Rey Gamboa (The Philippine Star) -
August 29, 2019 - 12:00am
Gauging just how much – or little –
has been achieved by a law is certainly prudent, and this is more true for the
2001 Electric Power Industry Reform Act (EPIRA) which is aimed at restructuring
how the country would deliver electricity for future generations.
The law lists 11 objectives, and
going through a comprehensive review of each would give our country’s leaders
and lawmakers enough fodder to determine what tweaking is necessary so that
goals are accomplished. On a macro level, this would also provide a categorical
answer as to whether EPIRA is moving in the right direction.
Let’s go through some of the more
relevant objectives and give a cursory assessment of where the law stands:
Total
electrification
When it comes to the goal of total
electrification, the law is obviously lacking. The Department of Energy
recently put the number of Filipino households still not connected to any power
grid at five million.
The National Electrification
Administration similarly puts household electrification at 95 percent,
although the agency is optimistic it can bring the figure to 100 percent
by 2022. Whether or not this is doable in the next three years, remains to be
seen.
A review should highlight the
workable programs that the more successful rural electric cooperatives have
adopted, while tackling many outstanding issues of losses, mismanagement,
pilferages, and others that continue to hog electric cooperative operations.
Supply
security and affordability
The law cannot claim to have
accomplished supply security and affordability. During latter part of the
summer months, the country was witness to several yellow and red flags,
warnings that the power system was without adequate reserves to cover for the
drop in hydroelectric power sources.
Supply was compounded by poor
reliability, a condition that power generators attributed to ageing power
plants that were a legacy of the pre-EPIRA days. Power affordability, on the
other hand, continues to be high compared to our neighboring countries.
A review should yield a definitive
answer to why EPIRA has not significantly brought down electricity prices.
Transparent
and reasonable pricing
Given the Supreme Court’s recent
ruling voiding supply contracts approved by the Energy Regulatory Commission
between power producers and distribution utilities (DUs) for not going through
competitive bidding, a bureaucratic lapse seems to have occurred.
This casts doubt on the rate charges
made by the concerned DUs, and which could induce a flood of consumer calls for
rate rollbacks that would burden the ERC’s credibility as a regulator that
pursues the best of public interest.
There are allegations also of
monopolies in the power sector, of too few companies controlling the industry
today. More importantly, issues are being raised about DUs inking supply
contracts with affiliated power plants.
A detailed review of such supply
contracts is needed, as well as a thorough assessment of the reasonability of their
pricing.
Private
sector participation
From a monopoly by the National
Power Corp. (NPC) before the law was passed, we now see a widened base of
private capital in all sectors of the power industry, from generation to
transmission and distribution. But just how broadened this private sector
participation is needs to be vetted to ensure that the spirit of free
enterprise is kept alive.
The power industry requires huge
investments that can only be recovered over longer periods. While private
sector participation is encouraged, its operating terms must not impinge on
customers’ welfare and the country’s long-term growth.
We have learned how “onerous”
provisions are justified during periods of crises, like when the Philippine
economy was held captive by brownouts and NPC’s massive debts before the turn
of the century. This kind of vulnerability must never happen again.
Environment-compatible
EPIRA aims to assure socially and
environmentally compatible energy sources and infrastructure, and yet, government
policy continues to skirt the issue of “dirty” coal and indigenous people’s
guardianship over watershed areas.
Assessing this objective of the law
will be difficult given the irrefutable logic of getting cheaper electricity
from coal-fired power plants until today. On the other hand, the need of a
rapidly growing economy to exploit energy sources from water could become more
important than indigenous people’s rights.
We need a clearer direction of how
the country will tackle these conflicting interests.
Renewable
energy
The law seeks to promote indigenous
and renewable energy resources in power generation, thus reducing the country’s
dependence on imported energy. Yet, over the years, use of coal and similar
fossil fuels has grown faster than non-fossil sources.
The DOE has introduced several
mechanisms that encourage private sector to invest in power generation using
sun, wind, water and steam energy. But these may not be enough. This definitely
is one area where new inputs to the law will be needed.
NPC
privatization
The Power Sector Assets and
Liabilities Management (PSALM) Corp. continues to struggle in paving the way of
an orderly and transparent privatization of NPC’s assets and liabilities, one
of the key objectives when EPIRA was passed.
Doubts persist on how PSALM will
settle its inherited loans, as well as additional liabilities incurred with the
continued operations of NPC until 2026, the prescribed end of PSALM’s corporate
life. Definitely, this will need a diligent review given the financial mess it
now is in.
Timely
independent review
Now is not a bad time to initiate
this thorough and comprehensive review of EPIRA. The independent review process
may be parceled out to a number of research institutions with the required
expertise before being sent through the legislative mill.
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