Proposed Epira amendment 'to prevent power sector collusion'

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Tuesday, January 14, 2014

MANILA -- Another bill was filed on Tuesday to amend the 13-year-old Electric Power Industry Reform Act (Epira); this time, to prohibit cross-ownership in the generation and distribution companies.

In filing House Bill 3676, Eastern Samar Representative Ben Evardone said the proposed amendment would prevent collusion in the energy sector, a problem previously probed by the Department of Energy (DOE) amid reports of the simultaneous and unplanned shutdown of power plants.

"Under Epira, only a few corporations dominate in both the generation and distribution sectors, to the detriment of the Filipino power consumers. This set-up has recently fueled allegations of collusion among players in the generation sector and/or with those in the distribution chain," Evardone said in the bill's explanatory note.

"Through these amendments, it is anticipated that genuine competition would take place with the possible emergence of small players who will have a fighting chance to survive a de-monopolized industry, avoid a few companies to dictate prices of electricity and for more importantly, to avoid soaring electricity prices in the future," he added.

Evardone noted that under the Epira law enacted in 2001, there is a ban on cross-ownership of any distribution or generation company to own a share in the National Transmission Corporation (Transco) and vice-versa.

"There is no such ban between the generation companies and distribution utilities. This failure to provide a ban on cross-ownership between generation companies and distribution utilities would later on become a key factor to the soaring electricity rates in the country," he said.

The lawmaker said that the only safeguard Epira provided was "to prevent distribution utilities from sourcing more than 50 percent of its total power demand from bilateral contracts with its related generation companies.”

The measure provides that existing interests must be divested within one year from the effectivity of the proposal.

House committee on energy chairman Reynaldo Umali earlier said that there is a need to "tweak" several provisions of the Epira. (Sunnex)

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