Energy Emergency: 16 years of liberalized energy industry under EPIRA

Posted:

June 8, 2017

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ONE YEAR after we laid down the People’s Power Agenda as a challenge to then newly-elected President Rodrigo Duterte, the people have yet to witness any substantive changes in the Philippine power industry. Sixteen years after the Electric Power Industry Reform Act (EPIRA) became a law, the energy industry has become further liberalized and at the control of private corporations which seek profit above the welfare of its consumers.

 

EPIRA has failed in achieving its vision of bringing down electricity rates and providing efficient power delivery by handing over the control of the entire energy industry to private corporations. In fact, it has paved the way for steadily increasing electricity rates amid intermittent power disruptions and anomalous power supply deals.

 

The Philippines retains its spot as one of the countries with the highest electricity rates -- third in Asia and 16th in the world. Meralco, the largest distribution utility in the country, has shown a 52.31% increase in residential electricity rates since in a span of 15 years. In 2001, the effective power rate was at P4.87/kWh; it has risen to P8.63/kWh in 2015.

 

The surges in the electricity rate are manifestations of the pass-through provision in EPIRA where companies such as Meralco are allowed to pass industrial costs to the consumers. The most recent incident of said phenomena is the P0.66/kWh rate hike by Meralco last April to June 2017 supposedly caused by the 20-day Malampaya shutdown in February of the same year.

 

The pass-through provision in EPIRA is also the reason why Meralco is set to refund over P11.6 billion to the consumers. Comprised of P6.9 billion in overcharging from 2014-2016 and an additional P4.7 billion left from overcharges that date as far back as 2003, this is the total amount of the debt Meralco owes to its consumers. Despite the long amount of time Meralco was able to make use of the said amount for its own profit, the Energy Regulatory Commission said that the company is not obligated to include interest in the amount to be refunded as this was not stated in the law.

 

EPIRA’s goal of using free competition to lower electricity rates has been ineffective and has in fact laid down a favorable environment for the power industry to be controlled by a few big corporations. By removing majority of power assets from the control of the government, EPIRA has also allowed the virtual takeover of the private sector in the power industry. This has led to cases of connivance between companies across the entire power industry. Meralco’s anomalous power supply agreements (PSAs) with seven generation companies, six of which are sister companies of Meralco, is a clear example of such.

 

EPIRA has been in force for 16 years but we have yet to see any substantial improvement in the power industry under it. We must push for an alternative power industry framework that will ensure accessible, affordable, and reliable power generation, transmission, and distribution. Our power industry should also consider environmental sustainability, energy security, and optimal use of indigenous and renewable energy sources. We call for a nationalized power industry that is geared towards addressing domestic needs and laying a favorable setting for industrialization.#

 

Reference:

Finesa Cosico
Secretary-General, AGHAM - Advocates of Science and Technology for the People
(02) 998 4226