18 February 2010
ADVOCACY group Freedom from Debt Coalition is not convinced that controversies plaguing the power industry are primarily climate-related or mere supply problems.
Amid talks of power failures, impending rate hikes, and Meralco’s overcharging of more than P7-billion, the group insisted that these are failures of the very policy that was enacted to address these problems.
In a statement, FDC said that pestering problems of high electricity rates, chronic inefficiency in the power system and regulatory failures are dark legacies of a failed program under the Electric Power Industry Reform Act (EPIRA).
“This a failure of the whole power sector reform program under EPIRA. Nine years under EPIRA and the Filipino people are still facing a dark future,” said Milo Tanchuling, FDC secretary general.
“We call on all candidates running for national positions to make the overhauling of EPIRA an urgent agenda for action,” Tanchuling added.
According to reports, the Luzon, Visayas and Mindanao grids have been experiencing power interruptions due to the malfunctioning of several plants and the effect of the El Nino phenomenon that reduces the capacity of hydro power plants. High rates are thus expected as a consequence of running the more expensive diesel-fired plants.
The group bewailed the fact that the current problems facing the power industry today is a reverse of what was envisioned by policy makers when EPIRA was passed into law in 2001.
EPIRA’s main objectives are to bring in competition in the industry, ensure efficiency, reliability security of supply, and bring down rates. These objectives are supposed to be achieved under the regime of liberalization, deregulation and privatization.
“Yet under EPIRA, the rates doubled and the Philippines remained at the top of countries with the most expensive electricity rates. Weak regulation also led to corporate abuse and wanton fraud that impose heavy burden on consumers as in the case of repeated overcharging by Meralco,” stressed Tanchuling.
Inefficiencies also remain in the power system with a highly imbalanced demand and supply situation, the group said.
Citing data from the Department of Energy, FDC said the bulk of installed capacity is in Luzon, with 12,172 MW. Peak demand in Luzon was only about 6,674 MW in 2008. Over the past six years, peak demand in Visayas increased from 903 MW in 2002 to 1,176 MW in 2008, while installed capacity here reaches only to about 1,832 MW. In Mindanao, the peak demand decreased from 1,241 MW in 2007 to 1,204 MW in 2008 compared to the installed capacity of 1,933 MW.
“This means that we have excess capacities in some areas that cannot be shared to other areas that have less power capacity due to problems of interconnections. This is despite the fact that no new capacities are built in areas that have long been threatened by supply shortfall. Unfortunately under EPIRA, the government has relegated the task of building new capacities to the private sector,” Tanchuling lamented.
The group also hit the government for continuously allowing independent power producers (IPPs) to drain Napocor's finances through onerous take or pay arrangements inserted into one-sided contracts.
Moreover, FDC explained that competition is not working in the industry because the ownership base of the industry is virtually under the control of few oligarchs such as the Lopezes and the Aboitizes.
“Sadly, it is the consumers who pay the high cost of these mistakes,” Tanchuling said. (30)