The proposal of National Power Corporation (NPC) to increase the cost of electricity by 37 centavos per kilowatt-hour (kwh) will translate into increased cost of production, prices and consumption expenditure of households.

Late last year, the NPC sought for a P2 increase on the cost of electricity but a temporary adjustment of 97.98 centavos per kwh was approved by the Energy Regulatory Commission (ERC). Now the NPC is seeking for an additional increase of 37 centavos on top of the 98 centavos per kwh granted last year.

The 37 centavos hike will increase the generation cost of PhP3.4236 by 10.81 percent, to Php3.7936 per kilowatt-hour.

Based on the exercise made by the National Statistical Coordination Board (NSCB) using the Input-Output Model this would result to the following:

1. The average price of all goods and services will increase by 0.36 percent. The highest changes in prices are expected in the manufacture of ice (except dry ice) which will increase by 2.10 percent, iron and steel by 1.03 percent, non-ferrous foundries by 0.81 percent and textile, spinning, weaving, texturizing & finishing by 0.76 percent.

2. The cost of production, which includes electricity as one of the initial and necessary inputs is expected to increase by 0.41 percent. As maybe expected, the industry sector posted the highest increment when it comes to production cost. And among the industry sectors, the utility and manufacturing sector registered the biggest increase of 0.15 and 0.14 percent, respectively. Meanwhile, next to industry, the services sector exhibited an increase of 0.09 percent with trade, private and government services posting the highest increase of 0.03, 0.02 and 0.01 percent, respectively. Agriculture, fishery and forestry is the least affected sector.

3. With the proposed additional 37 centavos, consumers will experience an increase of 0.31 percent on their cost of household expenditures. Expenditure on wholesale and retail trade, rice and corn milling, slaughtered and meatpacking and manufacturing of ready-made clothing are expected to increase by 0.04, 0.03, 0.01 and 0.01 percent, respectively.

The above computations are based on the assumption that the costs of distribution and transmission of electricity are not going to change as a result of the increase in generation cost.

For inquiries, please contact:

Ms. Vivian R. Ilarina, Ms. Marianne P. Abanilla or Ms. Eileen P. Capilit
Tel. No. (632) 896-5372
E-mail addresses vr.ilarina@nscb.gov.ph, mp.abanilla@nscb.gov.ph and ep.capilit@nscb.gov.ph