CAMARINES Sur Rep. Luis Raymund Villafuerte yesterday backed President Marcos Jr.’s plan to have the 21-year-old Electric Power Industry Reform Act (EPIRA) reviewed to bring down electricity rates, saying one priority amendment to the law is the removal of the provision granting distribution utilities (DUs) the exclusive right to operate in their respective franchise areas.
Villfuerte said Congress should scrap the rule that allowed DUs to “enjoy a monopoly over electricity supply in their respective franchise areas.”
DUs are corporations, electric cooperatives, state-run utilities or local government units (LGUs) that have exclusive franchises to operate and maintain electricity distribution systems.
“The 1987 Charter prohibits any monopoly or exclusive right in franchises,” he said. “The EPIRA Law of 2001 should thus be amended to make this constitutional prohibition clear, so that competing DUs could be allowed to do business in areas currently serviced solely by franchisees. This way, consumers will have the power of choice as to which service provider to get, based on which one offers more stable, better and cheaper services.”
“The DOE should encourage greater and genuine competition at the distribution level by doing away with the current monopolistic structure arising from an EPIRA provision on captive markets that prevents DUs from doing business in a particular franchise area already serviced by another DU,” he also said.
Amendments to the EPIRA is among the priority measures approved by the Legislative-Executive Development Advisory Council (LEDAC).
During a visit to Bacolod City last month, the President discussed the matter after local officials led by Mayor Albee Benitez informed him of their plan to enter into a joint venture) with solar power generation companies so they could tap renewable energy sources in slashing electricity rates for the benefit of consumers.
Given that the EPIRA prohibits power generators from selling electricity directly to consumers, the President suggested to Bacolod officials for the city government to get an opinion from the Energy Regulatory Commission on the matter, which the President should be the basis for the amendment.
With the President himself backing changes to EPIRA, Villafuerte said Congress should pursue reforms aimed at ensuring “genuine market competition, which, in turn, would clear the way to more affordable electricity for consumers and a lot more investments by the private sector.”
“Such reforms would enable the Marcos administration to achieve after over two decades the lofty goals of the EPIRA law to nurture true market competition, ensure reliable and affordable electricity for consumers, attract more FDIs (foreign direct investments) and check market abuse,” he said. “We need to rid this market of monopolistic structures, particularly in the power distribution level, that have hindered true competition and prevented consumers from gaining access to industry players that offer better services and cheaper electricity.”
To ensure that electricity consumers are neither overcharged nor held hostage to sudden rate adjustments that unduly pad their monthly bills, Villafuerte said the DOE should consider negotiating for long-term power supply agreements (PSAs) with fixed electricity rates in lieu of the current government practice of approving “floating” PSA contracts that are adjusted from time to time, based on unpredictable factors such as fluctuating foreign exchange rates and global oil prices.
He said that in relation to this, the DOE should introduce a long-term forward market where the entire industry could bid for forward contracts for the entire national power grid.
The DOE should also consider dumping its current policy of approving individual contracts in favor of approving the entire load profile per contractor in which the PSA itemizes how much of the entire electricity load for a franchise area comes from their baseload, intermediate or mid-merit and peaking plants, Villafuerte said.
Another reform, the lawmaker said, is for the DOE, together with the Philippine National Oil Corporation to strive to increase the share of natural gas in the national power mix to ensure a more stable power supply through diversification. However, he said, this would depend on the DOE providing much clearer regulatory policies to minimize investor uncertainty and thereby entice more overseas players to invest in liquified natural gas development in the Philippines.
Villafuerte said the DOE should also put a premium on developing indigenous renewable energy sources like geothermal power, and Distributed Energy Resources, which are small-scale units that generate 3 kilowatts to 50 megawatts of generally lower-cost power and operate locally but are connected to larger power grids of DUs.
An example of DERs are the stand-alone rooftop solar photovoltaic units of homeowners that are connected to DUs like the Manila Electric Co. (Meralco).
The administration lawmaker said the cost of any indigenous energy source must not be linked to any global price or peso-dollar rate other than the initial foreign exchange cost of any capital expenditure made by the power generator.
