"As far as impact of VAT on fuel and power, we don’t want to make announcement on actual, unless we are near implementation, otherwise it might be off the mark," Energy Secretary Raphael P.M. Lotilla said.

But what he can say at this point is that the energy department’s initial calculation on VAT impact in electricity rates could be around 1.8 percent; depending on how well they can implement the proposed mitigating measures.

The energy chief noted that one area they are looking at is to pare down actual cost to consumers by adopting economic dispatch both of the National Power Corporation (NPC) plants and the contracted independent power producers of the Manila Electric Company.

"In power, right now it’s 1.8 percent increase, but we will see how to mitigate that in terms of dispatch mix of NPC and Meralco," Lotilla added.

Given that water level remains high at this period, he has hinted that higher dispatch of the hydro plants is among the measures being explored.

"Since water supply is still high in quantity, instead of spilling, we forego coal and replace by maximizing hydro," the energy secretary said, adding that talks are now ongoing between NPC and Meralco on possibly enforcing this strategy.

"More or less, they know the proposal so we hope this will lead to mitigate, after all it could just be temporary…I don’t think the rains will continue," he added.

At the same time, the energy department makes reference to the economic dispatch issued by the Energy Regulatory Commission; noting that this is one way of providing least cost power to consumers.

"We’ll validate the economic dispatch of the ERC up to what extent we can modify with the end objective of allowing consumers to get the best price," Lotilla noted.

On fuel, he said that discussions with economic manager are ongoing, including that of Bureau of Internal Revenue and Customs; on how to settle tax issues for imported alternative fuels, like ethanol.

It would be noted that in the past batch of importation made by the new oil industry players, there have been unresolved concerns on the imposition of the reduced tariff of 1.0percent and the prescribed 5centavo excise tax because the ethanol products brought in were in denatured form; which means that this can be diverted for other uses, aside from being a blend to gasoline products.

The existing measure on tariff reduction for alternative fuel, he said, only refers to pure ethanol, so there’s a gray area on the denatured product; because this can be devoted as raw material for food and not just fuel purposes. (MMV)