03 MAY 2012
Power outrage: The Mindanao power crisis after 10 years of EPIRA
President Benigno Aquino III himself laid out the situation in his recent Power Summit speech when he told the people of Mindanao: “Pay a little more for energy, or live with the lack of energy and the continuation of brownouts.”
Mindanao is in a power crisis. The island’s energy demands reaches 1,300 megawatts (MW), however, its current energy capacity falls 20 MW short at 1,280 MW. As a result, massive brownouts hit the region February this year, and a proposal to increase electricity prices looms.
People must pay “real price for real service,” Aquino said, explaining that the hefty price tag for the provision of electricity, a basic service, is simply a matter of economics at play.
However, critics have lashed out at the president for his insensitivity, and pointed out that the president’s proposal – an increase in electricity rates – may only aggravate the already dire energy situation in Mindanao.
Mindanao, which holds a third of the country’s population, is known for its supposedly “cheap” costs of electricity. Data from the Department of Energy (DoE) shows that distribution units in Mindanao have charged the cheapest power rates in the country, which is at P6.69 per kilowatt-hour (kWh), lower than the effective residential rate in Luzon at P9.84 kWh and Visayas at P8.19.
But however cheap DoE claims Mindanao’s power rates are, they are still expensive compared to other countries. The Philippines has the highest electricity rates in Asia, according to a 2011 survey conducted by the Japan External Trade Organization, which ranks Asian cities based on electricity rates. Manila has the most expensive residential rate at P10.16 kWh, while Cebu lands the third spot at P8.39 kWh, after Singapore.
Mindanao is a manifestation of the same trend. Cagayan De Oro City, Davao and CARAGA regions have higher power rates than major Asian cities like Seoul, Kuala Lumpur and Beijing, according to JETRO’s survey and DoE reports.
“While Aquino is blaming the power crisis on the people of Mindanao for being pampered by ‘cheap’ power, Mindanao is actually paying much more than most major cities in Asia,” notes Arnold Padilla, public information officer of umbrella alliance Bagong Alyansang Makabayan (Bayan).
Electricity rates vary so broadly from Luzon, Visayas, to Mindanao because of the Electric Power Industry Reform Act (EPIRA), a national policy that has governed the operation of electricity services in the country for the past decade.
After its passage in 2001, the EPIRA was hailed as a landmark law by the Arroyo administration, touted to finally halt the financial burden of electricity on the government. EPIRA aims to increase the National Power Corporation’s (NAPOCOR) income, to help it settle its growing debts to major financial institutions. EPIRA also seeks to sell the assets of the formerly government-owned NAPOCOR and encourage market competition with the private sector, with the end goal of decreasing rates in electricity.
Under EPIRA, however, the move to sell or lease government energy facilities has resulted in surging prices of electricity in the country, says Padilla.
Data from the DoE show that the residential rate of electricity in the Philippines reached $0.18 per kWh since the enactment of EPIRA, which was more than double the rate in 2001 of $0.08. Moreover, the residential rates of Manila Electric Company (Meralco), the country’s largest public distribution unit, rose from P4.87 per kilowatt hour before the EPIRA to P10.67 in 2011, a 119 percent increase.
Mindanao is relatively exempted from EPIRA, which is why electricity rates there have remained relatively lower than in Luzon and Visayas. According to 2010 data from the DoE, 82 percent of Mindanao’s power plants are government-owned or controlled, compared to just 18 percent in Luzon and 36 percent in Visayas. NAPOCOR dominates the power generation industry at 926 MW.
However, the El Niño phenomenon is in large part to blame for the power crisis in Mindanao. El Niño dried up the region’s hydropower plants, which supplies half of Mindanao’s energy output. “Power supply in the island was insufficient as water elevation in lakes and rivers all over the grid were way below their critical level,” states the DoE report.
The prospect of soaring energy rates is also problematic because of the prevalence of poverty in Mindanao. This year, the National Statistical Coordination Board estimates that 36 percent of the country’s poorest families live in Mindanao, including the country’s three poorest regions: CARAGA, the Zamboanga Peninsula and the Autonomous Region in Muslim Mindanao.
“Amid this condition, the people of Mindanao are being forced to pay for electricity that is way beyond the rates in Asia’s richest cities. Yet Aquino wants Mindanao to shell out more money to supposedly solve its power crisis,” says Padilla.
Indeed, Mindanao is also besieged with problems of environmental degradation and poverty; to hike up rates for a basic service would only aggravate the crisis in the region. There is no point in applying EPIRA to Mindanao when it has already failed in Luzon and Visayas, explains Padilla.
Aquino’s ‘solution’ shows “gross ignorance on the impact of the decade-old EPIRA on power rates and energy security in the country,” noted Bayan in a statement.
EPIRA has diverted the attention from the government to provide electricity as a basic social service. Instead of privatizing the energy industry, the government should have focused on building up alternative sources of energy, most especially the drying hydropower plants, in the midst of the power crisis.
“The government has abandoned its strategic role to design and implement power development projects consistent with a long-term industrialization plan,” Bayan says.
According to the DoE, 60 percent of energy in the country in 2010 was generated through coal and natural gas. Geothermal and hydropower were placed at 15 and 12 percent, respectively. The report noted the limited capability of hydropower during the summer in the Mindanao region.
“Instead of EPIRA, the government should develop a vision of a state-supported energy sector to fulfill the promise of sufficient, affordable and efficient electricity for Filipinos,” says IBON Foundation.
Evidently, the experience of the power sector under the reins of the private sector has wrought the country with high electricity rates—the exact opposite of EPIRA’s purported promise. Hence, a decade of deviation to such promises compels the government to reconsider its much-vaunted law.
If the case of Mindanao is any proof, then strong government intervention and complete reversal of failed policies is essential in ensuring that every Filipino household can enjoy the convenience of electricity without worrying about expensive bills.
Read article source in Philippine Collegian, May 3, 2012