To the Honorable Senators:
30 January 2004
The Freedom from Debt Coalition believes that the Downstream Natural Gas Industry is a strategic undertaking. Policies regarding this sector will greatly affect industries and consumers.
We would like to express the following urgent concerns regarding Senate Bill 2524 (An Act Ordaining the Development of the Downstream Natural Gas Industry, Consolidating for the Purpose All Laws Relating to the Transmission, Distribution and Supply of Natural Gas and for Other Purposes):
1. The bill must not allow any take-or-pay arrangements because this is grossly disadvantageous to consumers and against public interest. Past experiences bear out the negative impact of take-or-pay provisions or other forms of risk guarantee: extremely high electricity rates, risk free operations of private entities at the expense of consumers and public funds, and the financial and fiscal deterioration of state companies such as the National Power Corporation.
2. There should be full and effective public control over an industry as strategic as the natural gas industry. The bill calls for private sector participation. In other areas, these words have come to mean private sector dominance and monopoly. While we recognize that private sector involvement may be necessary, it should not negate public control over the natural gas industry.
3. Further, the bill must clearly state that no financial guarantees, whether direct or indirect, shall be extended to private sector investments. Public funds should not be used to shore up and protect private investments.
4. Prohibition against cross-ownership between transmission, distribution, and supply sectors should be explicitly stated to prevent possible collusion and predatory pricing among industry participants.
5. In the matter of rate adjustments, consumers should be given the chance to be heard before the ERC renders any decision. Thus, the provision that
allows the ERC to decide rate increase applications without prior hearing should be removed
6. The provision that disallows parties to renegotiate their Gas Sales and Purchase Contract should be removed, since this does not give flexibility in dealing with changes in circumstances including severe economic crisis and force majeure events.
7. Regulatory powers should be given to an independent entity with consumer representation. We disagree with giving vast regulatory powers to an executive agency that is accountable only to the President, like the Department of Energy.
8. There should be clear oversight mechanisms to ensure transparency, accountability and compliance with laws and regulations from bidding, to contract awarding, to implementation and operations.
FDC urges the Senate to give the public more time to understand and critic this proposed measure.
Signed:ANA MARIA R. NEMENZO