Outline

1)Power rates have doubled with EPIRA

2)EPIRA has re-concentrated ownership of the power industry to a few

3)EPIRA legitimized onerous contracts and debts resulting in greater indebtedness and looming rate hikes

4)EPIRA has hostaged our development and industrialization to the whims and profit margins of private industry players.

Power rates doubled under EPIRA

Before 2001, Meralco residential consumers were paying P4.87 per kWhP4.87 per kWh. Ten years under EPIRA, the average rate increased to P10.35/kWh (112%)

EPIRA has hidden the PPA from onerous IPP contracts

“The current PPA is allocated between the generation and transmission rates. The generation component shall be periodically updated through the Generation Rate Adjustment Mechanism (GRAM).”

-ERC Order dated 30 May 2003, page 9

Various pass-on recovery mechanisms push the prices of electricity higher

Taxes, systems losses, cross subsidies and universal charges have increased by as much as 50.5 % since the unbundling of rates under EPIRA in 2003

•GRAM – NPC Generation Rate Adjustment Mechanism

• NPC raised its rates twice• FPPCA – Fuel and Power

Purchase Cost Adjustment (2010)

•AGRA – Automatic Generation Rate Adjustment•ICERA – Incremental Currency Exchange Rate Adjustment

• FxA – Foreign Exchange Related Cost Adjustments (2010)

•Deferred recoveries

New rate setting mechanisms put consumers at a disadvantage

Performance based regulation (PBR) Based on promises of

future company performance, operation, costs and capital outlays

Consumers paying for something that has not happened yet.

18 distribution utilities applying or under PBR

A. MERALCO, Dagupan EC, Cagayan EPLC,

B. Mactan Electric, Cotabato LPC, Iligan LPC, Cabanatuan EC

C. Tarlac Electric, VECO, Ibaan EEC, La Union EC, Davao LPC

D. Angeles EC, San Fernando LPC, Clarck EDC, Subic Enerzone, Bohol Light, Panay EC

EPIRA concentrated ownership of the industry to few corporations

Only three companies (SMC – 20%, First Gen/Lopez – 17%, Aboitiz – 15%) control 52% of generation capacity. PSALM holds 19% while 11% remain with NPC

Generation Transmission Distribution

San Miguel Corporation (20 %)

Henry Sy and partners in the National Grid Corp. of

the Philippines

Meralco (45 % MPI, 27% SMC, 6 % Lopez)

First Gen/Lopez (17 %)

Aboitiz (15 %) Aboitiz (Davao Light and Power, VECO, Cotabato

Light and Power Company, San Fernando Electric Light & Power Co.

Inc., Subic EC, Mactan EC., Balamban EC)

WESM: manipulation and volatility in rates

High volatility in rates Dominant control in generation can drive

speculation in ratesFrom PEMC

EPIRA legitimized onerous contracts and debts

• Psalm shelled out $18 billion from 2001-2010 to settle original $16.39 billion NPC obligations. Yet, total NPC debts remain at $15.82 B in 2010. This is still nearly 33% of the national debts over the years

NPC debts (US $ billions)

NPC IPP obligations NPC debts

2001 10.4 6

2002 11.9 7.4

2003 13.6 8.7

2004 12.9 6.6

2005 12 7

2006 11.7 7.3

2007 10.9 7.7

2008 10 6.9

2009 9.5 7

Jun-10 9 7.3

Proceeds from privatization did not lessen NPC debt burden

EPIRA hostaged energy security to private profit-seeking interests

• Government not allowed to build new plants under EPIRA. Private investors and the IPPs would not build and maintain a plant until it finds it profitable