Power users bear passed-on burden

The Electric Power Industry Reform Act (EPIRA) of 2001 promised reforms of affordable, secure and reliable electricity through privatization and competition. More than two decades later, Filipino consumers face some of the highest power rates in Southeast Asia while generation companies, distribution utilities and transmission operators enjoy comfortable margins. 

The full pass-through mechanism policy that automatically passes on all costs and charges — generation, transmission, distribution losses, system inefficiencies, even policy-mandated subsidies — directly to our monthly bills was originally intended to incentivize the private sector into investing in the power industry in the aftermath of the power crisis in light of the rapid economic growth in the late 1980s and early 1990s. 

However, in the present context, the same policy has now become a burden to the public and a bane to our economic growth. Whether inadvertent or deliberate, the inaction by Congress to update and revisit the EPIRA, especially the policy allowing the full pass-on mechanism, has resulted in a continuing injustice to power consumers. 

Distribution utilities and cooperatives have little to no motivation to cut losses below regulatory benchmarks because excess losses are often recoverable. Transmission projects drag on, yet the NGCP still collects its fees. Generation firms lock in expensive contracts, knowing the market will absorb them. 

Meanwhile, ordinary Filipinos tighten their belts amid inflation and economic uncertainty. Manufacturers lose competitiveness. The lifeline cross-subsidies to qualified households are funded not by taxation but by fellow consumers. 

Why invest in modernizing grids, reducing pilferage, and optimizing procurement when every centavo of loss or incompetence can be passed on to households and businesses? With no real penalty for inefficiency, there is no motivation to minimize cost and cut losses.

EPIRA did not bring about genuine market reform. And amendments are long overdue: Introduce performance-based regulation across the board — multi-year revenue caps tied to efficiency targets, loss reduction, reliability metrics and successful renewable integration. 

Gains from efficiency should be owed to consumers; persistent failures should hit company returns. Social and environmental subsidies (FIT-All, lifeline rates, missionary electrification) must be charged to the national budget, funded by general revenues or targeted taxes — not included in our electric bills. Strengthen competitive procurement rules, lower barriers for genuine new players, enforce stricter ownership caps to prevent market concentration and mandate transparent benchmarking of cooperatives against private utilities. Reward utilities that deliver lower rates and fewer outages. And penalize those that don’t. 

Filipinos have suffered enough. EPIRA should have served the greater public’s interest, not shield industry players from the consequences of their inefficiency and mediocrity. True reform demands that those who profit from the power sector also bear the risks and responsibilities. 

Meanwhile, political survival in Malacañang and Congress has taken precedence over fixing these structural and legislative flaws, just as we have seen with other national priorities. While impeachment dramas and dynastic maneuvers consume legislative resources, the daily economic hemorrhage from inflated electricity bills continues unabated. 

Congress must stop pandering to powerful industry lobbyists and prioritize amendments that genuinely protect the Filipino people and promote economic growth. Political survival cannot come at the expense of economic survival for millions of households and businesses struggling under the weight of unjust power costs. 

That said, this presents an opportunity for the Marcos Jr. administration to demonstrate it has the political will to pave the way for the transformation of the power industry into something that works for Filipinos, not the other way around.