THE LAW that restructured the energy sector and gave way to a competitive private sector driven market has yet to deliver its all-encompassing effect — reliable, secure and affordable electricity, the chairman of the Senate Committee on Energy said.
Senator Sherwin T. Gatchalian said on Tuesday his committee had identified the “gaps and limitations” in Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), noting these could be addressed through legislation and oversight.
“The metric used to determine the market share limitation should be reviewed. The law specifies installed generating capacity as the measure in computing market shares,” he told participants of a seminar on fostering competition in the power industry at the University of the Philippines’ campus in Taguig City.
However, he said this metric does not reflect the “true market power” of a company since the installed capacity is different from the power generated and injected into the grid.
Under EPIRA, market share limitations prohibit generation companies from owning more than 30% of the installed capacity of a grid and more than 25% of the installed capacity of the national grid.
“To illustrate, the share of coal in the country’s total installed capacity is approximately 35% but its share in actual generation is 48%. For natural gas, its installed capacity is only 16% but its actual generation is 22%. As a consequence, the use of installed generating capacity underestimates the true market share of a company especially if its plants have comparatively higher capacity factors,” he said.
He also cited the cross-ownership provision as another “imperfect restriction in the EPIRA.” He said there is a need to expand this to three groups of players, namely: generation companies and distribution utilities; upstream producers and the transmission concessionaire; and upstream producers and distribution utilities.
“Senate Bill No. 156 expands the EPIRA cross-ownership provision to include generation companies and distribution utilities to avoid sweetheart deals especially in light of the lack of an institutionalized competitive selection process, and lenient implementation of the associated party contracting limitation,” he said about the bill filed by Senator Joseph Victor G. Ejercito.
“New measure will also be filed to tackle cross-ownership between upstream producers and the transmission concessionaire, and upstream producers and distribution utilities. This is to prevent a situation where the transmission concessionaire or distribution utility favors a generation company that buys its energy resources such as steam, coal or oil,” Mr. Gatchalian said.
Measures will also be introduced to improve competition by allowing the entry of new generators whether it be companies, households, or communities, he said.
“Senate Bill 1439 or the Energy Virtual One Stop Act of 2017, currently on second reading facilitates the entry of new players by removing red tape in the permitting process of generation plants,” he said.
“Senate Bill No. 1308 or the Electricity Procurement Act, presently undergoing committee hearings, levels the playing field both for new and old generators by furnishing a neutral platform to bid for the uncontracted demand of distribution utilities,” he added.
Mr. Gatchalian said for nontraditional generators such as households and communities, three bills will be filed.
He said a bill on the right to own-use or self-generation will give individuals, both in the captive and contestable market, the right to generate and consume electricity using energy systems they own or lease.
Another bill that seeks to promote micro-grids will give areas not being served by a distribution utility but under its franchise the right to put up a system solely for electrification and not as a business operation, he said.
A bill will also be filed to encourage the use of embedded generation for distribution utilities as an exception to the limitation on related-party contracting, he added. — Victor V. Saulon
