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Main reason Epira is failing

01:04 AM September 19, 2015

Inquirer’s Sept. 8 editorial (“Energy efficiency”) reminds us of the widely publicized “inefficient” performance of the National Power Corp. This, aside from the need to reflect the true cost of power through rate unbundling, was used as a justification for its privatization and led to the passage of the Electric Power Industry Reform Act (Epira) purportedly to serve consumer interests.

Sadly, to this day, the Epira promise to lower electricity cost through the introduction of competition in the generation and retail supplier sectors remains a promise. Consumers ask: What happened to this promise?

We have been saying, the Energy Regulatory Commission (ERC) has failed in its mandate to ensure just and reasonable power costs because it sweeps under the rug the need for a regular regulatory audit of utility revenues. Such audit would show whether or not the funds collected by the utilities have been used according to their approved, separate purposes and whether the utilities are not enjoying excessive profits.


Administrative and judicial pronouncements have put a cap of 12 percent on the profit of utilities from their capital investments. But this cap the ERC conveniently ignores. As of today or 14 years after the Epira’s passage, we still have to see a detailed ERC audit report.

Recently, Meralco filed in the ERC an application for the approval of its interim average rate for year 2015. Since the maximum average price (MAP) for 2011-2015 under the third regulatory period has already lapsed, we requested the ERC a copy of its regulatory audit report for the past four years. (Under its MAP, Meralco is guaranteed a yearly profit.) From the report we will know whether consumers have been overcharged or undercharged, and thus we will be in a better position to engage ourselves in the conversation on Meralco’s current application.

It is the National Association of Electricity Consumers for Reforms Inc.’s position that with its kilowatt-hours sales increasing annually,

Meralco’s annual revenues have been correspondingly increasing. Thus, without an ERC regulatory audit of Meralco there will be a “regulatory failure,” to say the least—or worse, “a regulatory capture.” We believe this is the main reason the Epira is failing.

—PETE L. ILAGAN, president, National Association of Electricity Consumers for Reforms Inc., pete@nasecore.org

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TAGS: Electric Power Industry Reform Act, Energy Regulatory Commission, Epira, Meralco, National Power Corp.
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