‘No need to amend Epira’

By Lenie Lectura – February 16, 2017

from Business Mirror

Sixteen years since the Electric Power Industry Reform Act of 2001 (Epira) was enacted into law, the Department of Energy (DOE) strongly believes that the law does not need to be amended.

“After 16 years, the power generation is now in the majority hands of the private sector. Supply has improved. Price has gone down, WESM [Wholesale Electricity Spot Market] is running at P2 per kilowatt hour [kWh]. There are more players, so the price of electricity is becoming more competitive.  In general, the goal is being achieved, but there are some delays,” Energy Secretary Alfonso G. Cusi said during Thursday’s  Senate Committee on Energy-First Public Hearing on Joint Congressional Power Commission (JCPC).

The delay Cusi was referring to is the implementation of the retail competition and open access (RCOA) and the independent market operator (IMO).

“The segments of Epira that are not yet implemented are IMO and RCOA. We are already rushing the IMO. We are waiting for the result of an audit until February 28,” Cusi said.

Under Epira, the Philippine Electricity Market Corp. (PEMC), operator of WESM, must be transformed into an IMO one year after WESM was launched in June 2006. So far, PEMC has existed for 11 years now.

The transfer of WESM to the IMO is also meant to dispel concerns of continuing government intervention at WESM.

Cusi said his office awaits the results of a WESM audit being conducted by the DOE. “The audit is currently being undertaken. We have to wait for the February 28 report,” he said, adding there are issues in the composition of the IMO board.

“Pinag-aaralan ko pa talaga. I am not set on anything. Within the year, hopefully,” said Cusi, when asked how long will it take these issues to be resolved.

Currently, the PEMC board is a 15-man body made up of representatives from each sector of the electric power industry, as well as independent members.

The PEMC board is chaired by the DOE secretary until the transition to the IMO.

Based on a draft DOE circular, the composition of the seven-member IMO board includes an economist, academic, finance person, lawyer, engineer, governance member and the president of the IMO.

For RCOA, there was a slight delay in its implementation. “We are targeting this year the completion of RCOA,” Cusi said.

Under RCOA, which will be enforced in phases, consumers are allowed to choose their supplier of electricity to encourage competition in the generation and supply sector.

The implementation of mandatory migration for contestable customers (CCs) with 1 megawatt (MW) and up average peak demand is on February 26.

Mandatory contestability for CCs with 750-kilowatt (kW) to 999-kW average peak demand remains to be effective on June 26.

The rules also state that the lowering of the threshold to cover an end-user with an average monthly peak demand of at least 500 kW is set on June 26, 2018, subject to the review of the performance of the retail market by the ERC.

Energy Undersecretary Felix William Fuentebella said Epira only needs to be reviewed, and not amended. “We are all looking at the effective implementation of Epira. Some of the segments under Epira are delayed, but these are now being scheduled. We have identified the causes of delay. We have also filed our proposed EO [executive order] that will declare energy-related facilities as projects of national significance,” Fuentebella said.

The DOE formally proposed to Malacañang the issuance of the EO about two weeks ago.

Cusi stressed the importance to fast-track the implementation of power projects, which normally takes five years for a power plant to be put up.

“Permitting takes a lot of time.  So, we asked that an EO be issued to declare power projects, not just power plants, as national significance,” Cusi said.

Aside from the construction of power plants, Cusi said the Visayas-Mindanao interconnection project by the National Grid Corp. of the Philippines should also be done as soon as possible.

“We want to make sure that it will not go beyond 2020. We want to include this in the proposed projects of national interest,” Cusi added.