By Joel M Sy Egco/Manila Times
Malacanang yesterday admitted that the Electric Power Industry Reform Act (Epira) is defective because it contains provisions that run counter to the intent of the law, which is to ensure reasonable electricity rates.
Presidential Communications Secretary Herminio Coloma Jr said the Palace is throwing its support to some sectors that are pushing the repeal or amendment of the Epira law.
“The one that was passed sought to propose reforms and we realised that the provisions are not enough because we noted a lot of weaknesses or provisions that do not really help but instead are even damaging,” Coloma said.
The official said it is high time for all stakeholders to engage in discussions to determine the views of those in the power sector.
Coloma said stakeholders must join these discussions and suggest concrete actions that should be taken and come up with a national consensus on what the new Epira law should contain.
“That’s why all stakeholders must prepare and the government will do what is right to ensure a smooth process in accepting proposals for a new legislative proposal that would pave the way for reforms in the electric power industry,” he stressed.
He said it is important for power industry players, lawmakers, the executive branch and other agencies concerned to join the consultations and craft measures to reform the existing law.
Critics noted that while the Epira law of 2001 vows “to ensure transparent and reasonable prices of electricity in a regime of free and fair competition,” it contains provisions that is contrary to this objective.
Its section 45, for instance, specifies limits to the corporate elite’s participation in the industry in order “to promote true market competition and prevent harmful monopoly and market power abuse.”
The second paragraph of this particular provision adds that “distribution utilities may enter into bilateral power supply contracts subject to review by Energy Regulatory Commission (ERC).”
Critics noted that this provision subverts the goal of creating a competitive market for the trade in electricity. Such a market could have brought prices down.
Instead of participating in a spot market, generators and distributors could simply resort to bilateral contracts, since the cost of electricity purchased by a distributor such as Manila Electric Company (Meralco) would be passed on to consumers anyway.
This provision negates the intention of the Wholesale Electricity Spot Market (WESM) since more than 90% of its transactions does not involve spot trading but bilateral
contracts.