Generation company exec urges gov’t to implement Epira in full

Sun.Star Cebu <> Tuesday, June 16, 2009

BY NANCY R. CUDIS, Sun.Star Staff Reporter

AN official of a power generation company is calling for the “dismantling of the monopoly” in the electric power industry through the full implementation of the Electric Power Industry Reforms Act (Epira).

Jesus Alcordo, president of Global Business Power, said the Epira was supposed to fully dispose at least 70 percent of National Power Corp.’s (NPC) generation assets to create competition in the generation side and prompt open access among consumers.

The Epira, approved in 2001, provides a framework for the restructuring of the electric power industry, including the privatization of NPC’s assets that is meant to make the sector more competitive.

The law is designed “to enhance the inflow of private capital and broaden ownership of the power generation, transmission and distribution sectors.” At the same time, it will ensure transparent and reasonable prices of electricity under the climate of “free and fair competition.”

“The long-term goal of Epira is to eventually give consumers the freedom to choose the supply (source) that they would like for their electricity. How to do that? The law is
supposed to dismantle NPC’s ownership of generation (assets) to create competition and open access,” Alcordo said.

Open access, which Alcordo said is the central piece of the Epira, will initially allow electricity users of one megawatt (mw) and above to connect directly to the generator, using the distribution facilities of companies like the Visayan Electric Co. This would assure these consumers of lower electricity rates, he said.

Open access

However, he lamented that open access has not been established yet even though the Epira was passed eight years ago since most of NPC’s generation assets are still government-owned.

Alcordo said in a press conference late last week that the power sector has been under a monopoly for more than two decades. “And we all know monopoly breeds…inefficiency,” he added.

Starting next year, Cebu will have new capacity generation plants.

Global Business Power—a subsidiary of Metropolitan Bank and Trust Co. and a member of the Cebu Power Corp. consortium—is constructing a coal-fired power plant complex in Toledo City that will have a capacity to produce 246 megawatts (MW). The plants are expected to become operational in the first half of 2010.

Kepco-Salcon Power Corp., on the other hand, is building two coal-fired power plants in Naga that will have a combined capacity of 200 MW. The plants are expected to become operational in 2011.

Alcordo also voiced concern for the delayed implementation of the Visayas Wholesale Electricity Spot Market (WESM), which serves as a marketplace for buyers—distribution utilities and consumers needing 1 MW and more—and sellers—generation plants—of electricity.

WESM allows market forces to dictate the price of electricity and is supposed to encourage more investors in power sector as it will enable generation companies to recover the true cost of producing electricity.

Alcordo said government officials in Cebu and in the entire Visayas, have reservations about WESM due to the “lack of understanding.” He said the officials probably fear that WESM would only cause power rates to go up because of the lack of supply.

“We could have started WESM earlier if NPC did their part in disposing their assets since the trading process allows prices to be more transparent and competitive. Now, we are not enjoying the benefits of the reforms that the Epira law is supposed to bring,” he said.

He pointed out that while Epira is not perfect, stakeholders should fully implement it first and check which provisions need improvement before proposing to amend it.

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