EPIRA reforms pushed as energy security boost

EPIRA reforms pushed as energy security boost | Daily Tribune

In the unending pursuit of energy security, the House of Representatives are training their efforts toward the long-desired amendment of the Electric Power Industry Reform Act that received the support of the Congressional Policy and Budget Research Department.

According to the House think tank, the vision of an affordable, competitively-priced, and secure electricity supply has remained elusive since the passage of the Republic Act 9136.

It assessed energy insecurity remains a major impediment to sustainable economic growth and competitiveness, with high power prices, considered as one of the most expensive in Asia, having knock-on effects on investments, industry growth, and consumer welfare.

Notwithstanding the rapidly rising demand and the country’s dependence on imported fuel, other factors also explain why electricity prices in the country continue to be expensive, and among these are market power and cross ownership issues, red tape and bureaucratic inefficiencies, taxes and subsidies, an inadequate transmission, energy transition to renewables, and weak power sector governance, among others.

“The administration of Ferdinand “Bongbong” Marcos Jr. targets reducing the cost of electricity to achieve the vision stated in the Ambisyon Natin 2040, specifically by amending the EPIRA amid criticisms of its ineffectiveness in reflecting the efficient cost of power, market collusion, and inadequate power supply,” the CPBBRD indicated.

“Legislating some of these reform initiatives such as the competitive selection process, strengthening power sector governance of the DoE and ERC, among others, under the proposed EPIRA amendments, including the proposed review and amendments to the NGCP franchise and other tax reforms affecting the power sector should be prioritized,” it added.

EPIRA prone to abuse

A bill amending the EPIRA has been filed specifically seeking to strengthen the ban on conflict-of-interest in the industry.

The bill stressed that the EPIRA had allowed so-called cross-ownership among players in the power industry but this has been prone to abuse.

House Bill 174 — “Act Prohibiting Cross Ownership Among Distribution Utilities and Generation Companies” seeks to amend Section 45 of the EPIRA which allowed cross-ownership of distribution and generation facilities in the power sector.

The provision, in its current version, allows distribution utilities to source a maximum of 50 percent of its electric supply from an “associated firm.”

“Simply put, if both the distribution utility and the generation company are controlled by one entity, they are to be considered as associated firms,” HB 174 said.

The implementing rules and regulations of EPIRA expanded the definition of associated firms which allowed “private power firms to circumvent the already generous cross-ownership limitation in EPIRA.”

“The approval of this measure is earnestly sought,” the bill’s explanatory note indicated.

“The bill seeks to avoid monopoly altogether by eliminating the allowance for cross-ownership in Epira and by adjusting its IRR accordingly,” HB 174 stated.

“The prohibition on any form of cross-ownership will remove the conflict of interest among distribution utilities and generation companies, allowing a level playing field for all stakeholders,” it was stressed in the measure.