TOMORROW, Sept. 11, I will be moderating The Manila Times’ Energy Roundtable, “Epira at 25: What needs to change to secure the Philippines’ energy future?” I have been wanting to do this event for some time, and I am looking forward to it with great excitement. It is not the first such public discussion of the Electric Power Industry Reform Act of 2001, which turned 25 on June 8 of this year, and it probably won’t be the last. Having so many people and organizations focusing on the same subject over an extended period of time usually risks causing what I call “forum fatigue,” but I don’t think that is the case here. Energy is so fundamental to our economy and way of life that it would be well-nigh impossible to talk about it enough.
And besides, it’s me. I can make a forum about watching paint dry compelling, if I’ve had a good night’s sleep and a decent cup of coffee beforehand. What more when the subject is something in which I am reasonably well-versed, and almost obsessively enthusiastic about.
Outside of organized forums, there has been a great deal of discussion about the current value of the Epira law, and whether or not comprehensive changes to it really need to be made. My impression is that opinions on this are fairly balanced, with perhaps a slight tilt in favor of applying an overhaul to the 25-year-old law. The Department of Energy (DOE), for its part, seems to favor preserving Epira as it is, and making only minor tweaks to address the more obvious problems with it. Last week, the DOE released a book it has prepared, titled, “Epira at 25: 25 years of power reform in the Philippines,” and though I have only had time to give it a fast once-over in the day or two since I was able to download a copy, it is apparent that the tone is more celebratory than critical of Epira. Nevertheless, the DOE has recommended a number of upgrades, which warrant close examination. I will get to that when time permits.
I am obviously making an assumption here, but I think the reason that the DOE takes a more positive view of Epira in its existing form is that making substantial changes to the law will be rather difficult and time-consuming. A comprehensive reform of Epira resulting in a new version of the law would likely take years, the inefficiency of Congress being what it is, and risks producing a measure that is already outdated when it is finally implemented. From the DOE’s point of view, it may be more expedient to apply smaller fixes in ways that do not require legislative participation, such as through department orders or, as has been done lately in the example of removing the value-added tax from system loss charges, orders from the Energy Regulatory Commission (ERC).
The approach is understandable in the prevailing governance environment, but it will ultimately become ineffective. I liken it to the efforts to maintain the BRP Sierra Madre grounded on Second Thomas Shoal 30 years ago to establish an outpost on that contested scrap of sea; patching up the holes will eventually become inadequate, and a decision will have to be made to either abandon it or replace it with something new.
From my point of view, I don’t think abandoning Epira is a real option. Even though the law has some fundamental flaws and is otherwise badly outdated, as I have said before, the concept of a “basic law” governing the energy sector is useful, and whatever its shortcomings, Epira has provided stable governance across four administrations. That need for stability, however, is ironically the biggest reason Epira must be overhauled, because the basic law — which also serves as the foundation of complementary laws — must be realistic and relevant to the needs of the country today and for the foreseeable future, not the country of 25 years ago.
In that context, allow me to offer some broad suggestions for reforms of the existing Epira Law. I do not know what will emerge from the discussion tomorrow — the mystery is part of the anticipatory excitement of it — but perhaps these can be added to the talking points.
1. Drop the proscription of government ownership of generation assets: For one thing, this condition is only honored in the breach, anyway, the government continues to own plenty of generation assets through the National Power Corp. small power utilities group to service off-grid and isolated areas. That’s a bit of a niche, albeit a rather large one, and so it has been overlooked. However, there is a bigger issue in that if the Philippines wants to pursue generation expansion in the form of nuclear energy, or even expanded development of geothermal energy, government financial participation, and therefore partial ownership, is unavoidable.
2. Drop the proscription against cross-ownership of generation, transmission and distribution assets: As with the rules against government ownership of generation assets, the rules here are already bent nearly to the breaking point, anyway, which leads to inconsistent and inefficient regulation. Energy development would be faster and far more coordinated if this condition was dropped, and as I pointed out in my column last Sunday, Sept. 6, the prohibition against the National Grid Corp. of the Philippines’ owning generation assets for grid stability purposes wastes energy and adds costs to consumers.
3. Enforce the provisions of Epira calling for a wind-down of missionary subsidies and the conversion of electric cooperatives into stock cooperatives or stock corporations. In these cases, Epira does not actually need to be amended at all, but the responsible agencies — the DOE, the ERC and the National Electrification Administration, as well as the industry itself — simply need to be compelled to stop ignoring what the law actually says.
There are probably a dozen or so other changes I could list, but I believe these are the biggest ones, and the ones that would be most conducive to expanding and improving energy supply, and ultimately reducing power costs. Whether or not there is any real appetite for making serious reform is something I hope we’ll discover tomorrow.
ben.kritz@manilatimes.net
Bluesky: @benkritz.bsky.social
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