House Bill (HB) 8457, otherwise known as the Comprehensive Electricity Industry Restructuring Bill, got a much-needed shot in the arm when the Department of Energy (DOE) and the National Power Corp. (Napocor) decided to endorse the latest version of the bill.
In a forum held by the 365 Club, Energy Undersecretary Cyril del Callar said the department is contented with the latest version of HB 8457 sponsored by Rep. Arnulfo Fuentebella.
Del Callar said they are satisfied with the provision setting a 30-percent ceiling on cross-ownership in any of the three subsectors by one firm.
"That is 30 percent control of the national grid or 40 percent control in any of three grids (Luzon, Visayas or Mindanao Grids)," he pointed out.
However, these caps will only be set for a three-year period, after which any firm or group of companies, if capable, can form monopolies in the energy sector.
To counter this situation, the energy department will recommend that the bill will have clear provisions increasing the regulatory powers of the Energy Regulatory Board (ERB).
Both DOE and Napocor officials stressed that the ERB must have broad powers to prevent and penalize abuse of market power and other forms of anti-competitive behavior.
"Such penalties should include administrative and criminal sanctions including forcing errant industry players to divest of their shareholdings if these are beyond the allowable ceilings or caps," Napocor officials said.
Likewise, the two government agencies said they are in favor of the proposal to allow private power distributors to pass on their stranded coats to their customers upon the full deregulation of the industry.
However, several energy officials said they will still support the Senate version (Sen. Juan Ponce Enrile) which sets a cross-ownership ceiling.
Enrile did not specify any cap except that it should not be substantial enough to warrant one board seat of one company being acquired or invested in by another company. In other words, company A (in the generation subsector) can own equity in company B (in the distribution sector) less than the equivalent to one board seat.
"That is roughly less than 20 percent equity in a single company with an average five to six board seats," said the advocates of the Enrile version.