Two lawmakers and authors of a bill amending the Electric Power Industry Reform Act (EPIRA) called on other members of Congress to act on their proposed measure to strengthen the ban on conflict-of-interest in the power industry.
Rep. Caroline Tanchay said the EPIRA law had allowed so-called cross-ownership among players in the power industry, but this has been prone to abuse.
Tanchay co-authored House Bill No. 174 or the proposed “Act Prohibiting Cross Ownership Among Distribution Utilities and Generation Companies”, with Rep. Rodante Marcoleta. Both Tanchay and Marcoleta belong to the SAGIP Party-list.
It seeks to amend Section 45 of the EPIRA which allowed cross-ownership of distribution and generation facilities in the power sector.
The provision, in its current version, allows distribution utilities to source up to 50 percent of its electric supply from an “associated firm.”
“Simply put, if both the distribution utility and the generation company are controlled by one entity, they are to be considered as associated firms,” said HB 174.
The implementing rules and regulations (IRR) of EPIRA expanded the definition of associated firms which allowed “private power firms to circumvent the already generous cross-ownership limitation in EPIRA.”
“The approval of this measure is earnestly sought,” Tanchay and Marcoleta said in the bill’s explanatory note. Maricel V. Cruz
The bill cited the case of Manila Electric Company (Meralco), which controls power distribution in Metro Manila and nearby provinces that represent 75 percent of the entire economy. Its subsidiary Meralco Powergen Corp. (MGen) has ownership shares in power generating plants that included the 455-megawatt San Buenaventura Power Plant in Mauban, Quezon province; the 237-megawatt coal-fired plant in Sarangani province; and the 120-MW plant in Zamboanga province.
Meralco also entered into a joint venture agreement with San Miguel Corp for a 1,200-MW coal plant in Mariveles, Bataan province.
The two lawmakers said the proposed bill seeks to avoid this monopoly altogether by eliminating the allowance for cross-ownership in EPIRA and by adjusting its IRR accordingly.
“The prohibition on any form of cross-ownership will remove the conflict of interest among distribution utilities and generation companies, allowing a level playing field for all stakeholders,” they said.