Congress must look at Epira now

THERE is no subject further stirring up the public’s social and economic interests than rising electricity bills. After all, this affects households, commercial and industrial sectors.

When the Electric Power Industry Reform Act (Epira), or Republic Act 9136, was signed into a law on June 8, 2001, by then President and now Pampanga second District Rep. Gloria Macapagal-Arroyo, it was supposed to ensure quality, reliable and cheap supply of electricity.

Likewise, in its declaration of policy, the law shall “protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power”.

Exactly 16 years after the Epira was passed, consumers continue to bear skyrocketing electricity rates and experience brownouts, not to mention a big section of the country’s population—especially in Mindanao and the rural areas—still remain without electricity. Incongruously, these are the striking opposite of the things promised by Epira, particularly after President Arroyo said in her Ninth State of the Nation Address on July 27, 2009: “The next generation will benefit from low prices from our Epira.”

Why, then, do problems continue to beset the power industry? It is worth noting that another objective also written in Epira’s declaration of policy was to “provide for an orderly and transparent privatization of the assets and liabilities of the NPC”. Epira changed the Philippine energy landscape, as it accelerated the privatization and deregulation of all power- industry sectors.

Debilitating give-and-take policy

A fundamental question is who benefited and suffered most from Epira? With private companies venturing into power generation, the situation piled profits for the oligopoly of a few corporate elite families that have long-entrenched business interests.

Under Epira, power purchase agreements (PPAs) are legitimized, giving birth to “take-or-pay” arrangements that compel consumers to pay for the production costs of electricity as projected by private corporations and not for the actual electricity they consume.

While PPA is no longer reflected in current electricity bills, it is bundled into other charges, such as generation, transmission and distribution rates, as well as systems loss charges. The public is also paying for National Power Corp.’s (NPC) stranded debts still amounting to billions of pesos, in the guise of “universal charge.” These NPC debts continue to grow despite repeated power-rate increases intended to cover it, and ordinary consumers, in fact, shoulder these rate increases.

It is also Epira’s aim to “ensure transparent and reasonable prices of electricity in a regime of free and fair competition.” After its enactment, the control of more than half, or 52 percent, of the total generation capacity of the country is chiefly at the mercy of top power players, including the Lopez Group, San Miguel Energy Corp., AboitizPower and the group of businessman Manuel V. Pangilinan.

Another unquestionable fact is that power rates have steadily spiked up since the private sector came to control it. In fact, the Philippines is seen as one of the countries with the most expensive power rates in Asia.

This, in turn, discouraged foreign investors to build industries here as they diverted their projects to neighboring Indonesia, Malaysia, Thailand and China, where power costs are much cheaper.

Critical issues

AS shown by the experience of US, New Zealand and countries in Latin America and Asia, privatization of the power sector has failed to ensure public benefits as promised. Thus, in many cases, the reform programs created more problems for consumers or whole communities.

In the past 14 years the world also witnessed a series of disastrous blackouts, skyrocketing power rates, increasing corruption and financial problems in the power sector. Serious brownouts in some parts of the US over the past eight years brought to light the grim consequences of deregulation and privatization of the power sector.

Actually, the Asian Development Bank and World Bank’s power-sector reform programs came from an erroneous diagnosis that public ownership and government monopolies inherently lead to poor performance of public utilities and the eventual financial ruin.

The Freedom from Debt Coalition, a highly reliable private think tank organization, said these wrong prescriptions, in effect, allowed the government to abandon its social contract that existed with its constituents by surrendering its obligation to private hands after setting up the electricity infrastructure.

Retrospectively, the serious lack of consumer protection and transfer of corporate debts into public liabilities must quickly steer our lawmakers into action to reexamine Epira, and require Department of Energy Secretary Alfonso G. Cusi to explain why the energy sector has gone from bad to worse beyond frequently issuing motherhood press releases that tend to cover up the real picture.

To reach the writer, e-mail cecilio.arillo@gmail.com.

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