Amid the news of cases of impeachment being filed against President Aquino because of his acts in his Disbursement Acceleration Program and the destruction wrought by Typhoon Glenda, Department of Energy Secretary Jericho Petilla announced that he has recommended that the President seek emergency powers under Section 71 of the Electric Power Industry Reform Act (EPIRA). Secretary Petilla warned of an impending power crisis come summer of 2015 if this problem is not addressed.
It turns out that this threat of emergency powers stems from the inability of Petilla (and the government) to convince the Philippine Independent Power Producers Association (PIPPA) to plug in the 400-500 MW power deficit in 2015. Petilla met with the PIPPA last Tuesday and got no commitment from them on how to fill up the deficit.
Section 71 of the EPIRA allows the President, upon determination of an imminent shortage of supply of electricity and with the joint approval of Congress, to establish additional generating capacity under approved terms and conditions. The EPIRA law has barred the government from building power plants and has fully left the development of power generation to the hands of private firms.
There lies the problem—government has surrendered its responsibility to direct a strategic industrial industry to the private sector. Faced with protests and criticisms, it now seeks to save face by threatening power producers with EPIRA’s emergency power clause without actually solving the long term issue of electric power supply.
Petilla’s proposal is to rent gensets and diesel fired power plants to fill the deficit. He does not plan to build a large plant that will secure several years of breathing space for the government. The short sightedness of his proposal shows the short sightedness of the Aquino government’s response to the power crisis. They would rather buy expensive power than to re-nationalize the electricity industry.
The EPIRA law’s intention was to “bring down electricity rates and to improve the delivery of power supply to end-users” through the privatization of the electricity industry. It has failed on both accounts. Rates have more than doubled and, as we have seen in Petilla’s warning, electricity supply is still thin despite more than a decade of the law’s implementation.
In surrendering government’s power to generate power to private corporations, we have lost (as Petilla and company discovered) our capacity to direct our long-termgrowth. It will always be dependent on the whims, and profit margins, of the corporations.
Worse, in the course of the high electricity rates because of the lack of supply last year, government has acted like a profiteer on its own. Instead of managing government’s remaining assets to keep the rates down, it participated in the Wholesale Electricity Spot Market looking for its own profits. The people ended up with astronomical rates which was fortunately stopped by the Supreme Court upon the Makabayan bloc’s petition.
What the government needs to do is not to ask for emergency powers but to scrap the whole EPIRA law altogether.
We can start by stopping the privatization of its remaining power assets. It should also start buying back the transmission lines now solely controlled by the private National Grid Corporation of the Philippines. In the generation sector, it should re-nationalize the power plants it previously sold to private companies and to reinvest heavily into power generation again.
Does it have money to do all of these? The PDAF and DAP controversies have shown us that the government has money. The 144 billion pesos in the DAP can build around three power plants with a capacity of 600 MW. That is 1.8 GW (gigawatts or 1000 MW) of additional electricity. The so-called presidential pork of 1.3 trillion pesos translates to an equivalent of 30 of such plants which is 18 GW of new power. That staggering power is more than double of Luzon’s peak demand of 9000 MW (9 GW).
Government should also have a stronger regulatory body to hear matters involving power rate increases. It should also stop collection of VAT and other add-on costs to our electric bill such as the systems losses, the VAT levied on systems loss, franchise taxes and others.
Petilla’s recourse to emergency powers is short sighted and is designed to cover for the government’s inability to anticipate the shortage beforehand. In the end, Petilla’s threat is one more example of the failure of the EPIRA law. It is also an example of the failure of privatization as a solution to our long term energy security.
It is high time to prioritize national development over private profits and renationalize the power industry that is geared towards industrialization and in bringing affordable, stable and accessible electricity for all.