What is the ELECTRIC POWER INDUSTRY REFORM ACT of 2001 (R.A. 9136)? On June 8, 2001, President Gloria Macapagal-Arroyo signed into law Republic Act 9136, or the Electric Power Industry Reform Act of 2001. The said enactment was the culmination of more than seven years of public hearings and floor deliberations on various versions of the said measure in Congress. Among other benefits, RA 9136 is designed to bring down electricity rates and to improve the delivery of power supply to end-users by encouraging greater competition and efficiency in the electricity industry. The essence of these reforms is giving stakeholders a CHOICE. Consumer Empowerment. This can be achieved by giving consumers the power to choose their source of electricity from among a host of generators and suppliers of electricity. Higher Efficiency. Consumers will be assured of adequate and reliable power supply at lower rates. Open Access. There will be open access to transmission and distribution network/ facilities so that the benefits of competition in the generation/supply sector could really trickle down to the consumers. Industry Accountability. There will be higher levels of environmental, health and safety standards. Non-complying companies will be subject to appropriate fines and penalties. There will be higher levels of environmental, health and safety standards. Non-complying companies will be subject to appropriate fines and penalties. Competition in Generation and Supply. There will be competition between and among generating companies where prices will be market-driven and competitive. There will be long-term contracts and a spot market where the trading of electricity between buyers and sellers will be undertaken. There will be competition between and among generating companies where prices will be market-driven and competitive. There will be long-term contracts and a spot market where the trading of electricity between buyers and sellers will be undertaken. Electricity Tariff Unbundling. This includes the itemization and the segregation of various components of electricity tariffs to make the rates more transparent. With rates unbundled, customers will be able to know how much they would be paying for generation, transmission, distribution and other benefits or charges. These reforms are aimed at making sure our country will have reliable and competitively priced electricity. The strategy is to put an end to monopolies that breed inefficiency, encourage the entry of many more industry players, and generate competition that will benefit consumers in terms of better rates and services. In other countries, a restructured and competitive power sector has provided consumers with lower power rates. We look around us and find that the same pattern can be seen in local industries that have been de-monopolized and deregulated like telecommunications and inter-island shipping. The privatization or sale of NPCs generating power plants to several companies will trigger competition, on the generation side. In addition, its privatization will allow government to shift the burden of ensuring continuous financing for the construction, operation and maintenance of hugely capital-intensive power generating plants to the private sector. Now that RA 9136 is in place, what reforms will be instituted in the power industry? Two major reforms are embodied in RA 9136, namely, the restructuring of the electricity supply industry and the privatization of the National Power Corporation (NPC). The restructuring of the electricity industry calls for the separation of the different components of the power sector namely, generation, transmission, distribution and supply (please see diagram on page 2). On the other hand, the privatization of the National Power Corporation (NPC) involves the sale of the state-owned power firms generation and transmission assets (e.g., power plants and transmission facilities) to private investors. These two reforms are aimed at encouraging greater competition and at attracting more private-sector investments in the power industry. A more competitive power industry will in turn result in lower power rates and a more efficient delivery of electricity supply to end-users. With restructuring, will the power industry be fully deregulated? How can government ensure that consumers will be protected from undue and frequent increases in power rates?
Posted on: Tue, 07 Oct 2014 23:24:46 +0000
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