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Power failure: 10 years of EPIRA

A people’s review on the impact of the Electric Power Industry Reform Act of 2001. Power failure: 10 years of EPIRA. Key findings. Rates have more than doubled Only three groups now dominate the industry NAPOCOR remained heavily indebted Energy security remained precarious .

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Power failure: 10 years of EPIRA

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  1. A people’s review on the impact of the Electric Power Industry Reform Act of 2001 Power failure: 10 years of EPIRA

  2. Key findings • Rates have more than doubled • Only three groups now dominate the industry • NAPOCOR remained heavily indebted • Energy security remained precarious

  3. 1. Rates have more than doubled

  4. Factors behind the doubling of rates • EPIRA did not cancel the notorious PPA • EPIRA introduced new items that jacked up the rates, & it also removed the subsidies • EPIRA deregulated power rates thru the AGRA (automatic adjustment of generation rates and systems loss rates) • EPIRA introduced investor-biased method to adjust rates – Performance-Based Regulation (PBR)

  5. 2. Only 3 groups dominate the industry 3 biggest distribution utilities in the Phils.

  6. Due to cross-ownership in distribution & generation… • Unbundling of rates has become meaningless • Spot market does not foster real competition • venue for speculation

  7. 3. NAPOCOR remained heavily indebted FROM 2001 TO 2010, NAPOCOR SHELLED OUT $18 BILLION TO PAY FOR ITS FINANCIAL OBLIGATIONS

  8. Reasons for NAPOCOR’s continuing financial woes • EPIRA legitimized the onerous supply contracts with the IPPs, consequently: • Privatization proceeds failed to cover NAPOCOR’s financial obligations • while delays in privatization forced NAPOCOR to continue operating the plants & managing the IPP contracts • aggravating its need to seek more debts

  9. 4. Energy security remained precarious • Rotating brownouts • In Luzon, despite excess capacity, due to uncoordinated shutdowns by privately-controlled power plants • In Mindanao, due to power supply shortage resulting from lack of additional capacity in the past decade

  10. Causes of energy insecurity • Under EPIRA, government turned over its strategic role in planning, developing, and implementing power infrastructure to profit-oriented private sector • Small PH energy market is not very attractive to investors unless guarantees and sweetheart deals are offered

  11. Thank you!

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