Gov’t urged: Focus on consumer welfare in power row

MANILA, Philippines - Consumer welfare is getting sidetracked in the ongoing controversy involving the Energy Regulatory Commission (ERC), which is in danger of being abolished by Congress, a non-government consumer advocate said recently.

The Action for Consumerism and Transparency in Nation Building (ACTION) warned that the scandal might further delay the full implementation of retail competition and open access (RCOA) in the electric power industry. 

“Who benefits from this turmoil? I am sure it is not the consumer because every time RCOA is delayed, they end up paying the price,” said Jake Silo, spokesperson of ACTION. 

Silo explained that before the controversy erupted last month, the ERC in May promulgated a definite timeline for mandatory contestability and new safeguards against collusion.

There was an attempt to derail these twin moves, but the Supreme Court (SC) temporarily set aside an injunction issued by the Pasig regional trial court, citing the grave and irreparable injury it posed on the energy industry, the Philippine economy and electricity end-users. 

Issued in October, the SC order paved the way for the implementation of mandatory contestability by February next year.

If it had not been challenged, mandatory contestability would have been implementable yesterday.

Freeing the consumer

Mandatory contestability sets the stage for RCOA by freeing customers with peak demand of one megawatt from the captive market to enter into contracts with retail electricity suppliers of their choice. 

This is currently being implemented on a voluntary basis at a threshold of 750 kilowatts, largely among industrial consumers, such as firms located in export processing zones.

The February 2017 timeline for mandatory contestability kick-starts a process that will gradually free more consumers from the captive market, until the power to choose reaches the household level.  

“But now everything is up in the air all over again because the talk has shifted to abolishing the regulator,” Silo said.

ACTION called on lawmakers to ensure the full implementation of RCOA, which culminates wide-ranging reforms begun 15 years ago with the enactment of the Electric Power Industry Reform Act of 2001 or the EPIRA law. 

Silo said that among the worst impacts of the 1997 financial crisis was the ballooning of the National Power Corp.’s (Napocor’s) debts.

Then a government monopoly providing generation, transmission and distribution services, Napocor had to be bailed out with subsidies that electricity end-users eventually paid for. 

The resulting backlash was the impetus for the EPIRA law, which created the ERC as an independent body to ensure market competition in the electric power industry.

“If our government and lawmakers are serious about their pledge to free consumers from the burden of high electricity costs, then it is incumbent on them to consider very carefully the ramifications of disrupting energy sector reforms at this critical juncture. The Filipino people deserve no less,” Silo said.