[Event] National Power Summit: “Lessons Learned, Challenges and Prospects for the Philippine Power Industry” – www.fdc.ph

Posted on June 8, 2011 by Human Rights Online Philippines 3 comments

On the 10th year anniversary of EPIRA
An initiative by
Freedom from Debt Coalition (FDC)

in cooperation with

1st Consumers Alliance for Rural Energy Partylist (1-CARE)
Association of Mindanao Rural Electric Cooperatives (AMRECO)
Institute for Climate and Sustainable Cities (iCSC)
Foundation for Sustainable Society Inc. (FSSI)
Fair Trade Alliance (FTA)

convenes a

National Power Summit

“Lessons Learned, Challenges and Prospects for the Philippine Power Industry”

Introduction

The power industry in the Philippines is at a crossroads.

With one of the highest industrial and residential power rates in Asia and in the whole world, the industry has made life harsher and harder for poor Filipinos. Economic growth is also slow as the high cost of power has made our industries uncompetitive in the international market, the consequences of which are being shouldered by ordinary people – by workers for instance who suffer depressed wages and job losses, and by consumers who bear the brunt of high prices of goods and services.

Regrettably for over a decade, the Filipino people have not come close to savoring the taste and smell of an affordable and reliable supply of electricity. Under the pre-EPIRA set up wherein power generation and transmission were concentrated in a state monopoly, and where rural electric cooperatives tended to serve a more political than developmental (and democratic) function, rent-seeking, corruption and political patronage became the norm, culminating in the monstrosity of the Bataan nuclear power plant, the severe power shortage of the 1990s, and debts that even the World Bank found unsatisfactory.

The power crisis from the late 80s up to the early 90s was exploited by the International Financial Institutions (IFIs) and the power-brokers in Malacanañg to tap the private sector in addressing the crisis by liberalizing the entry of Independent Power Producers (IPPs) in power generation. The supply shortage was addressed but the prohibitive cost of such cure was not told to the public until the mid-1990s.

The apparent haste of the National Power Corporation (NPC) in entering into contracts with IPPs without it seems much consideration of actual and realistically forecasted supply and demand conditions, and without prudent assessment of the risks and costs attached to such risks that NPC was absorbing in these contracts, created a new problem for the power sector. From a situation of shortage the pendulum shifted to an over-contracted supply that consumers had to pay for whether or not they were actually using the contracted capacity. This and many anomalous details in the contracts with IPPs also sank the NPC deeper into debt: US$9-B[1] of new debts arising from the purchased power contracts with the IPPs. These onerous IPP contracts gave rise to the unjust collection of purchased power adjustment or PPA from the consumers. From then on, PPA constituted the single biggest item in NPC’s tariff rates, amounting to not less than P3/kWh before the unbundling of rates. This quick fix solution also allowed the entry of dirty power plants utilizing fossil fuel such as coal and diesel which pollute the environment and add to CO2 emissions.

The enactment of the Electric Power Industry Reform Act (EPIRA) in 2001 has put the IFIs power reform program in the country into full motion, with privatization as its main motor and deregulation as its accelerator. With its proclaimed mission of lowering rates and ensuring efficient and reliable energy supply, EPIRA as it has been implemented over the past ten years has resulted to more price hikes and less competition. In addition, the newly-created Luzon grid spot market under WESM has not been spared from price manipulation as highly concentrated demand and supply conditions make it extremely profitable for the players (private and state) to exercise and abuse market power. Moreover, injury is aggravated when consumers are rendered helpless against these abuses and manipulations as the Department of Energy (DOE) and Energy Regulatory Commission (ERC) do nothing to stop or prevent these from happening. And they continue to happen, with impunity.

The few families that dominated the power sector in the past remain as entrenched as ever if not more so, with two or three wealthy individuals and big business groups entering the fray since the passage of EPIRA in 2001. Privatization of the government’s assets has not resulted in de-monopolization and competition, but rather, higher concentration, vertically; and horizontally. This together with deregulation of generation and supply courtesy of the EPIRA has resulted in market abuse that has so far been unchecked by the regulators. And since the government’s liabilities were not privatized, we have recently learned that privatization of the assets of the National Power Corporation has done little to reduce its debts which will now be passed on to electricity consumers, rich AND poor.

Notwithstanding all these unmet objectives of EPIRA, the IFIs, government, and power-brokers/marketers contend that while reforms in the power industry may have suffered setbacks, all these are but a work in progress as actual privatization of the assets of NPC began only five years ago. Yet with privatization continuing at a more harried pace today, the future of the industry and the dream of consumers to have universal access to affordable, sustainable and reliable power, remain bleak. As far as ordinary consumers and the poor are concerned, the lights are still off.

A. Objectives:

1. To craft strong and unified positions on the government’s campaign to privatize remaining assets of NPC (Angat, Agus-Pulangi and Unified Leyte Geothermal Plant) and the rural electric cooperatives, and on the privatization of transmission

2. To develop and promote Filipino consumers welfare and interest in the power industry

Affordable power rates
Reliable, secure power supply
Strategic and programmed democratization of ownership and control particularly in generation and distribution sectors
Strategic and programmed shift towards renewable energy
Active role of the public sector in transmission and in crucial power generation

B. Target participants:

1.       119 Rural Electric Cooperatives
2.       Legislators
2.1    Hon. Senator Chiz Escudero
2.2    Hon. Senator Gringo Honasan
2.3    Hon. Senator Antonio Trillanes
2.4    Hon. Deputy Speaker Erin Tañada
2.5    Hon. Congressman Walden Bello
2.6    Hon. Congresswoman Kaka Bag-ao
2.7    Hon. Congressman Michael Angelo Rivera
2.8    Hon. Congressman Salvador Cabaluna III

3.       Consumer groups
3.1    Save Angat Dam (SAD Sale)
3.2    Coalition of Consumers for the Deferment of the Privatization of the Tongonan Geothermal Power plants (UNIFIED Leyte)
3.3    PALAG Mindanao
3.4    FDC Local chapters (Ilo-ilo, Cebu, Negros, Evis, Davao, Westmin, Gensan)

4.       Business groups (c/o FTA)
5.       Associations and unions under REC’s (c/o APL, PM, NSU-NSA)
6.       Department of Energy (DOE)
7.       Energy Regulatory Commission (ERC)
8.       Power Sector Assets and Liabilities Management Corporation (PSALM)

C. Concept and description of activities:

Day 1 – Pre-Summit (Public Forum and Focus Group Discussions)

Morning session – Public Forum sponsored by the University of the Philippines-National Engineering Center

Lessons Learned – “Dissecting the Anatomy of EPIRA”

Afternoon session – Breakout Groups (Focus Group Discussions)

Challenges – “Moving beyond the failures of EPIRA: Recommendations and other measures”

FGD (Session 1) – How to reduce power rates in the Philippines?
FGD (Session 2) – Solutions to NPC debts: Some recommendations
FGD (Session 3) – Making power industry more efficient, reliable and secured
FGD (Session 4) – A Viable and Democratic REC’s
FGD (Session 5) – What kind of regulation do we need and how?
FGD (Session 6) – Renewable Energy: Moving Forward

Day 2 – National Power Summit

Prospects

(Moring session) – A Sustainable Framework for Electric Cooperatives in Regulated Public Utilities
(Afternoon session) – Citizen’s report and recommendations on Power Industry – Multi-stakeholders gathering