Palace wises up on Epira

Business Mirror

07 Jan 2014 

 

Written by Ed Javier

AT long last, the Aquino administration has announced that it is open to amending the Electric Power Industry Reform Act (Epira) of 2001. Like so many of the grand master plans initiated by the government, this controversial law has failed to live up to its hype.

Proponents of the comprehensive power plan touted that it would be the answer to all our energy problems. The privatization of the generation, transmission and distribution of power was hailed as the key to providing the public with a reliable, secure and affordable supply of electricity.

Crafted by some of our most well-meaning legislators, the Epira was created on the premise that privatizing each component of the power sector and giving free rein to market forces would compel firms to compete in terms of lower electricity prices.

However, even the staunchest defender of the basic economic law of supply and demand that governs price determination in the market would be hard-pressed to explain how the electrifying promise of the Epira had so hopelessly fizzled out.

We need not look very far for proof of this failed experiment. By golly, it stared at us in the face when we saw our electric bill last month! It’s good that the Supreme Court (SC) granted us a reprieve, albeit a little late, when it issued a temporary restraining order just before Christmas.

As mentioned in a previous column, the fact is that the Philippines now has the most expensive electricity in Asia. What other evidence do we need to prove that the Epira has been inutile in easing the financial burden of consumers?

According to a report by the Department of Energy (DOE), the residential rate for electricity in the Philippines reached $0.18 per kilowatt-hour (kWh) in 2011, or more than double the 2001 rate of $0.08 per kWh.

This should have set off alarm bells because the local rates surpassed the electricity rate for residential customers in Japan ($0.17 per kWh) and Singapore ($0.15 per kWh).

The research firm IBON Foundation said “rates for commercial industries were also higher at $0.13, compared [with] $0.12 per kWh in Japan and [about] $0.14 per kWh in Singapore.” That was two years ago. The rates would be even higher today.

The Philippines is in danger of losing the precious few potential investments from neighboring countries if we do not address crucial investor concerns, particularly high electricity rates.

That is why we heaved a sigh of relief when Communications Secretary Herminio B. Coloma Jr. announced over the weekend that President Aquino had called for a review of the existing provisions of the Epira.

It’s about time the President did something radical to help ease the burden of ordinary consumers. It seems the number of instances he’s heeded the call of his “bosses” has been too few and far in between.

Already, talks are rife that the country faces a looming power shortage in the coming summer months. This will have very serious consequences for our economy.

How the government responds to the energy situation in the coming weeks and months bears close watching. We hope that Energy Secretary Carlos Jericho Petilla can find concrete solutions to our power woes by listening to all stakeholders.

He should not be perceived as being too cozy with the big power corporations, like when he appeared to “coach” the Manila Electric Co. (Meralco) on what legal remedies it could pursue with regard to the SC decision barring the power-rate hike.

We do not want a repeat of the power problems that plagued the country during Tita Cory’s time, especially now that another Aquino is staying in Malacañang.

Now is the time for the government to rewrite the Epira and disprove what a former top energy official told us: That the law was written so as not to be understood.

Perhaps, this is the reason it is prone to abuse.

Grill power-generation companies

WHILE on this matter, we wonder why power-generation companies like First Gen Corp., owned by the Lopez family, are not the ones explaining the real reason behind the recent power-rate hike.

We understand that Meralco, the distributor of power and the last entity in the so-called supply chain, is bearing the brunt of consumer brickbats. However, we think it should not allow itself to be the punching bag of consumers.

Meralco admitted that its distribution charge did not increase, but that the power firms had raised their rates presumably because of the Malampaya plant shutdown, which forced them to source fuel from more expensive sources.

Meralco should stop treating First Gen with kid gloves, since Meralco is no longer controlled by the Lopez family. Incidentally, the chairman and chief executive officer of First Gen is Federico Lopez, son of the Lopez family patriarch Oscar Lopez.

The DOE and the Energy Regulatory Commission should also look into the profits raked in by the power companies and whether the latest rate hike is justified or not. Many suspect that there was collusion among the industry players. This is something we would like to find out.

The government should probe deeper into the excuse trotted by First Gen and other power companies that the rate increase was due to the shutdown of Malampaya. This should not be swallowed hook, line and sinker; otherwise, it might be construed as a classic case of regulatory capture.   source