by Lenie Lectura - August 15, 2016
ENERGY industry stakeholders weigh
in on the potential impact of a shift to a federal form of government under the
Duterte administration.
Regulators, industry players and
observers agree that a push for federalism has its advantages and
disadvantages. Definitely, they noted, federalism would allow, on one hand, the
autonomous regions to realize their full potentials as self-governing units.
On the other hand, there are
challenges, and probably conflicts, that will be encountered but must be dealt
with in order to achieve the very objective of a federal form of government.
The Energy Regulatory Commission
(ERC), an independent and quasi-judicial five-man regulatory body, said there
is a need to thoroughly study this possible structure.
ERC Chairman Jose Vicente B.
Salazar, in an interview, said an advantage of a shift to a federal system of
government is that this would allow for the adoption of regulatory policies
that are dependent on the economic development and condition of a specific
region.
“These policies would, therefore, be
more attuned to the particular situation in that region,” Salazar said.
However, this advantage could also
be a disadvantage, as jurisdictional conflicts may arise between federal and
state regulators, he explained. “Hence, policy differences may affect national
development plans.”
As such, Salazar said, lawmakers and
concerned parties must weigh in on the possible impact this could have on the
power sector.
“In considering the shift, a careful
study on the impact on the system as a whole and on the rates to be recovered
from all consumers must therefore be taken into consideration,” the ERC chief
said.
Harmonizing difficulties
THE ERC is tasked to promote
competition, encourage market development, ensure customer choice and penalize
abuse of market power in the electricity industry.
To carry out this undertaking, the
ERC promulgates necessary rules and regulations, including competition rules.
The ERC can also impose fines or penalties for any noncompliance with or breach
of the Electric Power Industry Reform Act (Epira) and its implementing rules
and regulations (IRR). Penalties also carry on violations of other rules and
regulations the ERC promulgates or administers, as well as other laws it is
tasked to enforce.
An industry expert, meanwhile,
commented on the difficulty in harmonizing an overall policy.
“For example, in the US federal
system, California is going extremely for green energy. But some states in the
US are still into coal,” said the person familiar with the matter but is not
authorized to speak for the Department of Energy (DOE). “What happens is that
it is quite difficult to impose an all-out clean-energy policy on a national
level.”
With federalism, the needs of
different regions would be easily addressed. “It can be observed that a policy
imposed on all may not be effective in one province because the needs of one
locality differ from the other,” the energy expert said. “Hence, different
policy approach per region seems beneficial as varying needs can be easily
addressed.”
Spug areas
FORMER House Energy Committee
Chairman Reynaldo V. Umali said he is in favor of a federal form of government.“It
is definitely more advantageous. Under the present system, the smaller towns,
barangays and some local government units are somewhat neglected,” Umali said
in an interview. “But soon, they will have the opportunity to chart their own
course.”
He cited the National Power Corp.
(Napocor)-Small Power Utilities Group (Spug) as one of those that will
definitely benefit if and when a federal form of government is put in place.
“In Spug areas, assistance is not
often provided. If at all there is assistance from the government it’s still
not enough. Improvement is not felt in in these areas,” Umali said. “But under
a federal form of government, these communities can chart their own programs
that they themselves will benefit from.”
Through its Spug, the Napocor
continues to pursue its mandate to provide electricity in off-grid areas,
particularly in areas where private investors hesitate to come in due to lack
of infrastructure and political and security concerns.
The Spug areas include Palawan,
Romblon, Marinduque, Mindoro, Catanduanes, Basilan, Sultan Kudarat, Masbate,
Antique, Guimaras and Cagayan. Umali said these areas continue to seek
investments.
“One disadvantage is that since they
are small ‘states,’ so to speak, the ability to raise capital maybe limited.
You need large investments to develop stable, reliable and affordable power,”
he added. “They may encounter difficulties, especially for poor areas that do
not have too much revenue source. Mahihirapan sila makakuha ng [They
would have difficulty securing] funding kasi malaki ang investment sa
power [because of the huge amount of investment required].”
Uncertainty worries
SINCE there are several models of
federal states to study, Umali said he is confident the current administration
would carefully layout its plans and programs that are necessary in order to
achieve its goal.
An industry source, meanwhile,
explained how a shift to federalism might bring “uncertainty” in the power
system.
“If there is a federal state then
the transmission lines and other sources of power generation could be
affected,” the person said. “Hence, there could be possible power interruption
or inefficient delivery of power. Why? Because some may claim that this area is
ours, which could include these vital power facilities.”
The person who requested anonymity
to avoid a backlash from players in a tight industry added:
“As it is now, we are already having transmission right-of-way problems.”
“As it is now, we are already having transmission right-of-way problems.”
“Can the NGCP [National Grid Corp.
of the Philippines] still perform its duties? What about the long-term
contracts that had been entered into? Would these still be enforced or
scrapped?” Indeed, changing the rules in the middle of the game only brings
uncertainty and may only discourage investors, the person said.
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