TEN years and two months ago, Republic Act No. 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001 became a law of the land.
Creditors of the National Power Corporation, led by the Asian Development Bank and the International Monetary Fund, pushed the then occupant in Malacañang and her economic team to prod Congress to pass the law. The reforms in the power sector that were supposed to happen for the good of the Philippine economy were made conditions for the Philippine government to get new loans and extensions of unpaid loans. The sale to private corporations of the NPC’s (NAPOCOR’s) assets was also preconditions of those loans.

With EPIRA in place electricity was supposed to become cheaper in our country. There would no longer be any fear that economic and social development would freeze because of power shortages. The high cost of power as a deterrent to foreign investment in our country would disappear.

EPIRA was also going to restructure, of course, for the better the electricity industry and privatize the assets of NPC so that its losses from outstanding loans and the expenses needed to expand the power infrastructure of our country could come from private investors.

As a bonus, the government’s fiscal position would improve because the proceeds of the sale of generating stations and plants owned by NPC would go to the national treasury.

The cruel fact is that 10 years since EPIRA started to be implemented, the law’s intentions have not materialized. Instead, consumers are paying much more than they used to pay for the electric power they use—and don’t use. For the Energy Regulatory Commission has been allowing the electric firms to charge their consumers for the so-called system loss. This is electricity dissipated into the atmosphere in the course of transmitting power to customers. Also considered system loss is electricity pilfered from the utility companies.

Immoral and unjust system loss charge
This is unjust. And even immoral and corrupt. For the pilfered electricity is both recovered by the utility companies through the system loss charge on their customers as well as from the prosecution of caught pilferers who have to pay for what they stole.

The rosy promises of EPIRA have become bitter exactions from us Filipinos, including poor families.

We are threatened with economic slowdown because of power shortages resulting from the defects of our old rundown generating plants that might totally break down unless massive investments come from the private sector. But no grand power sector investor from abroad can be seen. Meanwhile, the ERC keeps allowing the power utilities to increase their rates for every imaginable reason.

The executive director of the ERC has told The Times in this special report what everyone has always known:

Asked what are the possible factors why electricity rates have increased despite all the regulatory measures, he gave the opinion that one reason is that the cost to a capitalist who invests in the Philippines is much higher than elsewhere. The cost of doing business here is higher than in any of our Asean neighbors.

These are his convoluted exact words:

“If you are an investor investing in the Philippines…given all the risk involved sa pagnenegosyo [in doing business] in the Philippines, mas malaki ‘yung rate of return na gusto mo [you would want a higher rate of return]. Gusto mo na mas mataas ang presyo ng iyong kuryente [You would want the price of your electricity to be higher].”

“If you (he means himself and the ERC) approve the returns lower than what they are expecting or desire, pwede namang magkaroon ng underinvestment [then there could be an underinvestment] in the electricity supply and the distribution,” adds Juan. “Kasi [Because] that capital can be brought elsewhere where they may earn the return they want. ‘Yun ang pwedeng mangyari, na may underinvestment, may shortage sa supply. [That is what could happen, that there could be an underinvestment, that there will be a shortage of supply.]”

He in effect said: If ERC did not grant the investors the rate of return that they desire, then they would not invest. So there will be what he calls “an underinvestment” in the power industry. The result then would be a power shortage.

Of course a power shortage means our economic growth and development will be curtailed.
Why does the ERC—which was created by action of the EPIRA to be the main implementing body of that law—grant virtually every request for higher rates by the utility companies?
Because if ERC does not, the utility firms would close down.

The EPIRA law should be rigorously reviewed. If no credible improvements can be made, it should be repealed.