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Why Epira remains a failure

/ 12:10 AM June 17, 2017

A year after we laid down the People’s Power Agenda as a challenge to President Duterte, the people have yet to witness any substantive changes in the Philippine power industry. After 16 years of the Electric Power Industry Reform Act (Epira), the energy industry is further liberalized and is in the grip of private corporations that seek profit over and above consumer welfare.

Using competition by handing over control of the entire energy industry to private corporations, Epira has failed in its goal of bringing down electricity rates and providing efficient power delivery. On the contrary, it has paved the way for the steady increase in electricity rates amid intermittent power disruptions and anomalous power supply deals.

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To this day, the Philippines remains one of the countries with the highest electricity rates—third in Asia, 16th in the world. In a span of 15 years, Meralco’s residential rates have increased by 52.31 percent. (Meralco is the largest distribution utility in the country.) In 2001, the effective power rate was P4.87/kWh; by 2015, it had risen to P8.63/kWh.

Surges in electricity rates were made possible by Epira’s pass-through provision which allows power firms, like Meralco, to pass industrial costs to the consumers. The most recent incident of this “phenomenon” is the P0.66/kWh rate hike in Meralco rates effective April to June 2017, supposedly caused by the 20-day Malampaya shutdown last February.

The same pass-through provision is also the reason why Meralco has to refund its consumers over P11.6 billion. The refund is in fact a debt Meralco owes its consumers; it comprises the P6.9 billion in overcharges from 2014 to 2016, and the additional P4.7 billion left from overcharges that date as far back as 2003. Yet, despite the many long years Meralco held to these funds, making use of the same for its own profit, the Energy Regulatory Commission ruled that the company is not obligated to include the interest in the refund as this was not stated in the law.

Epira has failed in its goal to lower electricity rates. Instead, it has laid down a favorable environment for the power industry to be controlled by a few big corporations. By removing most of power assets from the control of the government, Epira has also allowed the virtual takeover of the power industry by the private sector. This has led to cases of connivance between companies across the entire power industry. Meralco’s anomalous power supply agreements with seven generation companies, six of which are sister companies, is a clear example of such.

Epira has been in force for 16 years, but we have yet to see any substantial improvement in the power industry under it. Let us push for an alternative power industry framework that will ensure accessible, affordable and reliable power generation, transmission, and distribution. Our power industry should also consider environmental sustainability, energy security and optimal use of indigenous and renewable energy sources. Let us call for a nationalized power industry geared toward addressing domestic needs and laying a favorable setting for industrialization.

FINESA COSICO, secretary general, Agham-Advocates of Science and Technology for the People

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TAGS: Electric Power Industry Reform Act (Epira), Electricity, President Duterte, private corporations
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