Responding to President Arroyo’s challenge, lawmakers have filed bills seeking to reduce electricity rates through amendments to the Electric Power Industry Reform Act (EPIRA).
Mrs. Arroyo, in her State of the Nation Address on July 23, asked lawmakers to prioritize the amendment of EPIRA.
Sen. Juan Ponce Enrile wants some provisions in the EPIRA law reviewed to stop power producers and distributors from charging to consumers their losses from inefficiency and even from corruption.
Through Senate Bill 1234, Enrile also sought to remove the provisional authority of the Energy Regulatory Commission to allow electricity rate increase.
At the House of Representatives, Pampanga Rep. Juan Miguel “Mikey” Arroyo and Camarines Sur Rep. Luis Villafuerte said changes in EPIRA are needed because the law failed in its objective of bringing down the cost of electricity by promoting competition among power producers.
“All rates would be fixed and determined for the universal charge shall be approved by the ERC only after due notice to interested parties,” Enrile said.
Enrile said that to promote efficiency, the ERC “may adopt alternative forms of internationally known and accepted methodologies of rate making that will serve the interests of the general public as well as electric industry participants.”
“The rate-making method must be neither ‘extortionary’ to the users of electricity nor confiscatory to Transco (National Transmission Corp.) or the distribution utilities,” he said.
SB 1234 also provides for the exclusion of certain items from what is charged to consumers, such as corporate income tax, value of franchise and cost of assets and facilities.
The National Power Corp. and distribution utilities, under the proposed measure, shall be allowed to recover their stranded contract costs with independent power producers through universal charge but would be required to undergo a stringent review of these stranded costs.
Bilateral negotiated contracts between distribution utilities with affiliated generation companies must be subjected to rigid examination to eliminate or minimize the pass-on costs to end users of electricity, he added.
Self-generation facilities shall likewise be exempted from the universal charge to promote the policy of the state on easing the country’s dependence on imported sources of energy, especially oil.
Enrile also asked Congress to provide greater protection to electricity consumers as embodied in the Magna Carta for Residential Electricity Consumers.
SB 1234 also seeks to prohibit “cross-ownership among the industry players in order to promote transparency and increased competition in all levels of participation in the power sector.”
Enrile said the EPIRA law does not extensively address the reforms he proposes in SB 1234. “Retail competition and open access will be subject to realistic conditions,” he said.
‘Administrative impediments’
In House Bill 1889, Arroyo and Villafuerte said the agencies created by the law to privatize 70 percent of Napocor assets were unable to do their task effectively because of some “administrative impediments.”
Such “impediments” include the need for creditors’ consent to every asset sale, lack of supply contract, and intervention by the Joint Congressional Power Commission or JCPC.
“It is the purpose of this bill to address these remaining issues which will help in achieving the end goal of allowing open access and more competition and choice to end-users, including household consumers,” an explanatory note said.
With millions of dollars involved, it had not been easy for the biggest power firm to dispose of assets.
For instance, the 600-megawatt coal plant in Masinloc, Zambales recently fetched a price of more than $900 million when it was offered to bidders for the second time.
The first bidding failed when the winning bidder, a new and undercapitalized company, did not deliver the down payment of about $211 million despite two deadline extensions. The winning bid then was about $600 million.
The government added a sweetener to the second bidding by promising to work for a supply contract for the new owners. This accounted for the huge jump of $300 million in the price of Masinloc plant.
The two lawmakers also said a provision in EPIRA requiring buyers of Transco assets to secure congressional franchise is turning off potential investors.
Arroyo and Villafuerte said that instead of the franchise requirement, a Transco investor should be able to prove that it is 60 percent Filipino-owned. Transco is worth at least $3 billion.