After 10 years of implementation of the Electric Power Industry Reform Act of 2001 (Republic Act 9136), there is so much to be desired from its promised and potential reforms and improvements in the power industry and the lives of consumers.
The privatization effort of the National Power Corporation (NPC) and its massive debts continues. The electricity rate used and paid by millions of consumers keeps rising. The mismanagement of electric cooperatives and their inexplicable losses persists.
This is to revisit the law that sought, among others, to; 1) privatize the government agency tasked to generate, transmit, distribute, and supply energy to the country, 2) unbundle the power sectors to identify which is inefficient and incurring losses, 3) create a Wholesale Electricity Spot Market (WESM) to make the transaction transparent, open and competitive, 4) reduce the power rates.
In June 2011, the Philippine President, Benigno Aquino III, signed into law the extension of the implementation of lifeline electricity rate (subsidy) for poor consumers for another 10 years. The wisdom of the R.A. 9136 was that the lifeline rate would be unnecessary after 10 years of the Act because the electricity rate would have been affordable even by poor consumers.
On the contrary, after 10 years of R.A. 9136, the Philippines has the highest power rate in Asia. Thus, it is important to review the law in light of the current situation, context and its history.
Table of Contents
Introduction
History of R.A. 9136
An Impending Power Crisis
NPC’s Swelling Debt
Government’s Alternative
Overview of R.A. 9136
New Industry Structure
Wholesale Electricity Spot Market
Rates and Charges, Rate Reduction, Cross-Subsidies and Universal Charge
Advancing Competition
Electric Cooperatives
NPC privatization
Review of IPP contracts
Issues and concerns surrounding RA 9136
Viewpoints of Local Stakeholders on RA 9136
CASURECO II
CASURECO II Employees Labor Union (CASEMLU)
Local Business Group
Local Government Unit(Naga City, Philippines)
Cooperative Development Authority (CDA)
National Electrification Administration (NEA)
Civil Society (Naga City People’s Council and Barangay People’s Council)
Consumer
Local Implications of R.A. 9136
On power rates
On the Cooperatives such as CASURECO II
Research Objectives and Core Themes
The primary objective of this study is to revisit the Electric Power Industry Reform Act of 2001 (R.A. 9136) a decade after its implementation to assess its effectiveness in achieving its core promises, such as lowering electricity rates, ensuring market transparency, and improving efficiency within the power sector, while analyzing its local implications on stakeholders like electric cooperatives and consumers.
- Evaluation of the privatization and restructuring of the National Power Corporation (NPC).
- Analysis of the socio-economic impacts of power rates and the effectiveness of lifeline subsidies.
- Assessment of the competitive structure introduced by the Wholesale Electricity Spot Market (WESM).
- Examination of the struggles of local electric cooperatives regarding regulation, taxation, and organizational status.
- Review of the ethical dimensions of power sector reform in light of Catholic social teachings.
Excerpt from the Book
Overview of R.A. 9136
RA 9136 aimed to de-monopolize certain aspects of the power industry. Instituting a more competitive structure was hoped to lead to increased efficiency and lower power rates. Other countries such as Argentina, Australia, United Kingdom, New Zealand which had reformed their power industry, experienced remarkable declines in electricity rates ranging from 14 to 44 percent.5
Globally, privatization and restructuring have become the popular methods for reform in the context of a globalized market. Following this trend, RA 9136 was part of the government’s continuing commitment to liberation, deregulation, and privatization.
New Industry Structure. Prior to RA 9136, the power industry was divided into three major sector-generation, transmission, and distribution. NPC was the monopoly in the power generation until Executive Order (EO) No. 215 opened the generation sector to IPPs. In 2001, IPPs generated almost half of the country’s electricity. With RA 9136, four (4) major sectors would be established—generation, transmission, distribution, and supply.
Summary of Chapters
Introduction: Provides the context of the study by highlighting the failure of R.A. 9136 to lower power rates and the persistent mismanagement in the power sector after ten years of implementation.
History of R.A. 9136: Details the legislative journey, the financial crisis of the National Power Corporation (NPC), and the government's shift toward privatization as a strategy to address impending power shortages.
Issues and concerns surrounding RA 9136: Outlines the various protests and apprehensions voiced by consumer groups, social activists, and civil society regarding the transparency, economic impact, and potential monopolistic risks of the law.
Viewpoints of Local Stakeholders on RA 9136: Compiles sentiment from local stakeholders, including electric cooperatives, labor unions, and government units, regarding the practical challenges and political realities of implementing the reform.
Local Implications of R.A. 9136: Examines specific impacts on distribution utilities like CASURECO II, focusing on rate-making formulas, debt management, and the struggle for competitiveness in a restructured landscape.
Keywords
R.A. 9136, Electric Power Industry Reform Act, Privatization, Electricity Rates, National Power Corporation, Electric Cooperatives, CASURECO II, Wholesale Electricity Spot Market, WESM, Power Crisis, Regulatory Commission, Consumer Rights, Energy Policy, Philippines, Deregulation
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines the implementation of the Philippine Electric Power Industry Reform Act of 2001 (R.A. 9136) ten years later, questioning its success in reducing power costs and improving industry efficiency.
What are the central themes discussed in the work?
Key themes include the privatization of the power sector, the financial state of the National Power Corporation, the regulatory challenges facing electric cooperatives, and the overall impact of the law on Filipino consumers.
What is the primary research goal?
The goal is to determine if the reform law has achieved its objective of lowering power rates and improving service for consumers, or if it has failed to protect the interests of the marginalized.
Which scientific or analytical method is used?
The author uses a qualitative approach, combining policy review, historical analysis, interview data from local stakeholders, and comparative assessments of financial data and electricity rates.
What topics are covered in the main body of the work?
The main body explores the history of the law, the specific economic issues of power utilities, local viewpoints from stakeholders, and an ethical evaluation based on social teachings.
What are the primary keywords associated with this document?
Major keywords include R.A. 9136, privatization, electricity rates, NPC, electric cooperatives, WESM, and energy policy.
How does the author analyze the performance of CASURECO II?
The author investigates CASURECO II's financial status, its struggle to remain competitive, and how the implementation of the law's pricing policies affected its ability to maintain service without further rate hikes.
What conclusion does the author reach regarding the Act's success?
The author concludes that the Act has largely failed to meet its promise of affordable power, noting that the Philippines still faces some of the highest power rates in Asia, necessitating a re-evaluation centered on justice and the needs of the poor.
- Quote paper
- Menandro Abanes (Author), 2011, Revisiting the 10-year old Philippine Electric Power Industry Reform Act of 2001 (R.A. 9136) and Its Local Implications, Munich, GRIN Verlag, https://www.grin.com/document/176845
