House flexes muscle to amend power law

PHILIPPINE NEWS SERVICE — Ruling party Lakas Christian-Muslim Democrats has directed all its members in Congress to ensure the amendment of the Electric Power Industry Reform Act to bar power distributors like the Manila Electric Co. from passing on its systems losses to consumers and from engaging in cross-ownership with independent power producers.

Lakas spokesman Prospero Pichay said both the House of Representatives and the Senate must work for the amendment of the Epira “especially if there are provisions in the existing law which are onerous to the Filipino consumers.”

“If both the ERC [Energy Regulatory Commission] and Meralco claim that the pass-on mechanism which allows Meralco to pass on to consumers the company’s systems losses is clearly provided for under Epira, then this must be reviewed and amended, or repealed if necessary,” Pichay said in a statement.

The ruling party has at least 90 members in the House, but an alliance with Kampi, Liberals and Nacionalistas gives it majority control of the 238-member Chamber. It will also push for the removal of an existing provision in Epira that allows cross-ownership among power generation and distribution companies, which is against the spirit of the deregulation law, Pichay said.

“The original intent of the deregulation law was to break up the monopolies in the utility sector and open up the market to competition to reduce the costs that consumers pay for power, petroleum products and telecommunications but utility companies somewhat found a way to circumvent the law through a myriad of terms to the detriment of the consuming public,” Pichay said.

According to Ed Malay, spokesman of Lakas chairman emeritus Fidel Ramos, moves are under way to form a lobby group to pressure Congress into barring cross-ownership among power generation and distribution companies and to review Meralco’s franchise.

“If the violations are proven to be true, then we have no other recourse but to push for the revocation of the Meralco franchise,” Malay said.

Records from the Wholesale Electricity Spot Market will show Meralco’s habit of buying electricity from its own independent power producers during peak hours, Malay said.

“During peak hours, the price of electricity is at its highest and this has been the biggest factor for the spike in the power bills of consumers in Meralco areas,” Malay said.

Meralco, which is the country’s biggest power distributor, is controlled by the Lopez family which also owns four IPPs—the Sta.Rita and San Lorenzo natural gas plants and the Bauang diesel-fired plant in La Union, and the Mini Hydro Plant in Agusan which have a combined capacity of 1,727 megawatts or equivalent to 11 percent of the country’s electricity requirements.

Earlier, President Arroyo urged Congress to amend Epira to remove the “universal charge” being passed on to consumers and which is used to fund government projects in remote areas.

Last week, Mrs. Arroyo announced the decision of independent power producers to offer 2,000 megawatts in an interim open access scheme in Luzon and Visayas to allow high load factor consumers such as shopping malls to buy electricity without having to go through Meralco or other distributors.

The Philippine Independent Power Producers will file a petition before the Energy Regulatory Commission to allow the interim open access scheme pending the privatization of 70 percent of the assets of the National Power Corp., a requirement in the law before an open access regime can be implemented.

“This is very significant because the industry has voluntarily agreed even before Napocor sells 70 percent of its assets. This is really to boost the competitiveness of the country by bringing down the electricity rates in labor- and power-intensive industries,” the President said.

Before the open access scheme can be implemented, the law requires the privatization of at least 70 percent of the generating capacity of Napocor and the transfer of at least 70 percent of the management contracts over third-party power plants to the private sector.