DOE sets 2-day meet with stakeholders on Epira amendments

Business World Online

12 Feb 2014 

 

Written by Lenie Lectura

THE Department of Energy (DOE) will hold a two-day dialogue next week with various sectors to discuss what needs to be amended in the Electric Power Industry Reform Act (Epira) of 2001.

Distribution utilities (DUs) and power generators are expected to attend on February 17, the first day of the consultative dialogue on the Epira review.

On February 18 representatives from the business sector, labor and consumer groups, academe and non-governmental organizations will attend the sectoral discussion scheduled in the morning.

A plenary session follows in the afternoon where various groups will be given 30 minutes each to present their respective proposals and comments.

The DOE has already received various proposals to amend the law.

Energy Secretary Carlos Jericho L. Petilla said a report to be submitted to Congress is being prepared. “We need a week to analyze these [proposals] before we forward the report to Congress. We need to summarize all of these after the consultation is done,” Petilla said.

The Philippine Independent Power Producers Association (Pippa), in its comment, wants to require all DUs to contract 100 percent of their projected peak demand for the next three years. However, in the event the electric cooperatives and the DUs fail to meet their projections, in which their actual load is less than what they should contract, they should not be penalized.

Pippa, in its 11-page paper, is also pushing for the publication of annual planned outages by the system operator. “Currently, it is treated as a confidential information,” it said, although it pointed out that all DUs should “see when are the critical weeks and find cover during these periods.”

Meanwhile, the National Association of Electricity Consumers for Reforms (Nasecore) and the Freedom from Debt Coalition (FDC)  proposed to abolish the Wholesale Electricity Spot Market (WESM), saying the system failed to foster  competition and lower power rates.

“Seven years have passed, yet the operation of the market has not met its objective of providing the consumers the power of choice. What is needed is retail outlets for prepaid electricity, where prices can be competitive,” Nasecore said.

FDC said “often, if not most of the time,” electricity rates sold at WESM are way too expensive.

“Epira’s WESM is a contrived market. It must be abolished,” it said.

The World Bank, meanwhile, stressed the importance of “institutional strengthening of ERC” and, in particular, the economic regulatory skills of the agency needs to be built up.

“ERC, in general, is probably a bit too legalistic and process-oriented and not driven enough [nor capable enough] by core economic aspects,” World Bank senior energy specialist Alan Townsend said.

In order for the country to have one of East Asia’s most competitive generation markets, Townsend said the government should continue to be very cautious about making new public investments in generation. The government should also stop changing its policies with regard to provision of sovereign guarantees to power-generation investors. “These policies have provided clarity to the market and have been on balance strongly net positive for the country,” he added.

The Japan Bank for International Cooperation (JBIC), meanwhile, said a lead time is needed before the completion of power plants. It also said a detailed definition of an “imminent shortage” should be added.

“Power shortage should be avoided in its early stage. Once the crisis occurs, it’s too late to start building a power plant. At present, it’s not clear when and how this Section 71 could be applied,” JBIC said.

The Philippine Electricity Market Corp. (PEMC), meanwhile, wants to exempt all spot-market transactions from income tax and value-added tax.

PEMC, the operator of WESM, said pursuant to the objective of lowering the electricity rates for end users, “sales generated through WESM shall be exempted from income tax and value-added tax.”   source