People's Domain

[Opinion] De-monopolization

Next month,  the Electric Power Industry Reform Act (EPIRA) will mark its 10th year.  I  realized  that the  anniversary date is fast approaching after someone sent me an email asking: How did the EPIRA performed as far as dismantling monopoly of ownership, especially on the distribution utility sector?

The person asking the question was able to browse through the pages of the law and encountered the term de-monopolization. This particular concern is covered by EPIRA under Section 28 – “De-Monopolization and Shareholding Dispersal” in compliance to the “constitutional mandate for dispersal of ownership and de-monopolization of public utilities.”

I will leave the legal discussion on this issue to competent lawyers, but for the layman, like the person who asked the question, “de-monopolization” is interpreted as a mechanism provided for by the law which aims to break the monopoly of ownership and control by private business, especially in the distribution sector.

The review of the EPIRA has been at the center of the efforts of the Freedom from Debt Coalition in its quest to push for an alternative power industry reform program in the Philippines. The de-monopolization or democratization of ownership played a crucial part among the issues that were scrutinized by a technical working group composed of experts who took a lead role for the review of the country’s power industry, including legislation.

From 2008, a series of study sessions were initiated by FDC and attended by officials from the government’s energy sector agencies, regulatory body, academe, non-government organizations, and consumer groups. The sessions contained discussions from power systems and infrastructures; financing; legislations; participatory planning and demand side management; pricing and regulation; renewable energy sources; and, democratic access, ownership, and control.

It likewise looked on the power industry nationalization experience of Venezuela in order to gather necessary lessons in developing an alternative model that may be applicable in the Philippines.

Yet an overarching concern is of course the laws and legislation which govern the entire power industry. In the analyses of FDC, it recognized the glaring failure of the EPIRA on the issue of establishing democratic control and dispersal of ownership, especially in the distribution sector – a sector of the power industry considered closer to people.

In a span of 10 years under the EPIRA, there were many circumstances which could serve as consideration for de-monopolization like the overcharges illegally collected by distribution utilities from its consumers. This is concretely illustrated by the orders issued by the Energy Regulatory Commission which directed DUs like MERALCO and PECO, and also other utilities in Mindanao region, to refund consumers amounting to billions of pesos. These refundable amounts could have been converted into consumers’ equity shares in a DU, paving the way for democratization of ownership.

The EPIRA, however, lacks the mechanism on how the refundable amount can be converted into equity shares in a distribution utility. If only the EPIRA factored in these realities, de-monopolization could have been fast-tracked and consumer ownership could have been fully integrated among many DUs today.

The EPIRA provides a long procedure for de-monopolization. This is the reason why the law failed to dismantle monopoly or the dispersal the ownership and to include the consumers as a major stakeholder. What the law did was to provide an opening for private companies to even solidify its position and control of the distribution sector by diversifying its interest to further include power generation business.

I believe that the country’s power sector requires thorough review and that will include the EPIRA law. The review will provide the opportunity to present amendments on the law that will contain mechanisms like conversion of refundable amount into consumers’ equity shares in a private utility. There have been little reforms in the power sector after 10 years of EPIRA.

Another 10 years would be a long way to go. With the skyrocketing cost of electricity in the country today, electricity consumers must assert their right for ownership by pushing for an “extra-strength” de-monopolization provision or law. (Archived from Misreadings, The News Today, 12 May 2011)

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