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

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, per legislator some admit to and others not

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

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

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)

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

Salamat at magandang araw! Yolando T. Velasco UNFCCC Secretariat Zarky C. Pilapil Energy and Environmental Training Program