A people’s review on the impact of the Electric Power Industry Reform Act of 2001

1. Rates have more than doubled 2. Only three groups now dominate the industry 3. NAPOCOR remained heavily indebted 4. Energy security remained precarious

COMPARATIVE RATES OF MERALCO (AVE. RESIDENTIAL RATES) & NAPOCOR (GENERATION CHARGE FOR LUZON GRID) BEFORE & AFTER EPIRA COMPANYPRE-EPIRA (2000)TODAY (2010)INCREASE MERALCOP4.87 per kWhP10.35 per kWh112.5 percent NAPOCORP2.39 per kWhP4.45 per kWh85.9 percent SOURCES: MERALCO, NAPOCOR

 EPIRA did not cancel the notorious PPA  EPIRA introduced new items that jacked up the rates, & it also removed the subsidies  EPIRA deregulated power rates thru the AGRA (automatic adjustment of generation rates and systems loss rates)  EPIRA introduced investor-biased method to adjust rates – Performance-Based Regulation (PBR)

3 biggest distribution utilities in the Phils.

 Unbundling of rates has become meaningless  Spot market does not foster real competition  venue for speculation

NAPOCOR’S FINANCIAL OBLIGATIONS, 2001 & 2010 INDICATOR CHANGE IPP obligations$10.42 billion$8.79 billion($1.63 billion) Debts$5.97 billion$7.02 billion$1.05 billion TOTAL$16.39 billion$15.80 billion($590 million) SOURCE: PSALM FROM 2001 TO 2010, NAPOCOR SHELLED OUT $18 BILLION TO PAY FOR ITS FINANCIAL OBLIGATIONS

 EPIRA legitimized the onerous supply contracts with the IPPs, consequently:  Privatization proceeds failed to cover NAPOCOR’s financial obligations  while delays in privatization forced NAPOCOR to continue operating the plants & managing the IPP contracts  aggravating its need to seek more debts

 Rotating brownouts  In Luzon, despite excess capacity, due to uncoordinated shutdowns by privately-controlled power plants  In Mindanao, due to power supply shortage resulting from lack of additional capacity in the past decade

 Under EPIRA, government turned over its strategic role in planning, developing, and implementing power infrastructure to profit- oriented private sector  Small PH energy market is not very attractive to investors unless guarantees and sweetheart deals are offered