18 December 2007
As the House of Representatives continues its plenary deliberation on the proposed amendments to the Electric Power Industry Reform Act (EPIRA), as contained in substitute House Bill 3124, members of Freedom from Debt Coalition (FDC) staged a picket today to demand the repeal and replacement of the 2001 power sector privatization and restructuring law with a pro-people power industry reform law.
FDC criticized the “misguided focus” of the House energy committee, chaired by Pampanga Rep. Mickey Arroyo, on lowering the privatization target for Napocor assets from 70 per cent to just 50 per cent in order to accelerate open access and retail competition, stressing that the proposed amendment does not address the basic problems besetting the power industry – high electricity rates and still increasing power-sector restructuring related debts.
The coalition also criticized the presidential son for lying when he introduced HB 3124 at the plenary on December 12, saying that his committee consulted FDC.
“We were never consulted by the Lower House Committee on Energy on this bill. In fact, we were requesting the committee that we be invited to speak before the committee to share our position on the pending bills amending EPIRA. We were told that there are five committee hearings scheduled, the fifth being the schedule for the civil society,” said FDC secretary general Milo Tanchuling.
“We were surprised when we heard that the Committee had already made its report after two hearings,” added Tanchuling.
FDC believes that accelerating open access under the present condition where the power plants are owned by few entities will still not lead to so-called competition envisioned by the government to reduce electricity rates, citing the unresolved price manipulations that happened at the wholesale electricity spot market (WESM) last year.
According to FDC’s study, “accelerating privatization will not prevent price manipulation from happening again as these fail to consider the inherent design of WESM’s trading activity as the main stimulus for market collusion. The potential for implicit collusion through repeated interaction in hourly electricity auction is widely recognized among experts. The WESM practice of announcing its demand forecasts in advance of hourly auctions enables generators to bid strategically by learning the bidding strategies of other bidders. Even at 100 per cent privatization of generating capacity, trading firms in the spot market still have the incentive to coordinate their production and pricing activities to increase their collective and individual profits by restricting market output and raising the market price.”
From only about P5/kWh in 2001, power rates have now risen to about P8.50/kWh to P9/kWh for Metro Manila residential consumers, while rates have been increasing as well in other areas. Meanwhile, industrial electricity rates in the country are now the highest in Asia.
Contrary to the promises of EPIRA six years ago, consumers and taxpayers as well continue to be burdened with high power rates, rising government/NPC debts, and still inefficient, unreliable electricity service.
The power industry needs serious reforms. Unfortunately, the proposed amendments still miss to address this.
The coalition calls for democratization of access, ownership, and control in the industry such as having people-owned and managed generation and distribution utilities; complete halt to the privatization of the transmission sector and generation plants using natural resources; and prohibition of cross ownership between generation, distribution and supply.