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ALTHOUGH
the Electric Power Industry Reform Act (Epira) was
envisioned when crafted and enacted into law to bring
down power rates through competition, more than
competition, what’s really needed is to have a stronger
regulatory environment, a public forum on the power
industry said on Monday.
“As we
have recommended to lawmakers for the Epira amendment,
there is a need to strengthen the regulatory environment
in order to bring down the rates,” Milo N. Tanchuling,
secretary-general of the Freedom from Debt Coalition (FDC),
told BusinessMirror.
In
strengthening the regulatory environment, according to
Tanchuling, consumer representation in determining power
rates is very much needed as well as the need to
depoliticize the regulatory body.
“Meaning, setting rates should be apolitical and
independent from interests of appointing figures,” said
the FDC official.
Tanchuling said consumer representation will ensure that
in making or setting rates the consumers’ position and
concerns are not taken. “What happens is that utilities
seem to have a strong lobbying force than consumers,” he
added.
He
ranked the current regulatory environment below average,
considering the petitions for rate increases that it
seemed not to turn down.
“Will
there always be a need for the Supreme Court to
intervene to correct them in terms of the due process to
follow, implement and comply with like holding public
forums and publication of petitions?” Tanchuling asked.
In the
six years of Epira, Tanchuling noted that power rates
have even gone up to as much as P11 per kilowatt-hour
instead of going down, contrary to Epira’s vision when
it was crafted and enacted.
He added
that instead of breaking the government’s single
control, it simply transferred it to the private sector.
“Even
when the Epira was signed into law by President Arroyo,
she even had to ask legislators to review the law,”
Napocor president Cyril del Callar said.
The
Napocor official said President Arroyo even asked
lawmakers to amend the law, if and only if needed.
“The
Epira has introduced competition in both the generation
and supply businesses, while transparency through
unbundling of the four major subsectors of the industry
was realized. In putting in place the institutional
separation of the generation, transmission, distribution
and supply, then electricity rates shall be reasonably
priced,” said del Callar.
He said
Epira paved the way for private sector investment in
generation, transmission (through a concession),
distribution and supply.
Del
Callar said the commercial operation of the Luzon
Wholesale Electricity Spot Market is now in place and
continuously being monitored and improved to ensure that
the electricity market, as envisioned, will foster more
competition in the generation that redounds to secured
and adequate supply of electricity and paved the way for
cheaper or reasonably priced electricity.
“We are
continuously closely working with the regulator in order
to promote competition but at the same time ensuring
consumer protection,” said del Callar.
“There
is a need for an amendment or a new law that will
protect consumers without having the government to sell
its natural assets. In the long run, what happens to the
country once it gets to sell all of its assets just
because it wants to generate more revenues?” Tanchuling
asked.
Meanwhile, the Philippine Independent Power Producers
Association (Pippa) said consumers will not benefit from
any acts amending the Epira at this time, and will only
undermine the competitiveness of the power industry.
In a
position paper submitted to the House of
Representatives, Pippa said lowering the privatization
threshold to 40 percent from 70 percent will only be
“detrimental” to the industry.
House
Bills 1889 and 3042 seek to amend the Epira.
Among
the major amendments is the lowering of the threshold to
40 to hasten open access. Open access gives consumers
the discretion to choose power suppliers.
However,
based on the current industry structure, the government
through Napocor and Psalm still control 65 percent of
the
Luzon grid and 82 percent of the Visayas grid. Thus, the
government is still dominant and breaches the 30-percent
market share cap as stated in the Epira.
The
market share caps of 30-percent for the grid and
25-percent of the nationally installed generating
capacity ensure that there will be enough players to
compete in the market. Such a setup induces competition
that in turn, will lead to better prices and services
for the consumers.
The
Committee on Energy headed by chairman Mikey Arroyo and
coauthor Rep. Luis Villafuerte have been conducting
hearings to verify if such an amendment will hasten
competition and entice more investors.
Industry
experts said given the complexity of the power industry
and the reforms being undertaken, in-depth studies and
numerous public hearings are needed to see whether there
is a need to amend the Epira or simply let the Joint
Congressional Power Committee iron out the kinks in the
implementation of the law.
Pippa
noted that so far, privatization efforts of the
government through the Power Sector Assets and
Liabilities Corp. (Psalm) have been successful. In fact,
the valuation of old Napocor assets has increased
tremendously from $0.39 million per megawatt for a small
hydro to $1.55 million/MW for the 600-MW Masinloc coal
plant.
As such,
Pippa noted that amending the Epira would reverse the
successes the industry had patiently strived for and
endangers the momentum in the implementation of these
reforms. Thus, amendments would only be
counterproductive. |
