By Claire-Ann M. C. Feliciano, Senior Reporter

EPIRA works fine, but energy institutions need bolstering, experts say

Posted on July 24, 2015

ENERGY institutions should be strengthened to ease the way for private sector investments that will help meet the country’s continuously growing supply needs, experts said.

Stakeholders should focus on strengthening institutions like the Department of Energy and Energy Regulatory Commission instead of pushing for the amendment of the Electric Power Industry Reform Act of 2001. -- BW File Photo
Speakers during a power governance forum yesterday said stakeholders should focus on strengthening institutions like the Department of Energy (DoE) and Energy Regulatory Commission (ERC) instead of pushing for the amendment of the Electric Power Industry Reform Act of 2001 (EPIRA).

“Institutions matter particularly in building an enabling environment for private initiative,” Raphael Perpetuo M. Lotilla, former Energy secretary, said during the forum in Makati City jointly organized by Ayala Corp. and the University of the Philippines School of Economics.

Mr. Lotilla, who is currently the chairman of the Center for the Advancement of Trade Integration and Facilitation, said energy agencies are facing budgetary constraints that hinder them in investing compared with power firms, which are more flexible.

“Strengthening institutions and working together is important as we deepen the existing reforms,” he said.

He said coordination among the agencies is necessary to avoid situations that may affect the power industry.

“The planning function can serve as a way of integrating and coordinating, not only the ERC and DoE, but all energy related agencies. Oftentimes, the planning exercise is taken for granted,” Mr. Lotilla said.

“Integration is not simply collation of all sub-sector plans by putting together a coherent plan for the energy industry,” he added.

He noted that measures are available without the need to amend the EPIRA, which instead should be utilized and effectively executed.

These sentiments were backed by AC Energy Holdings, Inc. President John Eric T. Francia, saying that “there is a need to strengthen institutions under the EPIRA framework.”

“It is my hope that stakeholders focus on this thesis instead of repealing and amending the EPIRA,” Mr. Francia said.

The official cited various power generation projects in the pipeline that could soon address the growing need for power as he noted that the recent supply problems are only short-term.

“This goes to show that the system is ready when the need arises. The bottom line is that we do have the momentum. EPIRA is working. It’s not perfect and we need to strengthen the institutions,” Mr. Francia said.

The official also recognized the need for a sound energy mix policy, which the DoE wants to achieve to ensure energy security.

“We will be hounded, five to 10 years from now, if we don’t have the right mix,” Mr. Francia said.

To which Alternergy Wind One Corp. President Vicente S. Perez Jr. added: “If a significant portion of the energy market is dependent on imported coal from Indonesia and China, which also use coal for their own needs, I think that would be putting energy security at the hands of other countries.”

“The more diversified, the better the energy security,” Mr. Perez, who was also a former energy secretary, said.

He also concurred with the idea that EPIRA -- which he regarded as “ambitious” -- should not be amended.

Peter Lee U, dean of University of Asia & the Pacific’s School of Economics, for his part said that the country’s electricity market is working.

“If you have price spikes and volatilities, it reflects insufficient capacity in the market,” Mr. Lee U said.

Such situations send the appropriate signals, since the market is governed by supply and demand.

Mr. Lee U further said that the energy industry needs to establish a reserves market.

“Today, we tend to see a lot of narrow reserve margins, which can cause more volatility in the market,” he said.

“If it’s volatile, it shows that you don’t have enough supply from the power plants -- or in the case of reserves, you don’t have dedicated market that will produce ancillary service,” Mr. Lee U explained.

A reserves market has been on the radar of the energy agencies for some time, though implementation has yet to be realized.