Trumping competition

It took Congress nearly three decades to pass the law providing for a national competition policy and establishing the Philippine Competition Commission (PCC) to level the playing field and ensure efficient and fair market competition in the economy. It took the Lower House just four months, and the Senate another two (not counting the election recess) to pass a law giving one firm an undue edge, trumping its competitors, and trumping competition policy as upheld by the Philippine Competition Act (Republic Act No. 10667).

If this contrast is indicative of Philippine policymaking, it should surprise no one that we have consistently fallen behind our neighbors in achieving an economy that is both dynamic and inclusive, i.e., whose benefits are widely felt.

Solar Para sa Bayan (SPSB), aka Solar Philippines Inc., is just a President’s signature away from gaining undue advantage over existing and potential electric power providers all over the country. The nationwide franchise that the firm has managed to obtain from Congress is unprecedented in both its scope and nature. Critics call it a “super franchise,” quite unlike franchises granted its competitors. It’s also seen to run against the Constitution and existing power industry rules promulgated by the Electric Industry Reform Act (RA 9136).

The SPSB franchise is so controversial that it has attracted opposition from a broad range of stakeholders, bringing together even strange bedfellows otherwise known to represent opposing interests. Early on, a group of lawmakers assailed how House Bill No. 8179 was “railroaded” by the House committee on franchises, less than a month after the original bill’s filing. With only one hearing held that included only SPSB and some government agencies, consumer and civil society groups and key private sector stakeholders were reportedly unable to take part in the deliberations.

The Philippine Solar and Storage Energy Alliance cites how the bill grants one private company blanket authority to establish solar minigrids all over the country, with virtually no government oversight or provisions for consumer protection. “With millions of Filipinos still without access to electricity, the need is … [to] broaden the opportunities for all renewable energy developers in order to lower power rates and improve services, not add layers of regulation and bureaucracy through the requirement of a ‘franchise’ that has never even been imposed before, that is neither legally nor practically necessary, and that effectively kills competition.”

While the proposed SPSB franchise is said to be “nonexclusive,” it would imply that other solar energy minigrid developers would henceforth need to undergo the cumbersome process of obtaining a franchise “that has no legal basis and necessity.” The PCC warned Congress of the “undue advantage” SPSB will enjoy unless they first legislate a competitively neutral regulatory framework to govern distributable power technologies and minigrid systems.

The Philippine Rural Electric Cooperatives Association Inc. (Philreca), Philippine Electric Plant Owners Association and Manila Electric Co. have also opposed the measure. Arguing that SPSB does not even deserve such franchise, Philreca documented how SPSB has allegedly fallen short of its promises of efficient and lower-priced electric power in its existing minigrids in Paluan municipality and Cabra Island in Occidental Mindoro province.

Last week, leading business groups urged the President to refer the bill to the government’s economic managers, citing how the franchise will “put at a disadvantage other renewable energy companies now operating in our country.” Even Senate energy committee chair Sen. Sherwin Gatchalian objected to the insertion of a definition of “underserved” areas that SPSB can exercise authority in. Now it can refer to areas where power has been interrupted at least 12 times in the preceding 12 months. “To legislate a low and unfounded bar for an area to be considered underserved would be a disservice not only to the community but would be unfair to the franchised distribution utility,” he noted.

“Para sa bayan?” With all the outcry, SPSB seems to be anything but.

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