By
Rene E. Ofreneo - May 2, 2019
After hearing for four
grueling hours the testimonies of industry power players and government energy
officials on April 26, the hard-working chairman of the Senate Committee
on Energy was a picture of concern and frustration. Senator Win
Gatchalian failed to get any assurance from the hearing participants that no
more red/yellow alerts shall be issued by the power industry in the coming El
Nino weeks. Nor is there any assurance that brownouts/blackouts shall not
occur during or after the mid-term elections. And yes, Philippine
electricity prices, among the highest in the world, are bound to rise when the
demand spikes up.
Clearly, the
Philippines has weak energy security. Simply put, energy security means the
uninterrupted and sustained supply of electricity at reasonable prices to meet
the needs of all households, offices and businesses. Every country in the
world strives to develop a national energy security program, some stretching up
to several decades. It is a strategic component in building up national
stability, competitiveness and sustainability.
Ironically, energy
security is precisely one of the overarching goals of the “Electric Power
Industry Reform Act”, or the EPIRA law. The EPIRA was passed in 2001, or
18 years ago. The list of objectives outlined in the EPIRA are truly
ennobling:
“a) To ensure and
accelerate the total electrification of the country;
“b) To ensure the
quality, reliability, security and affordability of the supply of electric
power;
“c) To ensure
transparent and reasonable prices of electricity in a regime of free and fair
competition and full public accountability to achieve greater operational and
economic efficiency and enhance the competitiveness of Philippine products in
the global market;
“d) To enhance the
inflow of private capital and broaden the ownership base of the power
generation, transmission and distribution sectors;
“e) To ensure fair and
non-discriminatory treatment of public and private sector entities in the
process of restructuring the electric power industry;
“f) To protect the
public interest as it is affected by the rates and services of electric
utilities and other providers of electric power;
“g) To assure socially
and environmentally compatible energy sources and infrastructure;
“h) To promote the
utilization of indigenous and new and renewable energy resources in power
generation in order to reduce dependence on imported energy;
“i) To provide for an orderly and transparent privatization of the assets and liabilities of the National Power Corporation (NPC);
“j) To establish a
strong and purely independent regulatory body and system to ensure consumer
protection and enhance the competitive operation of the electricity market; and
“k) To encourage the
efficient use of energy and other modalities of demand side management.”
Consumer groups, CSOs
and even some LGUs and small business groups have been raising and filing
complaints on the failure of the EPIRA to deliver the above promises of the
law. In particular, we have seen the continuing rise in electricity
rates, especially those charged by Meralco. Which is the reason why there
is a proposed bill on “Murang Koryente” and there is a Party-List group that
has adopted the monicker “Murang Koryente”.
The unchecked growth of
electricity rates is very much related to the failure of the implementors of the
EPIRA to “broaden the ownership base of the power generation, transmission and
distribution sectors”. What the implementors of EPIRA did was to
transform public monopolies into private monopolies under a program of all-out
privatization of the power generation, transmission and distribution sectors.
In short, the whole system of power development and marketing is now built
around the investment plans of the corporations engaged in the transmission,
power generation, distribution and operation of the so-called Wholesale
Electricity Spot Market (WESM).
Some distributor
companies such as Meralco even source their power from generation companies
controlled by the owners of Meralco. One study pointed out that the rates
for more than 90 percent of distributed power is based on the non-transparent
and hazy relationships between the generation companies and distribution
utilities. Which raises questions as to what exactly is the purpose of
WESM and how WESM prices are really determined. Paging the PCC of Arsy Balisacan!
Meantime, the
leadership of the Department of Energy (DOE) of the Philippines, treated
as a critical and strategic agency in China, Japan and other countries, has
been weakened by the all-out system of privatization. A check at the
website of DOE shows that its main function has been reduced to monitoring,
nudging and even cajoling the big private sector players. But its power to
provide strategic leadership in power development, intervene in areas where the
private corporate sector fails and discipline corporations which engage in
predatory pricing practices or fail to coordinate with the government on their
planned/unplanned power maintenance programs and outages – all these are not
spelled out in the DOE TOR. It is also obvious that much of the time of
key officials of DOE is eaten up by looking for investors/contractors who can
be engaged in different areas of the privatized power development program such
as the establishment of new power generation projects.
Meantime too, the
Energy Regulatory Commission has been the object of so many complaints coming
from the consumer associations, CSOs, trade unions and local business groups.
The Mindanao Coalition of Power Consumers has reacted angrily to the failure of
the ERC to review the various power supply contracts, 27 in all, involving the
generation companies and distribution utilities and purge these contracts with
onerous provisions that the Coalition blames for the high prices of power that
the people of Mindanao have to endure.
From the foregoing, it
is abundantly clear that this is an opportune time for the government,
especially the Senate and the House, to undertake a rigorous assessment of the
EPIRA based on the failure of the EPIRA to deliver the promises outlined above.
There is a need to restore the role of the State as the leader in the overall
management of the power development.
There is also a need to
truly put people at the center of power development. As a starter, why not put
consumer/CSO representatives (non-voting) in the boards of the big
transmission, generation and distribution companies, and empower them to give
public reports on the true state of power development in the country?
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