31st Status Report on EPIRA Implementation

EXECUTIVE SUMMARY

The 31st Status Report on EPIRA implementation provides updates on various reform programs embodied in Republic Act No. 9136 as of  October 2017. The EPIRA is now on its 17th year of implementation with various developments while challenges are continued to be addressed by the  DOE in collaboration with the Energy Regulatory Commission (ERC), the attached agencies and key stakeholders.

Among the major reforms implemented, the privatization of remaining National Power Corporation (NPC) generating assets and Independent Power Producer (IPP) contracts including other disposable assets continued to be undertaken by Power Sector Assets and Liabilities Management Corporation (PSALM) with indicative target to complete the disposal by 2019. However, the privatization design for Agus-Pulangui Hydro Power Complexes is being studied and thereafter will be discussed with Congress to determine whether the same will be privatized or not. Relatedly, with the PSALM’s mandate to dispose the government’s power related assets, it likewise achieved significant reduction in the country’s foreign debts from the beginning balance in 2000 of PhP830.7 billion to PhP490.7 billion (or USD9.72 billion) as of 2nd Quarter of 2017 or a decrease of PhP340 billion.

As regard to the Wholesale Electricity Spot Market (WESM) implementation, the market continued to be confronted by frequent outages of key capacities, however, market prices were relatively stable with load-weighted average prices recorded below PhP4/kWh on a monthly basis from May to October 2017. Among the significant development was the ongoing preparation by the DOE, Philippine Electricity Market Corporation (PEMC) and the National Grid Corporation of the Philippines (NGCP) of the implementation of the WESM in Mindanao and the change from 1-hour to 5-minute dispatch interval. Correspondingly, various amendments to the WESM Rules and Market Manuals were adopted to ensure the seamless transition to a new dispatch interval.

Challenges to the implementation of retail competition and open access (RCOA) were faced by the DOE and the ERC as various groups filed court cases against the implementation of various policies which were promulgated to improve the competitiveness and transparency in the retail market. Despite such, significant improvement in the exercise of choice of electricity end-users was noted with the increase in the registration of Contestable Customers from only 240 in June 2013 to 898 as of October 2017. 

With regard to the EPIRA vision of widening the ownership base of the power sector, the generation sector is seen as moderately concentrated in terms of ownership wherein around 10 companies are owning majority of the generating capacities. In so far as compliance to market share limitation, based on DOE data, no entity breached the grid and national caps at 30% and 25%, respectively. Relatedly, the ERC held in abeyance the issuance of the annual determination of compliance to market share limitation pending completion of its study on the existing guidelines setting the installed generating capacity and the market share limitation per grid and the national grid.

Meanwhile, the power supply situation during the 1st half of 2017 remained stable despite incidences of plant and transmission outages,  earthquake, and security concerns. Total dependable capacity for the national grid was at 13,109 MW while maximum available capacity was recorded at 12,394 MW MW. Coal power plants continued to provide the bulk of power generation at 50% followed by natural gas at 29%. The peak demand for this period recorded an all-time high of 10,054 MW in Luzon grid last 09 May 2017. 

Electricity prices for the period in review exhibited downward movement in all grids and in most distribution utilities. On the average, the country’s electricity rates were lower by 12 centavos in September 2017 at PhP7.74/kWh as compared to the June 2017 level of PhP7.86/kWh. The reduction was brought by lower generation and transmission costs during the comparative period.

The household electrification level as of October 2017 is around 90.7%. For the remaining unelectrified households, the DOE in collaboration with various entities, continues to implement existing programs and activities specified in the Household Electrification Development Plan (HEDP) towards the new target of full household electrification by 2022 covering both on-grid and off-grid areas.

In terms of benefits to host communities, the total financial benefits accrued to PhP11.3 billion as of April 2017. Out of this amount, PhP7.0 Billion was already obligated for the implementation of various projects, leaving an available balance of PhP4.3 Billion.

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