PARE to DOE: reform existing subsidy mechanisms

 

June 13, 2025 – Following the Department of Energy's (DOE) statement deeming electricity subsidies as "impossible," Partners for Affordable and Reliable Energy (PARE) urges the government to reassess and reform existing subsidy mechanisms to provide immediate relief to Filipino consumers.

"Declaring subsidies impossible overlooks the potential of optimizing current programs and removing burdensome charges that inflate electricity costs," said Nic Satur Jr., Chief Advocacy Officer of PARE. "Instead of dismissing subsidies outright, the government should focus on practical reforms that can alleviate the financial strain on consumers."

PARE highlights that while large-scale subsidies may require extensive legislative processes, there are actionable steps that can be taken promptly:

• Remove the 12% Value-Added Tax (VAT) on Electricity: Eliminating VAT on electricity can significantly reduce monthly bills for all consumers, especially low-income households.

• Enhance the Lifeline Rate Subsidy: Currently, the lifeline rate benefits consumers using up to 100 kWh per month. PARE advocates extending this to those consuming up to 200 kWh, ensuring broader support for indigent households.

• Reform the Senior Citizen Discount: By making the senior citizen discount indigency-based, the subsidy can be more effectively targeted to those in genuine need, reducing redundancy and leakage.

These recommendations align with findings from the Philippine Institute for Development Studies (PIDS), which identified inefficiencies in the current subsidy system, including overlapping benefits and the application of VAT on subsidies, effectively taxing the assistance provided to consumers.

"We have existing frameworks like the Assistance to Individuals in Crisis Situations (AICS), Medical Assistance for Indigent Patients (MAIP), and Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) that demonstrate the government's capacity to provide targeted assistance,so why is it impossible for electricity consumers" Satur added. "It's just a matter of political will and administrative efficiency."

PARE calls on the DOE, Energy Regulatory Commission (ERC), and National Electrification Administration (NEA) to collaborate on implementing these reforms. By optimizing current systems and removing unnecessary charges, the government can provide immediate relief to consumers without the need for new legislation.

PARE urges all regulators—DOE, ERC, and NEA—to enforce stricter oversight of electric cooperatives and distribution utilities. A well-managed, transparent, and service-oriented co-op can secure better Power Supply Agreements (PSAs), which in turn result in lower generation rates for consumers. Efficiency at the distribution level is itself a form of subsidy—consumers benefit from better pricing and fewer losses.

"The goal should be to make electricity affordable and accessible to all Filipinos," Satur concluded. "Practical reforms, not dismissive declarations, will achieve this."

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