Part Two of a two-part series on EPIRA's 10 years)
Part One: EPIRA: failed promise of affordable electricity
IBON Features-- Republic Act (RA) 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001 sought to establish a liberalized and market-based power industry because this will supposedly deliver a quality, reliable, secure and affordable supply of electricity for the public. EPIRA’s comprehensive power sector plan defined the restructuring and privatization of power generation, transmission and distribution in the country. In short, it articulated how the government will rely primarily on the profit-seeking private sector, including foreign investors, for the country’s electricity needs.
The power sector however is a natural monopoly in providing an essential service yet with significant financial, economic and technological barriers to entry. In this context all the EPIRA has done is usher in the monopolization into private hands of the power industry where giant corporate energy players have been making significant profits at the expense of the public and national development.
The bulk of the country’s generation facilities and contracted capacities have been privatized, the transmission sector is in private hands, and the distribution sector which was already liberalized prior to EPIRA remains dominated by a handful of private distribution utilities. Increased control of the industry by foreign and local companies over the past decade has increased private power profits at the cost of more expensive electricity for the Filipino people.
The National Power Corporation (NPC) generating plants and contracted capacities with independent power producers (IPPs) have been sold particularly to the San Miguel, Aboitiz and Lopez groups. For instance, the San Miguel group took 76% worth of total 3,346 megawatts (MW) rated capacity of privatized NPC-IPP contracts in 2009 and 2010, aside from 620 MW worth of generation plants. The Aboitiz group meanwhile bought 36% of the total 4,103 MW rated capacity of privatized generating/operating plants. The Lopez group in turn took 14% of privatized plants. The power industry from generation, transmission, distribution to supply is thus now almost entirely controlled by the private sector.
The World Bank’s public-private partnership (PPP) in infrastructure database shows that the Aboitiz Group is the foremost beneficiary of privatization, followed by the Lopez Group, DMCI, Suritimo and J-Power. In the EPIRA period alone, there were 42 PPP power projects in the Philippines.
A company or related group can own up to 30% of installed generating capacity and 25% of the national installed generating capacity. It can own distribution utilities (DUs) as well. The restriction on cross-ownership only applies to ownership of generation with transmission. DUs, in turn, capture the entire market in their franchise areas (residential and general service users). In the end, this defeats the EPIRA claim of consumers having the option to choose the utility which can provide them with the cheapest electricity available.
Private monopolies: Generation, transmission and distribution
The NPC owned or controlled some 90% of the countries generating capacity before privatization. A decade after EPIRA, the power industry is dominated by just a few companies and families – many of whom are believed to be close business allies of past and current administrations.
Generating capacity in this country of some 100 million Filipinos is in the hands of basically seven or eight major players. The concentration is particularly strong in the biggest three firms. The Cojuangco-owned San Miguel Power Corporation (SMPC) has the largest generating capacity after just two years in the power business. The Lopez group, with foreign company BGL as partner, is followed by the Aboitiz group, with SN Power AS (Norway) and Pacific Hydro Limited (Australia) as partners.
The EPIRA also mandated the creation of the Wholesale Electricity Spot Market (WESM), which will supposedly set up a competitive electric power market. Yet while there are 30 registered trading teams from 23 generating companies participating in Luzon, for instance, just the six biggest generators in terms of registered MW account for 61% of the total registered 11,652 MW. This unavoidable concentration creates the conditions for cartelized manipulation of prices in what is supposed to be a ‘competitive’ market, with high prices far beyond the true cost of generation subsequently passed on to end consumers.
There have already been accusations of price-rigging by WESM operators. NPC and its IPPs were accused of jacking up prices when they composed the majority of WESM members. In an August to September trading cycle, NPC and PSALM were alleged to have colluded to manipulate prices in the WESM – the average price started at Php2.72/kWh but spiked to Php4.853/kWh and even reached Php6.88. WESM’s price determination methodology was approved by the Energy Regulatory Commission (ERC) but has also been questioned because it sets the clearing price based on the highest tender price of generation companies.
Meanwhile, the transmission sector is run by the National Grid Corporation of the Philippines (NGCP) – a consortium of State Grid Corp. of China and OneTaipan Holdings of Henry Sy, Jr. acquired from Enrique Razon’s Monte Oro Resources.
Private DUs (PDUs) have the largest market share among DUs with corporate interests in generation also present in distribution. The three largest PDUs in terms of the number of customers and gigawatt-hours sales are Meralco (of the San Miguel, Lopez and Pangilinan group) followed by the Visayan Electric Company (VECO) and Davao Light and Power Company (both of the Aboitiz Group).
Meralco is the largest PDU in the country covering cover some 25 million Filipinos in 29 cities and 82 municipalities in Luzon. VECO is the franchise owner of Metropolitan Cebu, including Consolacion, Liloan, Talisay, Minglanilla, Naga and San Fernando. The Aboitizes own other PDUs as well such as the San Fernando Light and Power Corp, Cotabato Light and Power, Subic Enerzone and others; the Lopezes are with the Panay Electric Company (Lopez).
Meralco bought over half of its power requirements in 2008 and 2009 from through bilateral contracts with IPPs and only 48% from WESM. In this period, average NPC rates were at Php3.98 which was much lower than the Php4.85 price from Lopez IPPs. In October 2008, for example, NPC’s rate was only Php3.70 while First Gas priced its energy from Sta. Rita and San Lorenzo plants at a much higher Php6.31 and Php6.61, respectively.
Profits in the power sector
Corporate profits in the power sector have generally been on the rise in the last decade – the top 25 revenue-making corporations in electricity generation, collection and distribution saw their profits jump ten-fold between 2001 and 2009--even as their profits dipped in 2003, 2007 and 2008 years. These huge corporate profits are extracted from their customers.
In 2009, for instance, Meralco’s Php183.7 billion in gross revenues made it the country’s biggest corporation by revenues, with a net income of Php5.6 billion that was more than double its Php 2.1 billion in 2008). Meralco has the highest average effective residential rate among the private distribution utilities at Php10.67 per KWh and the second highest commercial rate at Php9.05 per KWh. Meralco has also been controversial for its overcharging: it anomalously passed on to its customers operating expenses worth Php3.5 billion in 2004 and Php2.9 billion 2007 that it should not have. It also anomalously valued property and equipment worth Php3.7 billion in 2004 and Php3.6 billion in 2007 as part of its rate base even if these were not instrumental in electricity distribution to justify increases in the distribution charge. Estimates of total refunds owed by Meralco to its customers from overcharging since 2003 range from Php14 billion to Php34 billion. Even VECO is estimated to have overcharged its costumers by Php4.4 billion over the period 2004-2008.
Monopoly burden
Modern economic activity is power-intensive and economic progress cannot but in general require higher levels of power supply at reasonable prices – EPIRA has clearly not delivered this. It has already been reported that Philippine rates are among the highest in Asia. Over the period 2004-2010, average annual growth in total generation capacity of 3.6% was significantly outpaced by the average annual growth in gross domestic product (GDP) of 5.2% (with the country facing several hours of rotating brown-outs in 2010). The rising power rates over the last decade of EPIRA are especially problematic for the country’s poor families.
All these indicate that an industry as vital to the economy as energy should not be turned over to private corporate interests. Instead of laws like EPIRA, government should develop a vision of a state-supported energy sector to fulfill the promise of sufficient, affordable and efficient electricity for Filipinos. IBON Features
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Isang dekada ng EPIRA: sampung taon ng pagtindi ng private power monopoly
Nilayon ng Republic Act (RA) 9136 o Electric Power Industry Reform Act (EPIRA) ng 2001 na magkaroon ng liberalisado at nakabatay-sa-palengkeng power industry dahil magdudulot diumano ito ng de-kalidad, maaasahan, estable at abot-kayang suplay ng kuryente para sa publiko. Nakasaad sa kumprehensibong plano ng EPIRA para sa power sector ang pagrestruktura at pribatisasyon ng power generation, transmission at distribution sa bansa. Sa madaling salita, ibinalangkas ng EPIRA kung papaano iaasa ang mga pangangailangan ng bansa sa kuryente pangunahin sa nagkakamal-ng-tubong pribadong sektor, kabilang ang mga dayuhang mamumuhunan. .
Gayun, ang power sector ay natural na monopolyo na nagbibigay ng esensyal na serbisyo subalit may substansyal na pinansyal, pang-ekonomiya at teknolohikal na rekisitos. Sa kontekstong ito, ang nagawa lang ng EPIRA ay ibayo pang itulak ang power industry sa monopolisasyon patungo sa mga pribadong kamay kung saan ang mga kasaling higanteng negosyo sa enerhiya ay nagkakamal na ng dambuhalang tubo sa kapansilaan ng publiko at pambansang pag-unlad.
Naisapribado na ang bulto ng generation facilities at contracted capacities ng bansa. Ang transmission sector ay nasa pribadong kamay na at ang distribution sector na naliberalisa na bago pa ang EPIRA ay nananatiling dominado ng kakaunting private distribution utilities. Ang dagdag na kontrol ng mga dayuhan at lokal na kumpanya sa industriya nitong nakaraang dekada ay nagpataas lamang sa pribadong tubo sa power kasabay ng mas mahal na kuryente para sa mamamayang Pilipino.
Ang mga generating plant at contracted capacities ng National Power Corporation (NPC) kasama ang independent power producers (IPPs) ay naibenta na sa mga grupong San Miguel, Aboitiz at Lopez. Halimbawa, akontrolado na ng grupong San Miguel ang 76% ng 3,346 megawatts (MW) rated capacity ng naisapribadong kontrata ng NPC-IPP noong 2009 at 2010, maliban pa sa 620 MW ng generation plants. Ang grupong Aboitiz ay nakabili ng 36% ng 4,103 MW rated capacity ng mga naisapribadong generating/ operating plants. Ang grupong Lopez naman ay nakakopo ng 14% ng isinapribadong mga planta. Ang power industry mula generation, transmission, distribusyon hanggang supply ay halos buung-buo nang kontrolado ng pribadong sektor.
Ang public-private partnership (PPP) infrastructure database ng World Bank ay nagpapakita na ang Aboitiz Group ang pinakapangunahing benepisyaryo ng pribatisasyon, kasunod ang Lopez Group, DMCI, Suritomo at J-Power. Sa ilalim pa lang ng EPIRA ay nagkaroon na ng 42 PPP proyektong power sa Pilipinas.
Ang kumpanya o kaugnay na grupo ay maaaring magmay-ari ng hanggang 30% ng installed generating capacity at 25% ng national installed generating capacity. Maaari rin itong mag-may-ari ng distribution utilities (DUs). Ang restriksyon sa cross-ownership ay nag-aaplay lamang sa pagmamay-ari ng generation at transmission. Samantala, ang DUs ay nakakasaklaw sa buong palengke sa kanilang franchise area (residential at general service users). Sa huli, nabibigo nito ang pagmamalaki ng EPIRA na ang mga konsyumer ay makapipili kung aling utility ang makapagbibigay ng pinakamurang kuryente.
Pribadong monopolyo: Generation, transmission at distribusyon
Bago ang pribatisasyon, kontrolado ng NPC ang may 90% ng generating capacity ng bansa. Pagkalipas ng isang dekada ng EPIRA, ang power industry ay dominado ng iilang kumpanya lang at pamilya -- na karamihan ay pinaniniwalaang malalapit na alyado sa negosyo ng mga nakaraan at kasalukuyang administrasyon.
Ang generating capacity sa bansa ay nasa kamay ng may pito hanggang walong mayor na negosyo. Ang konsentrasyon ay partikular sa pinakamalalaking tatlong kumpanya. Ang San Miguel Power Corporation (SMPC) na pagmamay-ari ni Cojuangco ang may pinakamalaking generating capacity pagkalipas lang ng dalawang taon sa power business. Ang grupong Lopez, katambal ang dayuhang kumpanyang BGL, ay sinusundan ng grupong Aboitiz, na katambal ang SN Power AS (Norway) at Pacific Hydro Limited (Australia) bilang partner.
Minandato rin ng EPIRA ang paglikha ng Wholesale Electricity Spot Market (WESM) na dapat ay lilikha ng kumpetitibong palengke ng kuryente. Subalit habang may 30 rehistradong pangkat mula sa 23 generating company sa Luzon halimbawa, ang anim na pinakamalalaking generator lamang sa usapin ng rehistradong MW ang sumasakop sa 61% ng pangkalahatang rehistradong 11,652 MW. Ang konsentrasyong ito ay lumilikha ng kundisyon para sa manipulasyon ng presyo ala-kartel sa dapat ay 'kumpetitibong' palengke, kung saan ang mataas na presyo na malayo sa tunay na presyo ng generation ay, sa bandang huli, ipinapasa sa mga konsyumer.
Nagkaroon na ng mga akusasyon ng pagmaniobra sa presyo ng mga operator ng WESM. Ang NPC at mga IPP nito ay inakusahang nagpapataas ng presyo nang sila ang umupong mga myembro ng WESM. Sa isang trading cycle ng Agosto hanggang Setyembre, ang NPC at PSALM ay sinabing nagkutsabahan para manipulahin ang mga presyo sa WESM - ang karaniwang presyo ay nag-umpisa sa Php2.72/kWh subalit sumirit sa Php4.853/kWh at umabot pa sa Php6.88. Ang paraan ng WESM sa pagtakda ng presyo ay inaprubahan ng Energy Regulatory Commission (ERC) subalit kinwestyon din ito dahil nagtakda ito ng presyo ayon sa pinakamataas na tender price ng mga kumpanya sa generation.
Samantala, ang transmission sector na pinatatakbo ng National Grid Corporation of the Philippines (NGCP) - isang consortium ng State Grid Corp. of China at One Taipan Holdings ni Henry Sy, Jr., ay nabili ng Monte Oro Resources ni Enrique Razon.
Ang mga pribadong utility sa distribusyon (PDU) ay ang may pinakamalaking share sa palengke sa lahat ng DUs na may interes sa negosyo sa generation at naroon din sa distribusyon. Ang tatlong pinakamalalaking PDU sa usapin ng bilang ng kostumer at benta sa gigawatt-hours ay Meralco (San Miguel, Lopez, Pangilinan), sinusundan ng Visayan Electric Company (VECO) at Davao Light and Power Company (parehong pag-aari ng Aboitiz).
Meralco ang pinakamalaking PDU sa bansa na nakasasaklaw ng may 25 milyong Pilipino sa 29 lungsod at 82 munisipalidad sa Luzon. Ang VECO ay may-ari ng franchise ng Metropolitan Cebu, pati Consolacion, Liloan, Talisay, Minglanilla, Naga at San Fernando. Ang mga Aboitiz ay nagmamay-ari ng iba pang PDU gaya ng San Fernando Light and Power Corp, Cotobato Light and Power, Subic Enerzone at iba pa; ang mga Lopez ay may Panay Electric Company.
Binili ng Meralco ang kalahati ng suplays nito sa power noong 2008 at 2009 sa pamamagitan ng mga bilateral na kontrata sa IPPs at 48% lamang sa WESM. Sa panahong ito, ang pangkaraniwang singil ng NPC ay nasa Php3.98 na mas mababa kaysa Php4.85 presyo ng IPPs ng mga Lopez. Noong Oktubre 2008, halimbawa, ang singil ng NPC ay Php3.70 lamang samantalang prinesyuhan ng First Gas ang enerhiya nito mula sa mga planta ng Sta. Rita at San Lorenzo sa mas mataas na Php6.31 at Php6.61.
Tubo sa power sector
Patuloy na tumatatas ang tubo sa negosyo sa power sector nitong nakaraang dekada. Ang pinakamataas na 25 kumikitang korporasyon sa generation, koleksyon at distribusyon ng kuryente ay nagtamasa ng sampung-beses na paglobo sa kanilang tubo mula 2001-2009 kahit medyo bumaba ang kanilang tubo noong 2003, 2007 at 2008. Ang dambuhalang tubo sa negosyong ito ay pinipiga sa kanilang mga kostumer.
Halimbawa noong 2009, ang Php183.7 bilyon na pangkabuuang kita ay naglagay sa Meralco sa pwesto bilang pinakamalaking korporasyon sa usapin ng kita (na ang netong kita ng Php5.6 bilyon ay higit pa sa doble ng Php2.1 bilyong kita nito noong 2008). Ang Meralco ang may pinakamataas na abereyds na epektibong singil sa mga sambahayan sa lahat ng PDUs sa Php10.67/ kWh at pangalawang pinakamataas ang commercial rate sa Php9.05/ kWh. Naging kontrobersyal din ang Meralco sa pag-overcharge nito nang tiwaling nagpasa ito sa mga kostumer ng gastos sa operasyon na nagkakahalaga ng Php3.5 bilyon noong 2004 at Php2.9 bilyon noong 2007. Tiwali rin nitong pinalaki ang halaga ng pag-aari at kagamitang may halagang Php3.7 bilyon noong 2004 nang Php3.6 bilyon noong 2007. Bahagi ito ng rate base nito kahit na walang kinalaman sa distribusyon ng kuryente para lamang mapangatwiranan ang pagtaas sa singil sa distribusyon. Ang tantsa ng pangkalahatang refund na utang ng Meralco sa mga kostumer nito dahil sa overcharging mula 2003 ay pumapalo mula Php14 bilyon hanggang Php34 bilyon. Kahit ang VECO ay tinataya ding nag-overcharge sa mga kostumer nang Php4.4 bilyon sa panahong 2004-2008.
Monopolyong pasanin
Ang modernong aktibidad ng ekonomiya ay power-intensive at ang pag-unlad ay sadyang mangangailangan ng mas mataas na antas ng suplay sa kuryente sa rasonableng presyo. Subalit malinaw na hindi ito naihatid ng EPIRA. Naiulat nang ang Pilipinas ang may pinakamataas na singil sa buong Asya. Sa panahong 2004-2010, ang abereyds na taunang paglago sa total generation capacity ng 3.6% ay signipikanteng naungusan ng abereyds na taunang paglago sa gross domestic product (GDP) na 5.2% (habang may ilang oras ng rotating brown-out sa bansa noong 2010). Ang tumataas na singil sa kuryente sa nakaraang dekada ng EPIRA ay partikular na suliranin lalo para sa pinakamahihirap na pamilya sa bansa.
Lahat ito ay nagpapakitang ang isang industriyang napakahalaga sa ekonomiya tulad ng enerhiya ay di dapat ipaubaya sa mga pribadong negosyo. Sa halip na mga batas tulad ng EPIRA, ang dapat na paunlarin ay sektor ng enerhiya na suportado ng gubyerno upang maisakatuparan ang pangako nitong sapat, abot-kaya at estableng elektrisidad para sa mga Pilipino.
