Epira review: Govt must put people at center of power development

THE last Senate hearing on the power transmission issue confirmed our concern on the vulnerability of the national grid system to “cyber attacks.” The system can be immobilized by cyber warriors. These warriors can also engage in cyber piracy, digging and accumulating data of officials, businesses and homes. These are terrifying possibilities. Paging General Esperon, Defense Secretary Lorenzana, DTI Secretary Lopez and Neda DG Pernia.

The hearing also witnessed the animated exchanges between the officials of National Grid Corp. of the Philippines (NGCP) and the senators (Dick Gordon, Win Gatchalian, Risa Hontiveros and Koko Pimentel) on the role of Chinese technical people in the management and operation of the transmission business. The critical issue: are there violations of the Constitutional provision that only Filipino citizens can hold executive-positionsin the operation of the grid system?

As to the profit issue, the Senate still has to set new hearings on how much profits are being accumulated by NGCP, how much should go (or should have gone) to the government through TransCo and PSALM, and how much should be shouldered by the consumers. A number of CSO representatives, who were not able to speak in the hearing, claim that NGCP has been accumulating so much profits at the expense of the republic. The Senate should be able to sort all the figures in the future hearings.

The hearing touched on the role of DOE and ERC in the monitoring of the transmission business and other segments of the entire power sector. As the government watchdogs in the sector, these institutions have shared very little information on the transmission controversy, claiming that their auditing capacity is limited and undefined. As such, they are unable to conduct honest-to-goodness audit of NGCP and other power companies, and share the results of their audits with the Philippine public? Can they not be more proactive, resourceful and assertive?

At the end of the hearing, the good lady senator, Hontiveros, came up with a very important suggestion: a full-blown review and assessment of the 2001 Electric Power Industry Reform Act (Epira).

A full-blown review? Why not? Two decades ago, Epira was enacted based on the premise that are structured power industry under a regime of free competition would deliver quality, reliable and affordable supply of electric power for the consuming public. The restructuring took two seemingly simple steps: “un bundling” of the power sector into its different segments (generation, transmission, distribution and retailing) and “privatization” of virtually all these segments, including the establishment of a privatized Wholesale Electric Spot Market (WESM).

The neoliberal economic planners were effusive with praise on the Epira law. Accordingly, Epira means an end to endless power disruptions. Above all, power shall be cheaper and affordable to the masses.

It has not. The Philippines still has the highest power rate in Southeast Asia. The country, in fact, is in the top 5 countries of the world with the most expensive electricity. This probably explains why Ayala’s IMI electronics assembly

is done in China (despite rising wages), not in the Philippines.

So why has electricity remained expensive in the Philippines despite the rosy promise of Epira eventually leading to lower electricity bills? This is one of the many questions that should be answered by the Legislative inquiry. We would like to line up below other questions that should be raised and answered in a Senate inquiry:

Is the “take-or-pay” arrangements with the “independent power producers” encouraged by the Ramos administration to come in and invest on the power sector still on? How much has the country bled because of thiswith a score of I PP producers?

How much of the so-called stranded costs due to the foregoing arrangement with the IPPs are still in the books, and are being paid by the consumers?

Has the WESM been successful in promoting competition, when most of the “spot” transactions are bilateral deals?

Is Meralco, the biggest distribution company, controlled by Filipinos or Indonesians? Why is Meralco and other big power distributors allowed to setup their own power generation units, in violation of the principle of non-cross-ownership? Can Meralco’s distribution monopoly in Luzon be “broken up” through democratization, meaning representation of consumer groups in the Board? (The system of “independent directors,” who are usually chosen from the big private business sector, is no guarantee that consumers shall be protected.)

On power generation, whyis Department of Energy obsessed in the promotion of coal plants when most countries of the world are now phasing out these fossil emitting plants as part of their commitment to combat global warming? Is DOE blind to the fact that the renewables are not only the future of the power sector, but they also happen to be cheaper now (in most instances) than the non renewables? Why is it difficult for small renewable power producers to be accredited by DOE, and to be connected to the grids in Mindanao and other islands?

Can Bangko Sentral ng Pilipinas Governor Benjamin Diokno emulate his counterpart in Malaysia, who asked the Malaysian commercial banks to minimize lending to coal plant producers?

As to the NGCP, when will it fulfill its commitment to offer 20 percent of its stocks to the consuming public? Will it accept consumer representatives in its board? When will it complete the modernization of the grid system, and make it truly shielded from cyber attacks? Can the NGCP use its unique position in the middle of the power sector to promote greater involvement of the renewables in providing electricity to our people?

Finally, can the Senate come up with an new Epira that truly serves the interests of the people?