoverable rate has caused tremendous increase in electric costs.
The
cap provided for under the Anti-Electricity and Electric Transmission
Lines/Materials Pilferage Act imposes a recoverable rate of 9.5 percent
for private electric utilities, and 14 percent for rural electric
cooperatives.
For
this reason, irate consumers who are burdened by such system losses
deem it unfair for power utilities to charge them with losses which the
power utilities should absorb as part of doing business.
“Remove
administrative losses, including 'own use' charges of power
distributors, from the definition of system losses and we can see an
enormous relief for our electric consumers,” said Bichara.
Under
HB 4839 which seeks to amend Section 108 of the National Internal
Revenue Code, collection of VAT on system loss which is passed on by
distribution utilities to their consumers will be removed.
Bichara
said charging of EVAT on system loss is “unconscionable” since system
loss is a loss which arises from technical inefficiency and should not
be a VATable item because this does not form any part of electricity
consumed. (PNA)
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