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EPIRA SCORES 100% IN TRANSPARENCY, www.businessmirror.com.ph
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Sunday, September 1, 2024 Vol. 19 No. 320
P25.00 nationwide | 2 sections 12 pages | 7 DAYS A WEEK
BUT HIGH ENERGY COSTS MERIT REVIEW By Lenie Lectura
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F an energy legal expert were to rate the effectiveness of the 23-year-old Electric Power Industry Reform Act (Epira), Atty. Jay Layug would give perfect scores for transparency in electricity prices and for fostering competition in the power generation sector.
“Transparency-wise, it is definitely 100 percent. In terms of transparency, with the unbundling of rates, the consumers are now well-informed of where their payments go,” said the former undersecretary of the Department of Energy (DOE) in an interview. Epira, among others, provided for the unbundling of electricity rates, making the cost of electricity transparent to end-users. Layug, who also served as chairman of the National Renewable Energy Board, said the law basically divided the power industry into four sectors. “Generation, transmission, distribution and supply. Transparency has been met, indeed.” Epira also reformed the power industry by allowing private investors to put up generation facilities and compete in the business of supplying electricity. It facilitated the entry of competition into the power industry. This competitive environment under a regime of fairness, transparency and public accountability was intended to ensure reasonable, if not lower, prices of electricity in the country. “Definitely, we have met that. In fact, we have widened the base of ownership. Yes, of generating plants. Once upon a time, you only have a few conglomerates, right? Right now, you see everybody being a generator, especially with the renewables,” Layug, a Senior Partner at Divina Law Offices and President of the Developers of Renewable Energy for AdvanceMent Inc. (DREAM), said. To prevent monopolies, the Energy Regulatory Commission (ERC) yearly sets the limit on the power-generating capacity that a company can own or acquire. Under Epira, a company or group of related companies is barred from owning, operating or controlling more than 30 percent of the installed generating capacity (IGC) of a grid and/or 25 percent of the national IGC. “The commission determines annually the compliance by power-generation companies with
ELECTRICITY meters installed on a pole in Barangay Santa Juliana, Capas, Tarlac, illustrate a persistent issue: high electricity rates. While the Electric Power Industry Reform Act (Epira) of 2001 aimed to enhance transparency and foster competition in the power sector, many consumers still face substantial electricity costs. The ongoing challenge reflects the gap between Epira’s objectives and the reality of high power bills. MATYAS REHAK VIA DREAMSTIME.COM
market share limitations (MSL) imposed by law. If there are violations, the Epira authorizes us to conduct investigation motu propio and, as necessary, impose penalties, including requiring parties to divest of ownership or disgorge excess profits,” said ERC chairperson Monalisa Dimalanta via Viber. On its latest list, the ERC has identified the top five companies in terms of IGC and market share. These are Aboitiz Equity Ventures Inc. (AEV), San Miguel Corp., First Gen Corp., Ayala Corp., and the Manila Electric Company (Meralco). They, according to Dimalanta, all complied with the 20024 IGC and MSL. Eric Francia, president of ACEN Corp., the power arm of Ayala Corp., said Epira has enabled a transparent and competitive power market. “We value the benefits of an open and competitive market, especially when compared to other countries where we operate and where private sector is reliant on government procurement policy,” he said in a text message. Electricity rate is a touchy subject among power industry stakeholders. Layug, in his honest opinion, said, “in terms of reducing cost, I would say maybe around 60 percent,” referring to how Epira brought down electricity rates in the country. However, many would argue otherwise. A research study recently released by various organizations including Friedrich-Ebert-Stiftung Philippines, 11.11.11, and The Center for Power Issues and Initiatives (CPII) stated that “millions of Filipinos still suffer from high electricity rates and energy poverty.” Further, the current state of the power sector “reflects a transition to a new era defined by Epira, with a slow consolidation of generation plants, distribution utilities, and power suppliers into the hands of a few influential firms.” “Overall, the power sector’s evolution is intricately tied to historical, political and economic developments in the Philippines.” DOE Undersecretary Rowena Guevara said during the 16th media seminar of the US Embassy in the Philippines that power rates vary from P5.93 per kilowatt-hour (kWh) to P19.01 per kWh as of May 2024. “So why do some areas pay more than others when the generators and electric lines are essentially the same?” Guevara said. “This is because of reliability. You pay for what you get,” she said. The Manila Electric Company (Meralco), for instance, provides “reliable power supply” because it has extensively invested in its distribution network, thereby resulting, among others, less power outage incidents than other distribution utilities. “Since they have invested more to give its customers a reliable power supply there is a price to pay for this reliability,” Guevara said. The lack of government subsidy to the country’s energy sector is also another factor why power rates are higher than its neighboring countries. “Thailand, Taiwan, Vietnam, Malaysia, Sri Lanka, Indonesia, Continued on A2
PESO EXCHANGE RATES n US 56.2890 n JAPAN 0.3882 n UK 74.1495 n HK 7.2188 n CHINA 7.9303 n SINGAPORE 43.2062 n AUSTRALIA 38.2540 n EU 62.3626 n KOREA 0.0423 n SAUDI ARABIA 15.0012 Source: BSP (August 30, 2024)