Tag Archives: EPIRA

[Statement] Secretary Petilla, Do your homework first, otherwise resign!!! -Power to the People Coalition

POWER TO THE PEOPLE COALITION

Secretary Petilla, Do your homework first, otherwise resign!!!

The recent statement of Secretary Jericho Petilla asking the President to exercise emergency powers to solve the current energy crisis is a dire attempt to excuse his inability and ineffectiveness in solving the problems in the power industry.

power to the people coalition

We would like to remind Sec Petilla that before he use section 71 of the EPIRA law ,he should have gone first to section 37, powers and functions of DOE, which requires him to submit to Congress not later than the 15th day of September of every year the Philippine Energy Plan which (b) “shall provide for integrated and comprehensive exploration, development, utilization, distribution and conservation of energy resources, with preferential bias for environment-friendly, indigenous and low-cost sources of energy.” Section 37 (i) specifically mandates DOE to: “Develop policies and procedures and, as appropriate, promote a system of energy development incentives to enable and encourage electric power industry participants to provide adequate capacity to meet demand including, among others, reserve requirements.”

We shudder at the thought that he has been writing and making our policies to promote a system of energy development incentives to encourage participants to provide adequate supply of power. What exactly are those policies and incentives?

For one, has he looked into the asymmetry in the industry with Meralco being the biggest buyer and a monopsony, especially one that has interests, even if supposedly capped, in the generation and supply sector.With the highest electricity rates, why are we not drawing outside interest and new investments in the power generation.Quite the contrary, Meralco just invested millions of dollars in Singapore. Should this not be a matter of interest to the DOE Secretary?

Given this clear mandate and the emergency we are now in as very publicly declared by Petilla, his failure to fulfill his mandate must be the biggest crisis of the energy sector and the power industry. Petilla like EPIRA is a failure! His inability to submit the required plan is just one of the indicators of his ineptitude.

In other words, before Petilla goes to the president to spin tales of a crisis and make the beleaguered President into a white knight, he should face the public and explain why his Philippine energy plan failed to anticipate and plan for the generation/supply shortfalls and why his power development plan did not have the programs and policies to lure investors into generation. He should do his homework first! Otherwise he should resign from DOE.

After showing that the imminent crisis is beyond control and influence of prudent planning and responsive policies, only then can he bring up section 71 with the president. Otherwise, Petilla will be no different from Abad, who has apparently painted the president into the DAP corner. Petilla will be no different from Abad, who has implemented the DAP. We will not be surprised too, if Pnoy, just like what he did to Abad, will defend Petilla to high heavens and assert that his recommendations for emergency powers for the President will be an “act of good faith” and for the good of the people.

The rising prices of electricity including the crisis was brought about by corporate greed and privatization of the power industry though the passage of EPRA law. The failure of EPIRA to solve the power crisis only strengthens the call to repeal it and push for alternative sources of energy.

We should dismantle EPIRA and pave the way for the rapid development and shift to sustainable, accessible, safe and renewable energy systems that the people-especially the poor and the communities in the off-grid areas can truly enjoy and benefit from. The government should undertake immediate and massive public investments in the immediate and rapid shift and transformation of our energy systems.

PRESS STATEMENT
25 July 2014
Contact Person: Erwin Puhawan
Mobile No. 0932-872-6174

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[Press Release] Workers to ‘gods of Faura’: Stop power firms’ blackmail, fraud -NAGKAISA

Workers to ‘gods of Faura’: Stop power firms’ blackmail, fraud

While politicians and businessmen have joined President Aquino for the National Day of Prayer and Solidarity to the victims of natural and man-made calamities, workers in Metro Manila belonging to the labor coalition Nagkaisa, trooped to the Supreme Court to seek relief and ultimate deliverance from unjust power rate hikes.

NAGKAISA

The fifteen (15) justices, also known as ‘The gods of Faura’, were set to hear oral arguments tomorrow on several petitions seeking injunctions to Meralco’s P4.15/kWh rate increase. Prime in the agenda to resolve are questions on whether or not the Energy Regulatory Commission (ERC) committed grave abuse of discretion in approving Meralco rate hike; whether or not automatic rate adjustment is valid; and whether or not the generation sector is not a public utility and therefore beyond regulation by ERC, among others.

“We pray that the justices deliver us from a decade-old fraud and industry blackmail,” said Nagkaisa in a statement released during their picket at the gates of the Supreme Court building. The group was referring to frauds committed under the Electric Power Industry Reform Act (EPIRA), including the latest allegations on collusion and market abuse among power firms and the latter’s threat of rotating blackouts had they fail to collect rate increases.

Nagkaisa asserted that since the enactment of EPIRA which led to the deregulation of the generation of generation sector, privatization of Napocor assets, the creation of spot market, and the introduction of performance-based regulation, fraud became the norm in the power industry as shown by rising prices and cartelization.

“It is no secret that owners of power firms, the so-called Voltage 5 (Aboitiz, Lopez, San Miguel, Henry Sy, and Pangilinan) have been earning record high profits from record high tariffs of their power-related firms,” said Nagkaisa.

The labor coalition recalled that lowering the cost of power was the pledge of the Arroyo administration when it prodded Congress to pass the EPIRA upon assumption to power 13 years ago today.

Nagkaisa explained further that since 2008, many of its convenor groups have attended, submitted position papers, and argued against the ills of EPIRA before committee hearings of both houses of Congress, including those conducted by the powerful Joint Congressional Power Committee (JCPC). Yet no actions were made to address those concerns.

It likewise chided the Executive for peddling the line that the only choice for now is between expensive power, or having no power at all.

“We hope the Supreme Court brings light to a dark decade of power hikes, naked greed, and blackmail amid unreliability of power supply,” concluded Nagkaisa!

NAGKAISA
PRESS RELEASE
20 January 2014
Reference:
Wilson Fortaleza
09178233956; 09225261138
Louie Corral
09178055487; 09228022396

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[People] The Power Mess: How We Got into It and How to Get Out By Walden Bello

The Power Mess: How We Got into It and How to Get Out
By Walden Bello
INQUIRER.net
April 23, 2012

With the electricity rates in Luzon now among the highest in the world and Mindanao plagued by daily brownouts, the power situation in the Philippines can only be described as a mess. How did we work ourselves into this jam?

Well, there are several landmarks on the road to our current power crisis.

Three Landmarks on the Road to Crisis

The first was the decision, during the Marcos period, to build the Bataan Nuclear Power Plant (BNPP). BNPP, a 620-Megawatt (MW) facility, was supposed to fill the additional demand for electricity in Luzon from the 1980’s on. The only problem—and a big one—was that the technology was unsafe and the plant was situated in a seismically active area and on the slope of a volcano–Mt. Natib–that could not be certified as dead.

BNPP had to be cancelled, and the Fukushima tragedy of 2011 proved in retrospect how correct that decision was. But not surprisingly, with the main power project designed to fill growing demand in Luzon sidelined, rolling brownouts hit the country in the early 1990’s. The administration of President Fidel Ramos then committed the second big blunder, which was to hurriedly contract independent power producers (IPP’s) to fill the power gap. With their notorious “take-or-pay” provision–meaning distributors had to pay for a specified amount of power whether they used it all up or not–IPP contracts pushed up the cost of electricity tremendously. The power retailers like Meralco were not about ready to absorb the added cost, so they passed it on to the consumer.

The third milestone was the privatization of the National Power Corporation (NPC or Napocor) in 2001 via the so-called EPIRA law.

The Faulty Assumptions of EPIRA

EPIRA was informed by two heroic assumptions. The first was that the sale of government energy facilities would result in proceeds that would pay off Napocor’s massive debt, which reached P943 billion by 2001. As President Aquino described it at the 1st Mindanao Power Summit over a week ago, “The idea behind it [EPIRA] was: NAPOCOR would sell its power plants to private investors, and use the proceeds to pay its debt. This was supposed to put an end to the never-ending, increasing debt.”

The second assumption was that privatization would make the generation and delivery of electricity more efficient and thus bring down the cost of power. Private is better than public; the market is more efficient than the state: This was the neoliberal faith that was so enthusiastically embraced by Philippine technocrats in the 1990’s. This was the mindset that saw not only the surrender of NPC assets to the private sector but also the sale of the highly profitable Petron oil refining corporation to foreign interests and the ceding of the provision of water in the Metro-Manila area to the Ayalas and the Lopezes by the Metropolitan Waterworks and Sewerage System (MWSS).

The reality that followed differed from the assumptions behind EPIRA.

First of all, the anticipated revenue did not materialize since NPC facilities were disposed off at fire sale terms. For instance, according to a report by the renewable energy group MinCARED , the Masinloc Geothermal Plant in Zambales, valued at $390 million, was sold to private investors who made an initial down payment of only 40 per cent, with the balance to be paid in seven years at $80 million yearly—an amount that is actually the average yearly income of the plant itself! Similarly, the National Grid Corporation of the Philippines (NGCP) put in an initial payment of $987.5 million, or 25 per cent to acquire TRANSCO, NPC’s transmission facility. The remaining $2.92 billion or 148 billion pesos will be paid in 15 years. TRANSCO is earning an average of 15 billion a year, which is more than enough to cover NGCP’s yearly installment payment. In other words, as the analysis put it, “NGCP has only minimal investment in its acquisition of a highly profitable jewel of our country.”

Not surprisingly, the sale of NPC assets at extremely disadvantageous terms to the private sector has produced a situation in which NPC debt has not diminished but instead climbed from P943 billion in 2001 to P1.24 trillion in 2009.

The assumption that market forces would result in cheaper electricity owing to greater efficiency likewise did not pan out. The cross-ownership of power producers and electricity distributors allowed by EPIRA did not lead to greater competition but to what economist Edna Espos described as “institutionalized oligopoly …where the market is dominated by a small number of players who are able to collectively exert control over supply and market prices.” A key institution that EPIRA set up was the Wholesale Electricity Spot Market (WESM). Originally designed to be a mechanism for identifying and setting prices based on quantities of electricity transacted between many power generators and retailers, WESM’s prices actually came to reflect the dynamics of the collusive oligopoly that replaced the state monopoly.

Not surprisingly, the rates of Meralco, the country’s biggest power distributor, jumped by 112 percent over 10 years, while the rates charged by NPC went up by 95 per cent. Instead of dispersal of ownership, only a handful of groups – San Miguel Corp., the Aboitizes, the Lopezes, and “Manny Pangilinan Inc.”– control 52 percent of power generation. As Rep. Ben Evardone put it in a privilege speech in January of this year, “The EPIRA has obviously only harnessed the domination of only a few corporations in both the generation and distribution of power to the detriment of the Filipino power consumers. This can be attributed to the watered-down safeguards against monopoly in the electricity sector.”

Derailing Renewable Energy

Even as EPIRA floundered, the methods of power generation based on fossil fuels came under criticism for environmental reasons, including their contribution to global warming, of which the Philippines was a prime victim. The result of the widely felt need for a new direction in energy policy was the Renewable Energy Act of 2008, which sought to transform the country’s energy mix to one that was predominantly reliant on renewable sources like hydropower, solar, wind, and biomass. However, half-hearted commitment on the part of the Executive and resistance from business, which said renewable energy (RE) development would make power even more expensive, stalemated any move in the direction of RE. Instead, business interests, notably the Aboitizes, took advantage of projections of electricity demand to promote coal, the dirtiest energy source–both in terms of its impact on health and climate change–as the answer to the power crisis. From less than 10 per cent in 1991, coal plants now generate over 30 per cent of the country’s power. There are currently 11 coal-fired plants in the country, and plans are being accelerated to set up more. Most controversial is the Aboitiz project in the Subic Bay Metropolitan Authority which is projected to produce some 400 to 600 MW to “stave off brownouts in Luzon by 2014,” according to Energy Secretary Rene Almendras. Equally controversial is the Department of Energy’s plan for Mindanao, which envisions the installation of 1000 MW of coal-powered energy capacity in the next few years. Almendras, a former Aboitiz executive, has become the high priest of coal, though it is probably technocratic belief in the efficacy of coal rather than ties to the company that drives his advocacy.

Mindanao: Battle Ground of Energy Paradigms

Mindanao has now become the site of the battle between pro-RE groups and pro-coal forces brandishing the argument that that energy source is the only way to meet that region’s rising demand. Currently, Mindanao has the most RE-friendly energy mix, with hydro, geothermal, and other renewable sources accounting for 60 per cent of energy generating capacity, in contrast to 42 per cent in the Visayas and a mere 32 per cent in Luzon, according to UP Professor Clodualdo del Mundo. Central to the energy complex of the region are the Agus-Pulangui dams, which generate 52 per cent of the region’s power supply. Mindanao’s largely hydro-based system also enjoys the lowest generation charge among the country’s regions, coming to 2.8 pesos per kilowatt hour–compared to 4.3 pesos in Luzon and 4.0 pesos in the Visayas, where the generation cost is tied to the international price of oil and coal on which power generation is dependent. Yet, owing to the deterioriation of the Agus-Pulangui dams, supply has become erratic, especially during the dry season. Rehabilitation of the two dams is badly needed. Also, siltation of the Agus River in Lanao and the Pulangui River in Bukidnon has deprived the dams of the amount of water needed for them to function at full capacity. As a consequence, the electricity provided by the hydropower plants has been reduced by about a third from its former level, according to a report in the Manila Times.

Given their central importance to Mindanao, the deteriorating condition of the Agus-Pulangui complex strikes some observers as suspicious. As the Freedom from Debt Coalition put it in its Open Letter to President Aquino, “There are indications that vested cartels are positioning themselves to corner a huge share of the electricity market by allowing the intentional decay of said power plants,” a development that “will also virtually guarantee long-term high electricity prices, since contracts will be pegged to the volatile oil market and the ever increasing international price of coal.”

Distrust is also being sown by DOE’s plan to add 1000 MW worth of capacity whereas its estimate of Mindanao’s current shortfall is only 100 MW. Pro-RE advocates suspect that the agency is preparing a major expansion of coal plants not only to support rising residential and industrial demand but also respond to the projected demand from the mining operations, including coal mining. Their suspicions have been further stoked by Almendras’ publicly proclaimed goal of making the Philippines’ self sufficient in coal and his plan of exploring “30 coal areas” in the country.

The Way Out of the Mess

So how do Mindanao and the country as a whole fight their way out of the power conundrum? The following plan, consisting of immediate, medium-term, and long-term components, is distilled from the proposal of a number of groups, such as Freedom from Debt Coalition, the Mindanao Congress of Advocates for Renewable Energy and Rural Electrification and Development (MinCARED), and Akbayan.

First of all, say RE advocates, there must be a multipronged effort to address the immediate crisis. Secretary Almendras must rescind his recent order to electric coops to fill surplus demand by buying electricity from private power plants and barges at 14 pesos per kilowatt hour.

Two, the four power barges still under government control, each of which can generate 32 MW, must be deployed to Mindanao, to produce electricity that can be sold to consumers price based on the generating cost of 2.8 or 2.9 pesos per kilowatt hour. Power from these barges, along with power from the Agus-Pulangui, should meet most of current demand, with the remainder of the shortfall filled by energy conservation efforts devised by LGU’s in cooperation with electric cooperatives.

Three, the NPC must immediately upgrade the Agus-Pulangui hydro units, rehabilitating equipment, dredging the silt from the Agus and Pulangui Rivers, and undertaking watershed reforestation to promote sustained water flow.

Moving to the medium term, under the terms of EPIRA, Mindanao has been given a brief reprieve, meaning NPC’s assets there have not yet been sold to the private sector. This reprieve must be made permanent. Instead of turning over Agus-Pulangui to the private sector, a body could be set up along the lines of Rep. Maria Isabel Climaco’s proposal for a “Mindanao Power Company,” which would be a government-owned-and-controlled corporation, but with a multisectoral board, that would own, operate and control the Agus-Pulangui hydro power complexes. The idea, says Climaco, “is to have Mindanaoans be responsible for powering Mindanao.” Part of the financing of company could come from Mindanao’s 26 provincial governments.

In the long term, both for the sake of Mindanao and the whole country, EPIRA must be repealed. More than a decade after it was enacted, EPIRA has delivered the opposite of what it promised: higher electricity rates, an energy sector unable to cope with growing demand, inefficient provision of electricity, and a greedy oligopoly.

There must also be a decisive reversal of the trend to setting up more coal plants. While the expansion of coal is being justified as a temporary step as renewable energy projects are waiting to come on stream, the reality is that it will set up a massive fossil-fuel base energy infrastructure that is permanent, with all the damaging consequences for the environment and public health. The RE Act must, in short, be implemented, immediately. The feed-in tariff and other investment incentives must be deployed, and the latest innovations in solar, wind, biomass, and min-hydropower from Europe and China must be adapted to local conditions. While some RE projects have high start-up costs, in the long run these will fall and make RE equally if not more efficient than fossil fuels, and without the latter’s high environmental costs.

Also important is the institutionalization of citizen and consumer participation at all levels of energy planning to ensure accountability and transparency. The kind of brazen undermining of the Renewable Energy Act by the DOE in its promoting the expansion of the coal option must never be allowed to happen again.

Financing the Transition

Putting this energy plan into effect will take money. Where can this be sourced? Currently, the government is allocating over 20 per cent of the P1.8 trillion budget to creditors, many of whom have been paid many times for loans—including energy sector loans like the BNPP–that were given at crushingly high interest rates over the last four decades. A negotiated or unilateral reduction of debt repayments would release the funds much needed for putting in place a renewable energy infrastructure for the 21st century. An initial step might be the cancellation of fraudulent loans. As Lidy Nacpil of Jubilee South has pointed out, this is becoming politically feasible: in 2007, Congress actually approved a general appropriations bill with a provision on suspending debt payments for 17 loans that were found to be fraudulent. From that provision alone the government was expected to save approximately P29.5 billion that it could have devoted to pressing social or energy needs, but the measure was vetoed by then President Arroyo.

Many development economists, among them Nobel laureate Joseph Stiglitz, have increasingly reached the conclusion that countries with massive debt loads will find it very difficult to develop, owing to the channeling of national financial resources to debt repayment. In contrast to the Philippine experience, in Argentina, the late President Nestor Kirchner unilaterally reduced the debt burden of the country to foreign bondholders from 100 cents to the dollar to some 25 cents to the dollar in 2003. The bondhholders howled, but they eventually gave in. The result was an impressive 10 per cent per annum growth rate between 2003 and 2008 as financial resources were rechanneled from debt service to domestic investment.

If our country is to develop, if it is to have a 21st century renewable energy infrastructure, courage like Kirchner’s needs to be displayed by our leaders.

*INQUIRER.net columnist Walden Bello is a member of the House of Representatives representing Akbayan. He was formerly Chairman of the Freedom from Debt Coalition.

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[In the news] NGO seeks Congress intervention in PSALM rate hike plea -InterAksyon.com

NGO seeks Congress intervention in PSALM rate hike plea
InterAksyon.com
February 9, 2012

MANILA, Philippines – The liabilities of the agency tasked to bring down the debt of state-owned National Power Corp. (Napocor) has ballooned from P807.8 billion when it was created in 2001 to nearly P1 trillion last year, according to non-government Freedom from Debt Coalition (FDC).

In a statement, FDC said the surge in its debt shows that Power Sector Assets and Liabilities Management Corp. (PSALM), which was created under the Electric Power Industry Reform Act of 2001 (EPIRA), failed to address the fiscal difficulties of Napocor.

At end-2011, the government owed P915.19 billion, with PSALM accounting for P767.08-billion or 83.8 percent, broken down into P 744.63 billion worth of outstanding liabilities and P22.45 billion in contingent liabilities. This was despite Napocor’s sale of 25 out of 31 power plants, as well as the privatization of the power grid operations under National Transmission Corp. (TransCo).

Read full article @ www.interaksyon.com

[Video] Kuryente Kong Mahal (Part 1) – www.fdc.ph

Uploaded by fdcvideo on Sep 8, 2011

TEN YEARS since the passage of the Electric Power Industry Reform Act (EPIRA), its promise of affordable and accessible electricity to all through privatization and a leveled playing field in the industry has turned into its complete opposite.

Read more

[Press Release] EPIRA a “massive failure” – FDC

MANILA, Philippines – For not succeeding in achieving its objectives of reducing the debts of the National Power Corporation (NPC) and bringing down the power rates in its 10 years of implementation, the Electric Power Industry Reform Act (EPIRA) is a “massive failure,” according to the Freedom from Debt Coalition.

FDC issued the statement echoing the opinion of Senator Joker Arroyo who said that “EPIRA is a failure” during a public hearing of the Joint Congressional Power Commission (JCPC) last Thursday at the Senate.

The advocacy group asked the JCPC to compel the NPC and the Power Sector Assets and Liabilities Management Corporation (PSALM) to make public their financial statements. PSALM is the agency in charge of selling government power assets.

FDC secretary-general Milo Tanchuling, who participated in the JCPC public hearing, stressed that after ten years since EPIRA was passed the power rates have increased and the total amount of NPC debts have remained virtually the same.

He explained that the figures presented by PSALM showed that the NPC’s debt and other financial obligations stood at US$16.387 billion in 2001 when EPIRA was passed. At the end of 2010, it amounted to US$15.821 billion, or a difference of only US$500 million.

“With regard to the basic generation rates of NPC, there have been two rounds of increases since EPIRA was approved, first in 2005 when NPC was granted a P1.03 per kilowatt per hour (kWh) increase and in 2009 when NPC was again granted increases of P0.4682 per kWh in Luzon, P1.1460 per kWh in the Visayas and P0.7147 per kWh in Mindanao,” he said.

Tanchuling said during the JCPC public hearing that his organization was “dismayed by the fact that the huge debts of NPC have remained in spite of repeated power rates increases and power adjustments under EPIRA which were all shouldered by ordinary consumers, not to mention the burden of additional taxes used to invest in the NPC power plants—most of which have now been sold supposedly to pay the NPC debts.”

“It was clear that, EPIRA did not provide for any substantial and meaningful renegotiation of NPC’s contracts with independent power producers (IPPs), even though these contracts require NPC to purchase electricity whether or not these are actually generated or dispatched, and to supply fuel to IPPs that are in operation. The price NPC agreed to pay for this electricity was overstated to begin with, and many of these contracts have clauses that allow the IPP to raise rates over time,” he pointed out.

Tanchuling noted that EPIRA’s failure to meet these two objectives were also the reasons mentioned by Senator Arroyo during the JCPC meeting for the failure of the EPIRA.

Tanchuling proposed to the JCPC that NPC and PSALM should release their annual financial statements to the JCPC so that the public may know why NPC’s indebtedness was not reduced even after selling the bulk of its assets, hiking its generation rates twice and, on top of these, receiving regular payments of its so-called deferred accounting adjustments through the Generation Rate Adjustment Mechanism (GRAM) and Incremental Currency Exchange Rate Adjustment Mechanism (ICERA).

“Moreover, a debt audit of the NPC debts and financial obligations is needed to determine if these were contracted under fair terms and conditions, and then used wisely and prudently. The Filipino people will also have a solid basis to demand the repudiation of any onerous debts and financial obligations of NPC,” he added, “which if passed on to electricity consumers and taxpayers would be a grave injustice.”

Press Release
Contact Person: Milo Tanchuling
Tel. No. (02) 921-19-85