Major achievements (43)

With the implementation of major reforms in the power industry, the Department of Energy conducted an information, education and communication campaign to inform various stakeholders on the relevant amendments on the Electric Power Industry Reform Act (EPIRA).

Major development phases of EPIRA include the implementation of a Wholesale Electricity Spot Market (WESM). In mid-2005, the DOE and Philippine Electricity Market Corporation became increasingly engaged in preparing for the commercial operation of the electricity market in Luzon. Rules, systems and procedures for this market have been developed and are being tested, and various protocols and methodologies have been reviewed and approved.

Electricity pricing under a competitive environment and the demand growth of electricity are expected to provide signals for potential generation companies to invest in new capacity additions. These companies would have the flexibility of entering into short- or long-term contracts with the distribution utilities and likewise participate in real-time trading in the electricity market.

Implementation Status Reports were submitted to the Joint Congressional Power Committee (JCPC) reporting on developments on the overall implementation of the EPIRA.

As part of the government’s 10-point agenda, the DOE continues to pursue its thrust towards 100 per cent barangay electrification by 2008. As of December 20 2005, a total of 70 barangays and 64 sitios were electrified under the electrification fund facility. This helped elevate the electrification level to 93.9 percent by the end of 2005.

 Major Challenges (44) (45)

The vision of the EPIRA is to transform the industry into a competitive, market-driven environment. An effective regulator is needed ensure level playing field in all sectors of the industry as well as balancing the consumer and investors’ interest. The consistency and predictability of the Energy Regulatory Commission’s decision making process is very critical to developing confidence in electricity industry regulation from the public and private investors.

The establishment of the Wholesale Electricity Spot Market will facilitate a transparent and competitive electricity market. It is expected that the initial years of operations will be unstable, but over the long term, the market could improve industry efficiencies and lead to lower electricity prices.

According to the EPIRA, 70 per cent of the National Power Corporation’s power generation assets need to be privatized by December 2007. This privatization process is challenging considering the size of the corporation’s debt. Efforts are geared towards resolving outstanding plant specific issues related to privatization.

The Act also requires that the privatization of the Independent Power Producer contracts be done by Independent Power Producer Administrators. These Administrators are the qualified independent entities appointed by Power Sector Assets and Liability Management Corporation who shall administer, conserve and manage the contracted energy output of the National Power Corporation’s Independent Power Producer contracts, including selling the energy output offering ancillary services.

 National Energy Plan

The Philippine Energy Plan (PEP) 2005-2014 has two primary energy sector goals: attaining a sustainable 60 per cent self-sufficiency level by 2010 and beyond; and pursuing the effective implementation of reforms in the power sector.

An update in 2006 includes an indicative agenda covering the time horizon 2015-2024 for each sector to promote the long-term sustainability of targets. The agenda highlights the promotion of alternative energy resource options, emerging clean energy technologies, innovations in energy exploration and development technology, and demand-side management.

 Moving towards energy independence

Under the Philippine Energy Plan agenda is an objective to reach an energy self-sufficiency level of 60 per cent by 2010 and beyond. The planned mechanisms to achieve this include expanding the exploration, development and utilization of indigenous non-renewable resources along with the expansion in capacity of renewable resources.

The Renewable Energy Policy Framework of 2003 aims in increase the capacity of renewable energy-based resources from 4,449 MW in 2002 to 9,147 MW by 2013. In terms of generating capacity, geothermal resources contributed 18.4 per cent to the power supply mix. The plan envisions the increase of renewable energy capacity using hydropower, biomass, solar, and wind energy to an aggregate installed capacity of 548 MW by 2013. An initial assessment placed the country’s total wind potential at 76,000 MW.

Meanwhile, a passage from the House Bill “An Act to Promote the Development, Utilization, and Commercialization of Renewable Energy Sources” is expected to boost renewable energy development in the country. The proposed bill aims to accelerate the development and utilization of renewable energy sources through the provision of fiscal and non-fiscal incentives to renewable energy developers, including mandatory generation, priority dispatch for intermittent generation, and establishment of a trust fund. The zero rating provided for renewable energy generated electricity under the recently-implemented Reformed Value Added Tax Law (or Republic Value Added Law or Republic Act) will enhance the competitiveness of renewable energy-sources.

 Rural electrification

For rural electrification, a total of 8,944 units of solar home systems out of the targeted 15,100 units have already been installed as of December 2005. The project was due to be completed in 2007. The first ever grid-connected solar power facility was also inaugurated in 2005 and there are also similar projects being implemented under various Official Development Assistance (ODA) facilities.

 Enhancing energy efficiency and conservation (46)

As an immediate measure against continually rising oil prices, the DOE is doubling its efforts to generate nationwide commitment and support to the National Energy Efficiency and Conservation Program (NEECP). The NEECP, which is the government’s framework to promote efficient and judicious utilization of energy, estimates an aggregate energy savings of 25.7 MTOE within the planning period. Its carrier program, EC (Energy Conservation) Way of Life shall be a continuing collaboration with the private-sector community. The intensified implementation of the various energy efficiency and conservation programs was estimated to have resulted in 1.2 MTOE in energy savings in 2004. The government-mandated austerity measures and other policy directives as well as the onset of the voluntary agreements programme component of the EC Way of Life, are expected to generate higher energy savings within the planning period.

 Environmental management of facilities

The Philippines has a number of laws and policies with the aim of managing environmental impacts. For example, the Presidential Decree: Philippine Environmental Impact Statement System requires all government and private organizations to undertake an environmental impact assessment for any project likely to have significant environmental impacts. The Philippine Clean Air Act (1999) and the Philippine Clean Water Act (2004) requires air and water quality management at all facilities. Other legislation has been passed with the aim of protecting important ecosystems and managing waste . (47)

Stakeholders 

Philippine Department of Energy (DOE)
National Power Corporation (NPC)
National Transmission Corporation (TRANSCO)

(43) Philippine Department of Energy, 2005 Energy Sector Accomplishment Report cited a survey submission from the Philippines Department of Energy to ESCAP
(44) Philippines Department of Energy website, http:www.doe.gov.ph, accessed in August 2007
(45) Power Development Plan 2005-2014 cited in a survey submission from the Philippines Department of Energy to ESCAP.
(46) Overview of the draft, 2006, PEP Update cited in a survey submission from the Philippines Department of Energy to ESCAP
(47) Department of Energy, http://www.doe.gov.ph/TE/Envi.htm, accessed in September 2007.