Electricity is very vital in our lives. We get furious during power outages especially if it lasts for a day. Without electricity we can’s use our appliances which are supposed to make work and chores easy. Offices virtually shut down since computers cannot be operated and mobile phone users become anxious because they won’t be able to recharge their drained phone batteries. We have become so dependent upon electricity that we almost can’t live without it that is why production of electricity is such a lucrative industry. Since experts declared that human activities greatly contribute to the warming of the earth which has in turn triggered the much dreaded climate change, the international community has been pushing for “green” energy sources and for the world to lessen the use of fossil fuel. Countries passed legislations to hopefully counter the warming of the earth and reverse the effects of climate change. For its part, the Philippines in 2008 passed the Renewable Energy Act (R.A. 9513) which is aimed at enticing investors and developers to put up power plants utilising renewable energy sources. Can there be something wrong in a law which promotes the use of renewable energy sources?
Benefits for Developers
To entice the development of power plants using renewable energy sources, the RE Act has showered potential and existing developers of power plants with benefits. These benefits are the following among others:
(a) For the first seven years of its commercial operations, the duly registered RE developer shall be exempt from income taxes levied by the national government;
(b) within the first 10 years upon the issuance of a certification of an RE developer, the importation of machinery and equipment, and materials and parts thereof, including control and communication equipment, shall not be subject to tariff duties;
(c) any law to the contrary notwithstanding, realty and other taxes on civil works, equipment, machinery, and other improvements of a Registered RE Developer actually and exclusively used for RE facilities shall not exceed one and 1.5 percent of their original cost less accumulated normal depreciation or net book value;
The other benefits are on taxes and enumerating all of them here will take up much space but the point is, RE developers are being given benefits under RA 9513. It can be observed that most of these benefits are granted for a limited period of time to supposedly allow the developers to recover their expenses in putting up RE power plants. This law however slashed substantial benefit to local government units hosting the plants. The Local Government Code of 1991 gave local government units some benefits to compensate for the destruction and disruption brought about by the building of power plants. With the passage of the RA 9513, these benefits were dramatically diminished. The law in trying to encourage the putting up of RE plants, has given much benefits to companies at the great disadvantage of local government units.
The adverse effects of this law upon host communities will be given a more substantial discussion on the second part of this article.
