BY REGINA BENGCO

PRESIDENT Arroyo yesterday ordered the energy department to look into the possibility of giving value-added tax (VAT) reduction coupons to the lowest electricity consumers for refund by the government.

Arroyo, at the closing ceremony of the Energy Summit, said the scheme is better than a VAT reduction on power which she said would require legislation.

She said the refunds would come from government shares in Malampaya and excess profits in the privatization of the National Power Corp. (Napocor) and the National Transmission Corp. (Transco). She said the scheme would be implemented by Transco and the Philippine National Oil Co.-Exploration Corp.

She said government is getting a "windfall" from privatization efforts which would be used to subsidize power costs.

To further lower the cost of electricity especially in the Luzon Urban Beltway, Arroyo ordered the trade department to lodge petitions before the Energy Regulatory Commission to compel the Manila Electric Co. (Meralco) to lower its rates.

She ordered Napocor to charge Meralco the same rate it is charging electric cooperatives in Luzon. She said Meralco buys 45 percent from Napocor, 45 percent from its independent power plants, and 10 percent from the Wholesale Electricity Spot Market (WESM).

She said Meralco buys electricity from Napocor and WESM at peak hours at P6-P10 per kilowatt-hour but Napocor sells to Luzon electric cooperatives at P4.11 kwh if they buy 100 percent from Napocor.

Arroyo ordered the trade department’s Bureau of Consumer Protection to ask the ERC to enjoin Meralco not to buy from WESM at peak hours so it would buy from Napocor at a lower price.

She also told the bureau to ask the ERC to ensure that charges to industrial, residential, and commercial users are distributed equally. She said the consumer and industry groups and the DTI could also ask the ERC to prohibit Meralco from charging systems losses separately and to make Meralco stick to the 12 percent rate of return instead of the current 16 percent.

She also asked private generating companies and distribution utilities to cooperate in finding solutions on how to implement the open access scheme without amending the provision in the Electric Power Industry Reform Act which provides that open access could be implemented only if 70 percent of Napocor’s generating capacity has been privatized.

She said the private sector has expressed willingness for the early implementation of open access even without the 70 percent privatization requirement. Only 42 percent of Napocor’s generating capacity has been sold.

She also ordered the science department’s Philippine Council for Industrial and Energy Research and Development to concentrate on energy development programs.

The President directed that assistance be given to producers of coco biodiesel in terms of finding adequate coconut oil supply. She said the agriculture department should plant more coconuts in Luzon.