FEF, Inc. is a non-stock, non-profit & non-partisan institution advocating market-oriented policy reforms in the Philippines. Fellows of FEF, Inc. include economists, political scientists, business practitioners and media personalities.
PRIVATE SECTOR groups on Friday urged the government to address continuing power rate hikes and an impending electricity shortage, claiming that existing laws and current policy have failed to serve consumer interests.
"There appears to be no specific and strong action program or roadmap coming from the Executive department and made known and shared with the private sector, that is specifically addressing the major concerns ... of escalating power rate increase and pending base load and reserve deficiency in Luzon and the crisis in Mindanao," Philippinc Chamber of Commerce and Industry, Inc. (PCCI) President Francis C. Chua said at a press conference.
A joint statement issued during the briefing was signed by the PCCI, Philippine Exporters Confederation, Philippine Steelmakers Association, Foundation for Economic Freedom, and the Trade Union Congress of the Philippines.
As of 2009, they claimed, industrial and residential power rates in the Philippines were higher than in developed countries. The promise of cheaper power under the Electric Power Industry Reform Act (EPIRA), they added, has yet to be realized a decade since the law’s approval.
To address the issue of power rates going up, they urged the following:
• a halt to pending increases and a "strip and build" analysis of power costs where certain costs can be reassigned or deferred;
• put off charging the Power Sector Assets and Liabilities Management Corp.’s stranded costs and consider funding this via the national budget;
• create a "Government Single Power Purchaser" that will conduct auctions and resell electricity at a nominal two-centavo per kilowatt-hour markup;
• give the Energy Regulatory Commission (ERC) limited fiscal autonomy;
• review the performance-based rate-setting mechanism;
• review the design of the Wholesale Electricity Spot Market;
• defer high-costs renewable energy programs;
• focus the direction of the Renewable Energy Board to evaluating RE development;
• review the imposition of membership contributions to the capital component of tariffs charged by power cooperatives; and
• evaluate the benefit of registering the country’s 119 power cooperatives with the Cooperative Development Authority.
Officials particularly pointed to the feed-in tariff (FiT) policy under the renewable energy program, calling it misguided and claiming that it fails to address the fundamental issue of expensive electricity.
"We should be smart enough to wait for the technology to develop and be practical with our decisions. [Foreign groups] are pushing for this [FiT scheme] because of supplier-driven interests. Why are we looking into solar power, when biomass, for example, is so much cheaper?" said Ernest C. Leung, Foundation for Economic Freedom treasurer and a former Finance secretary.
To address supply issues, meanwhile, the private sector groups recommended:
• auctioning off the Agus and Pulangi hydropower plants and accelerating the transfer of two power barges from the Visayas to provide relief to Mindanao;
• accelerate the connection of some island grids to the national grid;
• create additional reserves via an "Anti-electric Power Line Disturbance Order" and imposing at least a 3% reduction in the allowable system loss; and
• that the Energy department use EPIRA provisions to conduct public supply auctions.
Malacañang, they said, should move to "achieve leadership integration" among key players such as the Energy and Finance departments, ERC and the Joint Congressional Power Commission.