Time to review Epira

Will President Duterte’s ad­ministration be open to amending the Electric Power Industry Reform Act (Epira) of 2001?

Like so many of the grand master plans initiated by the government, this controversial law has failed to live up to its hype.

When the law was being crafted, it was supposed to es­tablish a new policy, legal struc­ture and regulatory framework for the electric-power industry.

It also aimed to tap private capital for the expansion and improvement of the industry as the large government debt and the highly capital-inten­sive character of the industry itself have long been acknowl­edged as the critical constraints to the program.

The Epira was created on the premise that privatizing each component of the power sector and giving free rein to market forces would compel firms to compete in terms of lower electricity prices.

Our lawmakers saw at the time the need to fix the per­vasive flaws in the system that have caused a low utilization of existing generation capac­ity; extremely high and un­competitive power rates; poor quality of service to consum­ers; dismal performance of the government power sector; and high system losses.

Proponents of the com­prehensive power plan touted that it would be the answer to all our energy problems. The privatization of the generation, transmission and distribution of power was hailed as the key to providing the public with reliable, secure and affordable supply of electricity.

Alas, even the staunchest defender of the basic econom­ic law of supply and demand that governs price determina­tion in the market would be hard-pressed to explain how the electrifying promise of the Epira had so hopelessly fizzled out.

We need not look very far for proof of this failed experi­ment.

The fact is that consumers in the country are paying more for electricity than those in oth­er Asian nations. Power rates in the Philippines are among the highest in the region and 5th highest in the world.

Last week, Manila Elec­tric Co. (Meralco) confirmed that electricity rates are set to rise by as much as P1.44 per kilowatt-hour (kWh) in March as a result of the maintenance shutdown of the Malampaya gas-to-power facility later this month.

What other evidence do we need to prove that Epira has been inutile in easing the financial burden of consum­ers?

According to a report by the Department of Energy (DOE), the residential rate for electricity in the Philippines reached $0.18 cents per kWh a few years ago, or more than double the 2001 rate of $0.08 cents per kWh.

This should have set off alarm bells because the lo­cal prices had surpassed the electricity rate for residential customers in Japan ($0.17 cents per kWh) and Singapore ($0.15 cents per kWh).

The research firm IBON Foundation added that rates for commercial industries were also higher at $0.13 cents, compared with $0.12 cents per kWh in Japan and about $0.14 cents per kWh in Singapore. That was several years ago. The rates would be even higher to­day.

The Philippines is in dan­ger of losing the precious few potential investments from neighboring countries if we do not address crucial inves­tor concerns, particularly high electricity rates.

According to some ana­lysts, the high cost and sketchy reliability of electricity supplies and rates in the Philippines are now the main deterrents to in­vesting in the country. Foreign business leaders see the prob­lem as a persuasive reason to invest elsewhere.

In addition, the power grid network also needs enhance­ments to avoid regular rolling blackouts and the government is working on adding more ca­pacity and acknowledged that it needs to add around new generating capacity every year between now and 2030, if it is to overcome the country ener­gy crisis.

We hope that the admin­istration of President Duterte will call for a comprehensive review of the Epira. Repeal abusive provisions but retain and strengthen those that help ease the burden of ordinary consumers and assure stability of power supply in the country.

However, the government has to ensure also that there is the right balance between energy policies and electricity price to attract more foreign investment coming into the country.

We do not need power shortage in the coming sum­mer months. This will have very serious consequences on our economy.

How the new government responds to the energy situa­tion in the coming weeks and months bears close watching.

We hope Energy Secre­tary Al Cusi can find concrete solutions to our power woes by listening to all stakeholders. He should not be perceived as being too cozy with the big power corporations.

We do not want a repeat of the power problems that plagued the country in the 1990s.

Now is the time for the government to rewrite the Epi­ra and disprove what a former top energy official told us: That the law was written so as not to be understood.

Perhaps this is the reason it is prone to abuse.