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Topic 3 - EPIRA Law

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8 views5 pages

Topic 3 - EPIRA Law

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DELOS SANTOS, JAN JIMUEL
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TOPIC 3

R.A. 9136 Act of 2001 – Electric Power Industry Reform Act of 2001
- This Act shall be known as the "Electric Power Industry Reform Act of 2001". It shall here
in after be referred to as the Act. EPIRA aimed to establish a more efficient market by opening
up the generation sector to private companies, separating competitive and regulated aspects of
the industry, and creating a wholesale electricity spot market (WESM) for energy trading. The
law also envisioned a future where consumers could choose their electricity provider, a goal that
has not been fully achieved due to ongoing legal challenges.
Objectives of the EPIRA Law
- Promote Competition: EPIRA aimed to create a more competitive electric power
industry by opening up the generation sector, allowing more companies to participate.
- Improve Reliability: EPIRA aimed to ensure a consistent and reliable supply of
electricity for all consumers.
- Reduce Prices: The law aimed to lower electricity prices by creating a more efficient
market, making costs more transparent and encouraging competition among power
suppliers.
- Increase Efficiency: EPIRA sought to improve the overall efficiency of the power sector
by fostering better resource allocation and promoting cost-effective generation and
transmission methods.
- Enhance Customer Choice: EPIRA aimed to give consumers more choice by allowing
them to select their electricity provider and encouraging competition in the retail market.
- Strengthen Regulatory Framework: EPIRA sought to establish a stronger regulatory
framework to oversee the power industry, promote fair practices, and protect consumers.
Distribution System before EPIRA
TOPIC 3
R.A. 9136 Act of 2001 - ELECTRIC POWER INDUSTRY REFORM ACT OF 2001

Key Provision of R.A. 9136


- Restructuring of the generating Segment
Pursuant to Section 6 of EPIRA, the generation segment of the power sector was made
competitive and open to all qualified generation companies. Generation utilities are also
no longer required to secure franchise authority from Congress to operate. A maximum
permissible market share for participants in the generation segment was also established
to foster competition in the power generation sector.

- Integration of Transmission Facilities and Network Operations


In 2001, the National Transmission Corporation was created. It assumed the electrical
transmission function of the National Power Corporation (NaPoCor), which used to
dominate the transmission sector. It was also designated as the single independent system
operator to manage the operation of the network.

- Separation of Competitive and Regulated Segments


From a two-sector industry, EPIRA divided the electric power industry into four, namely,
generation, transmission, distribution, and supply. Generation became competitive and
open. The transmission and distribution of electric power remained regulated, subject to
the rate making powers of the Energy Regulatory Commission (ERC).

- Unbundling of Retail Tarrifs


Epira in its pursuit of a more competitive and transparent electricity market, mandates the
unbundling of a retail tariffs. This means that the distribution utilities such as MERALCO
are required to separate the different charges that make up your electricity bill.

- Elimination of Cross-subsidies
In 2002 and 2005, the intergrid (Between Luzon and Vizayas) and intrergrid (within
Luzon) subsidies were removed, respectively. Meanwhile, the interclass subsidies
(between industrial and residential) we removed in 2005.

- Creation of an Independent Regulatory Body and Body to Oversee Implementation


of the Law
The Energy Regulatory Commission was created as an independent, quasi-judicial, and
regulatory body that promotes competition, encourage market development, ensures
customer choice, and penalizes abuse of market power.

- Creation of a wholesale Electricity Spot Market for Energy Trading


TOPIC 3
R.A. 9136 Act of 2001 - ELECTRIC POWER INDUSTRY REFORM ACT OF 2001

Section 30 of the EPIRA provides for the creation of the Wholesale Electricity Spot
Market (WESM) by which competitive market forces would establish genration tariffs
and make cost more transparent.
- Implementation of Retail Competition and Open Access
The pinnacle of EPIRA is the full implementation of the Retail Competition and Open
Access (RCOA) - the landmark policy designed to give consumers the option to choose
their own supplier of electricty.

Achievement Under EPIRA


- Efficiency and Competition
Private sector participation improved operational efficiency and market competitiveness.
This has led to better services and innovations in the electricity market.
- Transparent Pricing
Clearer pricing was achieved by unbundling tariffs, making the cost components visible
to consumers. Fair pricing was promoted by removing cross-subsidies.
- Consumer Choice
Consumers were given the power to choose their electricity suppliers, fostering a
consumer-driven market. This competition among suppliers leads to better deals for
consumers.
- Regulation
Enhanced oversight by the Energy Regulatory Commission (ERC) ensures fair practices
and reliability in the power sector. The ERC plays a crucial role in maintaining market
stability.
- Infrastructure Development
EPIRA attracted investments that led to the development of new power plants and
infrastructure. This has enhanced the reliability and capacity of the electricity supply
network.

Challenges Under EPIRA


- Incomplete Cross Subsidy Removal - Consumers still bear costs through universal
charges.
- Delayed Retail Competition (RCOA) - Legal issues stalled the transition, creating
market uncertainty.
- Weak Government Commitment – Inconsistent policies discourage private investment.
- Limited Competition – Consumers still bear costs through universal charges.
TOPIC 3
R.A. 9136 Act of 2001 - ELECTRIC POWER INDUSTRY REFORM ACT OF 2001

- Political and Investment Risk - Uncertain reforms hinder long-term energy security.
Stronger government action and regulatory clarity are needed to fully realize EPIRA’s
goals.

Recommendation
1. Strengthen Competition and Market Efficinecy
o Enhance enforcement of anti-monopoly laws to prevent market abuse by
dominant power companies.
o Improve transparency in Wholesale Electricity Spot Market (WESM) transactions
to prevent price manipulation. Encourage more Independent
o Power Producers (IPPs) to enter the market to increase competition.

2. Improve Power Supply and Reliability


o Accelerate investments in renewable energy (solar, wind, hydro, geothermal) to
reduce dependence on fossil fuels.
o Encourage distributed generation and microgrids to improve energy access,
especially in remote areas.
o Strengthen grid infrastructure to minimize transmission losses and outages.

3. Enhance Consumer Protection


o Ensure affordable electricity rates by reviewing pricing mechanisms in WESM
and the Energy Regulatory Commission (ERC).
o Improve billing transparency and consumer education on electricity pricing.
o Strengthen mechanisms to prevent unjustified rate hikes by distribution utilities.

4. Improve Government Regulation and Policy Implementation


o Strengthen the ERC’s role in monitoring and penalizing non-compliant power
players.
o Improve coordination between Department of Energy (DOE), ERC, and National
Grid Corporation of the Philippines (NGCP) for better policy enforcement.

5. Promote Renewable Energy and Sustainability


o demand. Implement stronger incentives for renewable energy projects, such as tax
breaks and feed-in tariffs.
o Encourage local government units (LGUs) to adopt clean energy policies.
o Support energy efficiency programs to reduce overall electricity
TOPIC 3
R.A. 9136 Act of 2001 - ELECTRIC POWER INDUSTRY REFORM ACT OF 2001

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