MBC joins push for ‘full’ EPIRA

Business World Online
Posted on June 03, 2014 11:06:35 PM

THE MAKATI Business Club has backed other major business groups in their call for the “full implementation” of the Electric Power Industry Reform Act of 2001 (EPIRA) -- instead of amending the law -- to resolve the country’s energy woes.

“We support the view of our colleagues in the other business associations that, rather than opening up EPIRA now for amendments or changes, what is needed is the full implementation of its provisions as written in the law. While EPIRA is not perfect, we believe it provides a reasonable and generally acceptable regulatory framework,” the MBC yesterday said in a statement.

“Further, we believe that opening up EPIRA now for review and amendments will reinforce concerns about an unstable and unreliable regulatory framework, and these concerns may cause the deferment or cancellation of pending investments in the power sector,” the group added.

The MBC said changes can be made in the regulatory framework “to further promote and protect long-term consumer interests and encourage a more competitive market” without necessarily amending the EPIRA.

The group said the Energy department should avoid further delay in establishing a reserve market, in compliance with Section 37 of EPIRA, and execute the much delayed transfer of functions, assets, and liabilities of the market operator to an independent market operator.

The Energy Regulatory Commission (ERC) for its part, was urged to:

• complete the implementation of open access by June 30, 2015 to allow end-users with loads of 750 kilowatts (kW) and above to source their own power;

• further accelerate open access by allowing end-users with loads of 500 kW and above to source their own power by June 30, 2016;

• amend the Automatic Generation Rate Adjustment rules applicable to distribution utility generation charges;

• establish policy on the treatment of wholesale aggregators executing Power Supply Agreements with distribution utilities;

• maintain the “must offer rule”; and

• diligently monitor anti-competitive behavior and take action accordingly.

Power Sector Assets and Liabilities Management Corp. was also urged to privatize immediately the remaining government power assets and contracts to further encourage a competitive market.

Meanwhile, the National Grid Corp. of the Philippines was asked to publish regularly the annual planned outages of power plants, while National Transmission Corp. should accelerate the implementation of the Leyte-Mindanao underground cable interconnection, the MBC said.

“While the Philippines has enjoyed robust economic growth in the recent past, it is imperative that we improve our competitiveness through stable policy direction and by creating an environment that is conducive to investment,” the business group stated.

Last week, the Employers Confederation of the Philippines, Financial Executives Institute of the Philippines, Management Association of the Philippines and the American, European, Japanese and Korean chambers issued a joint statement saying: “EPIRA is not the problem; failure to implement it properly is.”

“The national government should announce now that EPIRA will not be amended, as amendment will not solve the present problem, and the government should increase dialogue with industry participants to reduce key uncertainties or changing material rules midstream,” the business groups said last week.

They also urged the Energy department to call a stakeholders meeting to address several issues, including but not limited to:

• Limits on open access;

• fiscal independence of the ERC;

• review of the Wholesale Electricity Spot Market (WESM) price cap;

• better monitoring and evaluation of grid operations;

• review of the electric cooperatives’ performance; and

• the merits of demand-side bidding in the WESM, as well as other revisions to the market rules.

The business groups also called on the government to declare power generation projects as “critical infrastructure” or make these eligible for registration with the Philippine Economic Zone Authority, which would allow for the streamlining of permits and approvals. -- Daryll Edisonn D. Saclag source