Amend EPIRA; stop selling gov’t power assets – Chiz

MANILA, Philippines – Will the 13-year-old law restructuring the country’s power industry be changed soon?

Senator Francis Escudero filed a bill amending the Electric Power Industry Reform Act (EPIRA) to prohibit the sale of the remaining power assets of the government.

Under Senate Bill 2167, Escudero said that the national government should retain control of the remaining assets of the National Power Corporation (Napocor).

Escudero’s bill amends the provision in the EPIRA stating that all Napocor assets “shall be sold in an open and transparent manner through public bidding, and the same shall apply to the disposition of independent power producers (IPP) contracts.”

“EPIRA was intended to be the solution to the country’s electricity problems. Instead, it has caused the government to lose control of the power industry, allowing private businesses to raise power rates with impunity,” the senator said in the bill’s explanatory note.

Enacted in 2001, EPIRA privatized the power sector to bring down electricity rates and to improve the delivery of power to end-users by encouraging greater competition and efficiency.

Yet citing one of Asia’s highest electricity rates and frequent power outages in the Philippines, Escudero said, “It is apparent that the EPIRA was not able to provide the promised reform.” As a congressman, Escudero voted against EPIRA.

Another amendment in Escudero’s bill is to exclude the Agus and Pulangi hydropower complexes in Mindanao from privatization. Escudero said government should retain control of these facilities because they supply half of Mindanao’s energy needs. 

“We should endeavor to rehabilitate these two resources in order to stabilize the market situation in Mindanao as hydropower is still the cheapest. Monopoly in Mindanao will also be cut,” Escudero said in a statement on Friday, March 28.

The senator also proposed that government retain, rehabilitate, maintain and develop all existing and future power assets, especially from hydro resources.

His bill authorizes the national government “to direct water usage” to satisfy all water requirements of privatized hydro facilities “imbued with public interest.”

The measure also mandates the government not to privatize existing geothermal plants, and instead seek to develop geothermal resources. 

“Unless the EPIRA is amended, it will be difficult – if at all possible – to maintain control of the power industry to the government in order to temper the profit-oriented practices in the power industry,” Escudero added.

Good law or failure?

Calls to amend EPIRA come after the controversial Manila Electric Company’s (Meralco) P4.15 per kilowatt hour power rate hike in December 2013, the highest in history. Consumer and militant groups questioned the price hike before the Supreme Court, which temporarily stopped its implementation. (READ: What Meralco’s rate hike tells us about the power sector)

The scheduled shutdown of the Malampaya natural gas field, and the coinciding “unscheduled shutdown” of power plants caused the rate hike. Meralco was forced to source more expensive power from the spot market, and passed on the expense to consumers.  

Senate President Franklin Drilon said the rate hike showed that despite the goals of EPIRA, “the opposite apparently happened.” The Center for Power Issues and Initiatives also said that EPIRA helped major power companies further monopolize the industry.

Yet Senate Energy Chairman Sergio “Serge” Osmeña III hailed EPIRA as a “good law,” saying other countries even want to copy the measure.

Osmeña said the problems in the power sector are due to mismanagement. The senator criticized the Aquino administration for failing to focus on the industry early on. He also accused Energy Secretary Jericho Petilla of focusing on politics instead of the power sector.

Osmeña has also argued that that the energy shortage is rooted in the lack of power plants. On the Mindanao blackouts, he said, “We said that 4 years ago and every year since. Until the new generating plants of Aboitiz and Alcantara are commissioned, the power supply of Mindanao will always have a shortage.”

Senator Antonio Trillanes IV said he does not see any problem with the EPIRA. 

“What we have is a supply problem so re-nationalizing the power sector or even part of it will not solve the problem. Instead, we should make it easier for investors to put up power plants for us to have a surplus of supply that would, in turn, push power rates down,” Trillanes said. – Rappler.com