Better Implementation of the EPIRA Law, Not Amendment, will Be Safer and Better for the Country and Consumers (Part 1)

David Celestra Tan, MSK
10 January 2023

Part 1

Calls to Amend the Epira law are again gathering up steam. Understandably, the Electric Power Industry Reform Act (EPIRA Law) of June 2001 or Republic Act 9136, had failed for 21 years the promises to the people of ample power supply, promotion of competition, and least cost electricity. Newly elected and appointed officials with good intentions will think the EPIRA Law has been the problem and amending the Law is the solution.

At the risk of being contrarian, we humbly say, after watching for 21 years the country’s struggles to make it work, that it has not been the EPIRA Law. It is its implementation that has been the problem. To start, if we try to go the route of reworking the EPIRA Law the right way, and come up with an EPIRA II, it will take at least 18 months, time that we are afraid we don’t have to be frozen.

If we ask 500 people why and what they want to amend in the EPIRA Law of 2001, we will get 500 different answers and most likely 1,000 reasons and even more hidden objectives.  Sure, many of the legislators and interest groups will be allowed to be heard but only the amendments that the powerful lobby groups wanted will be adopted. And then we would still not know what the amended EPIRA Law II will look like.  We should learn from the lessons when the EPIRA Law was  being written and debated from 1997 to 2001.

The EPIRA Law, known fully as “Electric Power Industry Reform Act” that was passed into law in June 6, 2001,  as currently worded and implemented, has delivered the results desired by the vested interests. There has been more market domination, less market competition, and undoubtedly higher rates. We continue to have red alerts and actually have been apathetic towards climate change. We are spending billions to subsidize Renewable Energy to off-set the environmental damage of coal but we have not been seriously controlling the source of the problem which is the continued building of coal power plants.

Under Section 2, which is the Declaration of the Policy of the State, the Epira Law was supposed to aspire under Paragraph C to make the Philippines globally competitive by bringing down power costs. The opposite has resulted. The Filipinos are instead paying the highest prices of electricity and the country is going in the opposite direction in industrial competitiveness.

If the EPIRA Law is not working, seeking to amend the law is as incongruous as seeking to rewrite one’s marriage contract if the marriage is not working. It is how we implement, what we do to make the marriage work, not the wording of the marriage contract.

Big risks of amendments

“Amending” the EPIRA law means opening all its provisions to amendments. And that is, in our opinion,what is extremely dangerous for consumers. Just as what happened during the crafting of the EPIRA Law in 1997 to 2001, the enticing “trojan horse” arguments that were used to gain public support and make the people believe in the noble intents of the Epira Law, were actually negated by the devious provisions being inserted by the dark forces in many parts of the law.

As examples, Under Section 45, distribution utilities were suddenly allowed in the last 2 days of finalizing the law to buy up to 50% of their power needs from their affiliated companies…when up to that point only 30 to 35% were being discussed during the bicameral sessions. And No competitive bidding was required to boot to somehow protect the consumers.

That was a big last-minute concession in the main EPIRA law. It is even worse in its implementing rules or IRR passed more than a year later. Rule 11 was inserted in the EPIRA Implementing Rules, thereby actually amending the edict of Section 45 of the main law in controlling market concentration of power generation facilities. Effectively, the limits on how much power a Distribution Utility can buy from an affiliated company had been surreptitiously changed way beyond 50% and to even be 100%.

Rule 11 was so expertly and innocuously written that it snuck up on most people, except those who strategized and inserted it in the EPIRA IRR. Perhaps no one looked closely because they did not expect it. Or was it inserted in the last minute? How can the IRR of a law brazenly contradict the main law it is supposed to implement?

Nonetheless, realigning Rule 11 to the true intent of the Epira Law can be easily achieved without amending the main law itself. In this case, the EPIRA IRR has been the problem, not the EPIRA Law itself.

An Imperfect Law can be better Implemented

The wordings of the EPIRA I  law are not perfect but it is still good enough to make it work with better patriotic intent in the implementation and in the policy and regulatory guidelines. Trying to amend its wordingsto create an EPIRA Law II can open the whole law to stealth changes that can make matters worse for the consumers. This is a very big possibility under our society and we should not risk it.

Otherwise the 21 year ordeal that the consumers went through waiting and “giving the EPIRA Law a chance to work”, as asked by many powerful groups, would have gone for naught.

Instead, we could focus on achieving the objectives that the EPIRA law had failed to deliver to the people… more power supply, more competition, less monopoly, less market domination, better generation mix, more access to the power market not only by the select few, emancipated regulation, and sustainably lower rates….. by better implementation.

Better implementation is within the powers of the implementing agencies and do not need the lengthy debates and unpredictability of Epira Law amendments.

Rule 11 of the EPIRA IRR can be corrected by the DOE. In fact, the ERC on its own apparently recognized the problem and tried to pass, towards the end of the term of then Chair Zenaida Ducut, a new methodology for determining concentration of installed capacity, a key to preventing market domination and monopoly. Sadly, the new methodology was “put in abeyance” in March 2016 and had not been revisited since.

Superseding Law Instead of Amending the EPIRA law and creating a new Epira II

If new laws need to be passed, it will serve the better interest of the consumers and country if those are made to surgically correct the loopholes and oversights of the EPIRA Law and addressing specific problems through a superseding law on perhaps “Power Security and Cost Reduction”.

For now, let us focus on truly working for the people….and not by just going through the ritual and charade of “competition” and “compliance”. The hardworking Filipinos deserve better. It is time to deliver what they need and what they were promised 22 years ago.

Those can be achieved faster and safer with better implementation instead of going through a treacherous path through Amendments.

After all, even if we assume we can come up with a much better worded Epira Law II, it will still not serve consumers and country better unless it is properly implemented.

Yes to Better Implementation, No to EPIRA Amendments!

Next Part 2 – Implementing to Truly Reduce Power Rates

MatuwidnaSingilsaKuryente Consumer Alliance
matuwid.org@yahoo.com