Cayetano: Time to amend Epira

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Friday, January 31, 2014


SENATE Majority Leader Alan Peter Cayetano is calling for changes to the Electricity Power Industry Reform Act (Epira), as he noted the flaws in the country's laws governing the electric power generation industry.

"Time to amend Epira. It is highly vulnerable to collusion unless it is amended," the senator said.

Members of the House of Representative earlier asked President Benigno Aquino III to certify as urgent a bill amending the 13-year-old law to address the high power rates in the country.

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House members agree that Epira "has failed" and "privatization has resulted in monopoly control, inefficient power delivery and sky-high prices, not in more efficiency, less concentration and lower prices."

Speaker Feliciano Belmonte Jr. assured that the chamber would approve measures seeking to amend the Epira before the 16th Congress ends.

Cayetano supported this move by the House of Representatives and said that Epira has failed to protect consumers against high power rates.

"Sa unang issue, ang pagtaas ng presyo ng kuryente mula December hanggang ngayon. P4.15 kwh ang increase, which basically, ang epekto sa ating bayan ay, kung 200 kwh ang kinokonsumo mo, P830, kung 300kwh it's P1,245, at kung 400 kwh, P1660," Cayetano said.

He noted that the country has one of the highest electricity rates in the world, which he said has constrained the country's economic growth and attractiveness to foreign investors. He said other countries like Singapore and Indonesia subsidize power rates to attract investors.

"We are disadvantaged by our high rates of electricity, and the recent massive hike makes it even worse," Cayetano said.

He has been asking the government to look for "creative solutions" to cushion the effects of the power rate hike, saying that the Filipino public cannot bear the burden of the rising prices of commodities.

Cayetano earlier proposed that a "floating" Value Added Tax (VAT) rate be implemented to cushion the effects of the power rate increase. He said that the government can reduce the VAT rate on power to 6 percent or 9 percent whenever the power rates are high, and correspondingly restore it to 12 percent when rates are low.

Cayetano cited studies by the National Economic and Development Authority, USAID, and Arangkada Pilipinas that subsidies may have beneficial effects for investments, jobs, and economic growth.

Earlier, he suggested the government form a high level group from the executive, legislative, and private sector to review the Epira and the necessary revisions to ensure lower electricity prices, adequate power reserves, and adequate returns to investors in electric power generation.

He even suggested the use of Malampaya funds to subsidize power rates as well, as scrapping the VAT charges on electricity.

Also, he encouraged Neda and the Department of Finance to look at the broader picture and consider long term gains from a stable and reliable power at competitive rates.

During a hearing conducted in the Senate, Energy Secretary Jericho Petilla said that it takes 165 steps just for the issuance of permit; it takes more than a year to process an application for a new power plant; and another three to four years to build the actual power plant.

Senator Juan Edgardo Angara emphasized the need to shorten the period of setting up new power facilities especially now that this country needs to increase its power capacity to stabilize power rates and address the rising demands in the long term.

Angara said the country's demand for power is rising by 600 megawatts (MW) per year or equivalent to the 600 MW Bataan Nuclear power plant, which was sidelined during the administration of former President Corazon Aquino citing earthquake hazard as the main reason.

Senator Sergio Osmena III confirmed that the country will be running short of electricity reserves until 2016.

"We really have to adjust some of the rules. Let us not be damn enough to continue because it will (price hike) happen again in the future." Osmena said. (Camille P. Balagtas/Sunnex)

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