Integrated Electric Utilities formed

1. Power Reform Act passed 2001 • NEA created • Massive blackouts in late ‘80s • BOT Law passed • Luzon&Visayas interconnected • IPPs negotiated 1990s 1980s • NPC created 1970s • Electric coops created • NPC developed nationwide grid • Generation nationalized to NPC 1936 1900s • Integrated Electric Utilities formed Overview of the Philippine Electric Industry

2. Governance Pre-EPIRA • Civil society participation in pre-EPIRA stage • separate hearings per sector • most consumer groups and other advocacy groups mostly against its passage • bias FOR big industries and AGAINST consumers (bear the brunt of the cost) • increase in electricity rates while there will be a decrease in the quality of service • foreign ownership of utilities as forms of neo-colonialism • Pay-off scandal • Php500,000.00 per legislator • some admit to and others not

3. Governance Post-EPIRA • PGMA’s 10-point plan: to address issues of transparency, accountability, power cost reduction, efficiency, cost competency and fair market competition • True cost of service (question of transparency) • Rates unbundling as reflective of the true cost of service • Caveat: former PPA hidden in the generation, transmission, distribution and supply charges as reflected in the billing statements • Rates unbundling criteria/formula of the ERC not available for public consumption • IPP review and renegotiations done behind closed doors; guidelines not clear; lack of time as an excuse to questionable decisions made • Universal charge: inefficiency of ECs passed on to consumers

4. Governance Post-EPIRA • Occasional petition for rate increase on the part of NPC and Meralco (question of transparency and public awareness) • ERC not willing to divulge information as to how often they can petition for such increases • Contract violation leading to double billing (question of accountability) • Meralco’s breach of the CSE  reduced utilization of NPC’s power plants  higher NPC rates  burden on consumersc • Performance standards for ECs • Enhancement of ERC’s technical capabilities through capacity building programs provided by the USAID question of efficiency

5. Governance Post-EPIRA • WESM plans being laid out and put into place (question of fair market competition) • appreciation programs for different stakeholders (government, private entities, civil society) • Monitoring and evaluation system (Power Tracker) • updates on EPIRA reform activities (transparency and accountability) • database on performance indicators (efficiency)

6. Opportunities and Challenges • Under the WESM: • More customer options • Costs reduction • Economic gain (increased employment and productivity) • Welfare loss due to removal of subsidies • Geographic setup • Potential for NRE sources utilization • Increased private sector participation • Market-driven industry • Willingness vs. capacity to pay • Rates fluctuation • Agency cooperation • Confidentiality vs. transparency

7. Salamat at magandang araw! Yolando T. Velasco UNFCCC Secretariat Email: yvelasco@unfccc.int Zarky C. Pilapil Energy and Environmental Training Program Email: zpilapil@eudoramail.com