Drilon: Review EPIRA after ‘apparent failure’

MANILA, Philippines – After the biggest power rate hike in recent history, Senate President Franklin Drilon joined calls to review the 12-year-old law regulating the power industry.

A day after the Senate began probing the increase in electricity prices, Drilon said it is already clear that the Electric Power Industry Reform Act of 2001 (EPIRA) failed to achieve its objectives.

“The EPIRA law is supposed to promote free competition in order that the consumers can benefit from a lower but efficient power generation system. The opposite apparently happened,” Drilon said in a press briefing on Thursday, December 19.

Drilon said he has yet to check the law to see what specific amendments are needed but said the power rate hike showed the need to change the EPIRA.

“There appears and I underscore that there are charges of collusion and therefore instead of free competition, there was a monopoly, there was a collusion to increase artificially the prices in the spot market so that must be looked into.”

Even before Drilon’s statement, several senators and House Speaker Feliciano Belmonte Jr, civil society and business groups already called for a review of the EPIRA. Malacañang said it will leave the issue up to Congress.

In his resolution proposing the review, Senator JV Ejercito said the EPIRA failed to protect consumers from the sudden increase of power generation charge and to lower electricity rates.

“After twelve years, the EPIRA law has failed to dismantle the cartel and provide inexpensive supply of electricity,” Ejercito said.

Senators Antonio Trillanes IV, Sonny Angara and Vicente Sotto III also pointed out that the EPIRA ran counter to its goals of ensuring an affordable and reliable supply of electricity through competition. Trillanes filed the resolution to probe the power rate hike.

Belmonte said, “It’s such an important matter that we need to revisit, it was passed more than 10 years ago, we have more than 10 years experience of it, so it’s just right that we revisit it once again. The EPIRA should be revisited to assess whether it was successful and beneficial to the economy.”

Akbayan and non-governmental organizations are campaigning to overhaul the EPIRA. Earlier this week, they asked the justice department to investigate the alleged collusion of power generators that may have caused the rate hike.

“The unabated increase in power rates, market concentration and the threat of another power crisis were the results of EPIRA which for the past 11 years produced nothing but escalating rates and diminishing power supply,” the petitioners said in a statement on Monday.

Calls for reform in the power industry came after the Manila Electric Co (Meralco) raised charges by P4.15 per kilowatt-hour (kWh) starting this month. The rate hike will be staggered as follows: P2.41 per kWh in December, P1.21 per kWh in February 2014 and P.053 per kWh in March.

In the Senate probe on Wednesday, December 18, some senators said they suspected there was collusion among power plants that went on “unscheduled shutdown” coinciding with the scheduled maintenance shutdown of the Malampaya natural gas field.

The shutdowns forced Meralco to source power from plants that run on diesel, which is more expensive than natural gas.

Observers though took Congress to task for the alleged failure of its oversight commission. They said Congress bears responsibility for the issue, with the Joint Congressional Power Commission in existence since EPIRA was enacted into law 12 years ago. 

Analysts point out that the Commission was tasked to oversee the implementation of the law, and should have long detected and addressed loopholes in EPIRA. Instead, it took the power rate hike for Congress to conduct a new investigation. 

‘Old laws can still punish colluding firms’

Even prior to the EPIRA review, Drilon said the government can hold the power firms accountable under the Revised Penal Code, which punishes monopolies and combinations and “restraint of trade.”

He called on the Department of Justice (DOJ) and the National Bureau of Investigation (NBI) to conduct an “in-depth investigation” into allegations of collusion among the power generators.

“While [the Penal Code] is an old law, it is still applicable to our present circumstances so pending the recommendation of the [Senate] committee on energy as to possible amendments to the EPIRA law that would prevent similar occurrences in the future, I will call [for a DOJ investigation].”

Justice Secretary Leila de Lima already announced earlier this week that her department’s Office for Competition will investigate the power firms’ possible violation of competition laws and prosecution violators “to prevent, restrain and punish monopolization, cartels and combinations in restraint of trade.”

The Department of Energy (DOE) also has a tripartite team conducting its own investigation into the alleged collusion. Energy Secretary Jericho Petilla said the results of the DOE probe will be out on December 30.

De Lima said her office is coordinating with the DOE in the investigation.

As for the Senate, Senate Energy Committee Chairman Sergio “Serge” Osmeña III said he has not seen any proof of collusion so far.

Osmeña said the Senate will conduct more hearings in the continuation of its probe next year. 

Meanwhile Malacañang reiterated its support for the Senate inquiry, which it said “runs parallel to the on-going investigation of the tri-partite committee.”

 

“We hope that the Senate inquiry will also lead to concrete proposals on how existing laws can be improved so that the protection of consumer welfare will be assured,” Presidential Communications and Operations Office Secretary Sonny Coloma said. – Rappler.com