“Meralco has almost 75% of Luzon as a captive market” – Deputy Speaker Marcoleta

With global developments such as the Russia-Ukraine Crisis, the Indonesian coal export ban, and the Malampaya gas field depletion, the energy sector is struggling to keep afloat. Mix in the monopolistic nature of the Philippine Distribution Utilities, and there’s a recipe for disaster.

The Pandesal Forum was an opportunity for heavyweights in the government and the energy sector to discuss the problems of Philippine power.

Deputy Speaker Rodante D. Marcoleta and Chairman of the Philippines Solar and Storage Energy Alliance Inc. (PSSEA) Tetchi Capellan were speakers at the “Pandesal Forum” on March 8, 2022, discussing the topic of the Monopolistic Control of Power Supply in the Philippines and its negative impacts on consumers.

The “Pandesal Forum” is a media and public issues forum regularly hosted at Kamuning Bakery Café by writer and analyst Wilson Lee Flores. It is a civic project meant to elevate discourse on national and global issues.

Monopolies in Energy

According to Marcoleta, Meralco has almost 75% of Luzon as a captive market. This is contrary to the spirit of the Electric Power Industry Reform Act of 2001 (EPIRA) that encourages competition in the interest of consumers, as the high prices of electricity due to a monopoly in the distribution utilities negatively impact consumers. Marcoleta said this issue highlights the weak regulatory powers of the Energy Regulatory Commission.

“To summarize po, ang gusto nating sabihin dito ay kinakailangang maging independent at malakas ang regulatory function po ng ERC. Kailangan mailatag po ang mga kaukulang regulasyon para mapanagutan po natin yung tinatawag na RCOA. Ito po yung Retail Competition and Open Access. Dito po kasi mawawala ang monopolistic power ng mga distribution utilities kapag nagkaroon po tayo ng mas maraming contestable markets, makakawala po sila sa tinatawag na captive markets,” Marcoleta concluded.

Global Developments affecting Local Energy

The Philippine Solar and Storage Alliance (PSSEA), through Ms. Capellan, emphasized that the coal export ban by Indonesia, together with the Russian-Ukrainian war and the Malampaya restrictions, would cause increases in energy prices that will have significant effects on the economy and the population’s well-being.

Improving Energy Generation Mix and Providing Solutions

According to Capellan, the energy generation mix should be improved. The majority of the power plants in the Philippines are 30 years old or over and thus are not as reliable. They have a derated capacity, reducing their power generation capacity, which leads to less power available in the market, and in some cases, may even result in outages.

As such, Capellan stated, establishing solar power plants will be one solution, given that peak production matches peak consumption months. She highlighted that solar power plants generate most of its electricity during the months of March, April, and May, and also perform optimally at the peak hours coinciding with the load profile.

“Without additional contracted power supply, the Alliance predicts that prices of electricity will rise again as it did in May 2021 when the load weighted average price (LWAP) rose to as much as 289%. Worse, we will witness a repeat of the 2014 scenario when prices rose weekly from the February 2014 to March 2014 at the rate of no less than 20 percent every week,” Capellan warned.

Reactor Ado Paglinawan agreed on this point, noting further that there are numerous cheap and durable solutions available from China. Reactor David D’Angelo offered an alternative viewpoint, where he pushed for providing community-grade solutions with electric cooperatives taking the lead, rather than large, centralized companies, which will simply result in higher electric prices. Further, he urged for the removal of the excise tax on energy. 

Alternative Viewpoints

Paglinawan and D’Angelo were in disagreement regarding the history of electric generation in the Philippines, notably on the reason behind the shutting down and mothballing of the Bataan Nuclear Power Plant.

According to Mr. Paglinawan, it was politically motivated by former Pres. Cory Aquino, saying that: “The ghosts of Cory Aquino continue to haunt us. Not only did she privatized[sic] the industry thus reversing its ownership away from the people, to greedy oligarchies.”

D’Angelo contested this and argued that it was Marcos himself who wished to mothball the plant.

Further disagreements were aired out in the open forum after the speakers, mainly concerning the reliability of solar and the proposed decentralization of power generation by D’Angelo.

However, it seemed that everyone agreed that a short-term solution that would be focused on solving consumer problems was to reduce or perhaps totally eliminate, at least for the short term, the energy excise tax.

Closing Remarks

Capellan emphasized the need for a “science-based” approach to the energy sector development. She noted that the current administration only has three months left, and the new leadership, whoever it may be, should focus on developing the energy sector, as a key component in enabling progress of the country.

 

 

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