Helena S. This was the primary purpose of Presidential Decree No. Napocor acted as the regulator body providing permits to operate to cooperatives, private utilities ad local governments, and other entities. Its main task is to attain total electrification through a series of linked-up generation facilities and power distribution centers. During this period, Napocor, through former Dean and Finance Minister Cesar Virata took control of Meralco and other power generating companies.
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The said enactment was the culmination of more than seven years of public hearings and floor deliberations on various versions of the said measure in Congress. Among other benefits, RA is designed to bring down electricity rates and to improve the delivery of power supply to end-users by encouraging greater competition and efficiency in the electricity industry.
Consumer Empowerment. This can be achieved by giving consumers the power to choose their source of electricity from among a host of generators and suppliers of electricity. Higher Efficiency. Consumers will be assured of adequate and reliable power supply at lower rates.
Industry Accountability. There will be higher levels of environmental, health and safety standards. Non-complying companies will be subject to appropriate fines and penalties. Competition in Generation and Supply. There will be competition between and among generating companies where prices will be market-driven and competitive. There will be long-term contracts and a spot market where the trading of electricity between buyers and sellers will be undertaken.
Electricity Tariff Unbundling. This includes the itemization and the segregation of various components of electricity tariffs to make the rates more transparent. With rates unbundled, customers will be able to know how much they would be paying for generation, transmission, distribution and other benefits or charges.
These reforms are aimed at making sure our country will have reliable and competitively priced electricity. The strategy is to put an end to monopolies that breed inefficiency, encourage the entry of many more industry players, and generate competition that will benefit consumers in terms of better rates and services. In other countries, a restructured and competitive power sector has provided consumers with lower power rates. We look around us and find that the same pattern can be seen in local industries that have been de-monopolized and deregulated like telecommunications and inter-island shipping.
In addition, its privatization will allow government to shift the burden of ensuring continuous financing for the construction, operation and maintenance of hugely capital-intensive power generating plants to the private sector.
Now that RA is in place, what reforms will be instituted in the power industry? Two major reforms are embodied in RA , namely, the restructuring of the electricity supply industry and the privatization of the National Power Corporation NPC. The restructuring of the electricity industry calls for the separation of the different components of the power sector namely, generation, transmission, distribution and supply please see diagram on page 2.
These two reforms are aimed at encouraging greater competition and at attracting more private-sector investments in the power industry. A more competitive power industry will in turn result in lower power rates and a more efficient delivery of electricity supply to end-users. With restructuring, will the power industry be fully deregulated? How can government ensure that consumers will be protected from undue and frequent increases in power rates?
No, only generation and supply will be deregulated. The Commission will be made up of a Chairman and four Commissioners, all of whom will be appointed by the President of the Philippines. The ERC will be tasked to promote competition in the power sector, encourage market development and ensure customer choice. Compared to its predecessor, the ERC will have stronger and broader powers in the sense that it will be authorized not only to correct but to prevent and penalize anti-competitive practices.
It will also be given certain rate-setting functions. Are there any safeguards in the law to prevent certain business groups or blocs from dominating the restructured power industry? To promote true competition and prevent monopolistic practices, RA provides for explicit caps or limits on the volume of electricity that a distribution utility can buy from an affiliated company that is engaged in power generation.
How sure are we that power rates will indeed go down? Are there any pro-poor provisions in RA ? Under RA , NPC is mandated to reduce its rates for residential consumers by 30 centavos per kilowatt-hour immediately upon the effectivity of the said law. This will ensure that such consumers will not have to contend with higher power rates even when the cross-subsidies on electricity tariffs are removed with the restructuring of the power sector.
Finally, the bill mandates NPC to carry on with its missionary function of providing electricity to non-viable, far-flung areas in the countryside even after its privatization. How will the privatization of NPC be carried out? How can government ensure that the proceeds from the sale of NPC assets will be optimized?
A set of criteria in the grouping of NPC assets will be considered. These criteria include financial viability, efficiency of operations, and management and operational synergy. Furthermore, all assets of NPC shall be sold in a open and transparent manner through public bidding.
Will NPC power plants that run on hydro and steam be privatized also? RA further specifies that the two hydro plants may not be privatized earlier than 10 years from the effectivity of the said law. Apo , RA states that the steamfield assets and the power plants of each of the said complexes shall not be sold separately. Rather, they shall be combined and each complex will be sold as one package through a public bidding.
The said enactment was the culmination of more than seven years of public hearings and floor deliberations on various versions of the said measure in Congress. Among other benefits, RA is designed to bring down electricity rates and to improve the delivery of power supply to end-users by encouraging greater competition and efficiency in the electricity industry. Consumer Empowerment. This can be achieved by giving consumers the power to choose their source of electricity from among a host of generators and suppliers of electricity. Higher Efficiency. Consumers will be assured of adequate and reliable power supply at lower rates.
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