Mindanao biz groups want Epira law modified to prevent monopoly

By John Rizle L. Saligumba
Davao Today

DAVAO CITY – Five business chambers in Mindanao urged the Department of Energy to modify portion of the controversial Electric Power Industry Reform Act to prevent monopoly in the energy sector.

The business chambers from Bukidnon, Cagayan de Oro City, Iligan City, General Santos City and Davao del Sur voiced out their concern over the provision on the law that clip on extent of ownership in the power generation sector.

During the consultation here on Thursday on “the proposed amendments to Republic Act 9136 or the Epira Law, Roderico Bioco of the Bukidnon Chamber of Commerce, warned that a monopoly of the power industry might happen if the provision would not be changed or modified on limiting ownership of up to 25 percent of the installed generation capacity of the grid.

While the chambers agreed that the percentage ceiling was meant to spread ownership, Bioco said that previous discussions made by different chambers would rather have the percentage ceiling slashed to allow more players to join.

Section 45(a), Chapter IV of the Epira Law states that “(n)o company or related group can own, operate or control more than thirty percent (30%) of the installed generating capacity of a grid and/or twenty-five percent (25%) of the national installed generating capacity”.

“We have already discussed this (in our chamber). This should be brought down similar to ship operators who cannot own more than 10 percent of port operations. Just the same, distribution utilities should be limited up to 10 percent, not 30 percent percent,” Bioco said.

Reducing further the ceiling to 10 percent would “give space for at least 10 players and to clearly define the word ‘grid’ to pertain to Luzon, Visayas or Mindanao grid”.

“Otherwise we should spell it G-R-E-E-D not G-R-I-D,” Bioco said.

“For example a group may reach the 25 percent ownership of the total in the whole country if the one-grid plan will push through. But if these are all located in Mindanao, so that would mean they would control electricity for the whole island,” said Bioco.

The other chambers, like the Oro Chamber of Commerce and Region 10, or Northern Mindanao, also wanted modification in the second sentence of the second paragraph of Chapter IV, SEC. 45, (c) which states that “(t)he ERC shall have the authority to modify or amend this definition of a grid when two or more of the three separate grids become sufficiently interconnected to constitute a single grid or as conditions may otherwise permit.”

“What I said about the section where ownership of grid is discussed or in Chapter IV, SEC. 45, (a), is that there is a provision in (c) of the same section which states that when two or more grid are connected, they will be as one grid,” Bioco said.

“This must be removed. The intention of the law is that there should be no cross-ownership, if there is, only up to a reasonable level only,” he said.

Bioco said that “(c)” was just “inserted” just as many other provisions were, and would include another controversial item, labeled as Sec 45, (b) of the same chapter, that he believed, would be interpreted as “distribution utilities are allowed to own up to 50 percent of their source of power from affiliated firms.”

“That is conflict of interest. That 50 percent is very significant. The most reasonable level is 10 percent only. If you buy from your own you can come-up with a very high rate which we do not want,” he said.

“I’m very disappointed on how this law was crafted, there are a lot of insertions like the budget of NEA (National Electrification Administration),” he said.

Erlinda Pilapil-Suario, chairperson of the Mt. Apo – Davao del Sur Chamber of Commerce Chair said that “even before the approval, we are against that Epira Law. I have nothing to discuss about this because (it) seems to kill the end-user.”

“When I was 12 yrs old, this was in 1958, my father is a government employee earning P120 per month but NPC (National Power Corporation) employees were already enjoying free house, free car, free everything and they are receiving a very high salary. So what the government should have done is to control their salary their bonuses, everything,” she said.

Pilapil-Suario said that Congress “must restudy this Epira or even repeal or abolish” it.

“Back to the NPC, improve everything then ask for an investor. It is up for the electric cooperative in your locality if they will buy from that Alcanta group, Aboitiz group, or the National Power group,” she said.

Bioco also said that they are against the Wholesale Electricity Spot Market contained in Article II, Section 30 of the Epira Law.

WESM as defined in the Epira law intends to “provide the mechanism for identifying and setting the price of actualvariations from the quantities transacted under contracts between sellers and purchasers of electricity.”

Bioco said in Luzon, the “trading rules are very prone to abuse” and there is “mechanism to temper the greed of traders.”

“There is no trading cap, there is no suspension of trading,” he said.

Bioco said that “there must be suspension when there is a spike in prices” but such is not a “feature” of WESM.

In Luzon, the price reached as much as P62 per kilowatt hour (kWh) late last year while in Mindanao, the price is only P11 per kilowatt-hour (kWh). (John Rizle L. Saligumba/davaotoday.com)