Foreign-ownership reforms seen lowering power costs

THE Department of Energy (DoE) said on Wednesday that proposals in the House of Representatives to remove foreign-ownership restrictions from the 1987 Constitution, particularly in the power generation industry, will result in reduced electricity rates.

“(Power) generation is subject to the movement of the cost of fuel, (which we do not have control over, so if we do open up, generation would be the best place (to allow investors in,)” Energy Undersecretary Sharon S. Garin told the House Committee of the Whole late Wednesday.

The DoE supports amending Section 11 of Article 12 of the 1987 Constitution to allow foreign equity investment in the public utilities sector.

Legislators this week began deliberations on Resolution of Both Houses No. 7, which seeks to ease foreign ownership restrictions in public utilities, education and advertising.

“If you increase competition there, I think that will have a bigger impact on the cost to consumers,” she added.

Ms. Garin cited an increase in investment in the renewable energy (RE) industry after the DoE in 2022 allowed 100% foreign ownership of RE projects by amending the implementing rules and regulations of the Renewable Energy Act of 2008.

“Since the approval of the new IRR up to December 2023, we have had 400 applications for RE service contracts. We have awarded, for 2023 alone, 275 service contracts, with a potential capacity of 39,622 megawatts (MW), for a total of estimated cost of investment of P8.53 trillion,” she told the committee.

Party-list Rep. Sergio C. Dagooc said he supports allowing foreign investors into generation, but maintained that Filipinos must keep majority control over the distribution and transmission of power.

Manila Electric Co. (Meralco) regulatory affairs head Jose Ronald V. Valles said easing foreign equity restrictions could attract more investment in the power industry.

He said amending the charter would help in “fostering infrastructure development, modernization and expansion, (and) spark greater competition within the industry, potentially leading to improved service quality and lower prices.”

Mr. Valles added that more foreign investors could “address potential shortages and enhance the nation’s preparedness for future energy demand by diversifying investment sources… and… contribute to the broader economic growth and development by fostering a more dynamic and competitive power sector.”

Lawyer Neri J. Colmenares said opening the public utilities sector to more foreign ownership poses national security risks.

“If China, for example, controls our big generation and distribution utilities, a little commotion in the South China Sea and they could black out Luzon,” he told the panel.