Towards people’s recovery and a better-powered new normal
P4P Campaign Platform 2020
The crisis caused by the global COVID-19 pandemic has had grave and far-reaching effects on all sectors of Philippine society— from a public health emergency of over 67,000 cases and rising, to an economic recession which has resulted to the unemployment of a record high of 7.3 million individuals and is expected to contract GDP by as much as 6.7% in the second quarter of 2020. Among those bearing the brunt of this crisis are ordinary Filipinos whose situation is becoming untenable as they have to contend with the pandemic health risks, loss of work and livelihood, and rising costs of healthcare, food, and basic utilities.
Since the start of community quarantine measures in March 2020, consumers and wage-earners have sought all avenues for aid and relief, including from their electricity providers. However, these power generators and distributors were either incapable or unwilling to implement substantial and systematic changes which could have helped mitigate the economic impacts of the pandemic on their customers. If anything, the pandemic revealed deep-seated problems in the power sector which cause it to be systematically biased against ordinary consumers in terms of costs, inclusivity, and sustainability.
Even before the pandemic, high electricity costs have been a heavy burden on Philippine consumers, with electricity prices being the 2nd highest in Asia at an average of 8.96 PhP/kWh. Upon the onset of the crisis, and despite demand for electricity falling by an estimated 30%, 17% and 25% in Luzon, Visayas, and Mindanao respectively, residential consumers were shocked to find higher charges, such as that in May 2020 when customers of MERALCO reported that they have been charged more than double their usual bill. Meanwhile, around half of electric cooperatives across the country have raised prices as well. While prices may have stabilized because of government intervention and the invocation of force majeure clauses by distribution utilities, the problem of electricity costs continues as long-standing issues. Large fixed costs and pass-on charges and taxes remain unresolved. Furthermore, weak implementation of exemptions, poor regulation, and non-release of pending refunds withhold the relief so pressingly needed by consumers.
High electricity costs are symptomatic of the Philippine power sector’s grave lack of flexibility and inclusivity. The power system’s market-dependent structure has failed to deliver electricity in a least-cost manner and instead shown itself to be unable to adapt and diversify in terms of generation sources and grid distribution. Around 70% of its capacity is reliant on imported coal and other fossil fuels, jeopardizing energy security given the exposure to fluctuations in global prices and supply delays. This overreliance on large baseload fossil fuel plants, which require a minimum demand load, also has ironically resulted in power outages and limitations in power supply, as shown when the entirety of Luzon was placed under a yellow alert.
The majority of the country’s power generation and distribution are monopolized by a handful of corporations; in contrast, electric cooperatives are handicapped by deficiencies in capital and technology. Furthermore, the utilization of lock-in PSA contracts between for-profit distribution utilities and large fossil fuel energy companies exacerbates the cost to consumers by making them shoulder cost recovery, fixing capacities to be utilized, and forcing them to pay for unused power. End-users are excluded from any decision-making with regard to these contracts which affect them, and have virtually little to no say in the overall working and direction of the power sector.
When the Electric Power Industry Reform Act (EPIRA) was passed into law in 2001, it sought “to ensure the quality, reliability, security and affordability of the supply of electric power,” “to protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power,” and “to promote the utilization of indigenous and new and renewable energy resources in power generation in order to reduce dependence on imported energy,” among many other noble goals. Clearly, these goals have remained unfulfilled. There is no better time than now for the government to look into the fallibilities of the law in its failure to deliver its promises.
This undemocratic power industry under EPIRA is also an unsustainable one. The continued dependence on fossil fuels and the twenty-six (26) coal projects in the pipeline runs counter to not only the need for greater flexibility but also the need to preserve local environments and phase-out coal as an energy source by 2030 in order to help mitigate the catastrophic impacts of global warming beyond 1.5°C. Moreover, the coal and fossil fuel dependence on imports, extraction, as well as enormous capital and debt financing add to its growing unviability as the fragility of globalized trade and financial markets have been exposed by the recent pandemic.
As global pandemics are intimately linked with climate change, the transition to a low-carbon economy is now more urgent and necessary to protect human health and sustain ecological integrity. It is evident, therefore, in the power sector, that its old normal cannot continue. Any recovery plan must be one that places consumers and marginalized peoples at the center, ensuring that they are able to withstand future crises while recognizing that ecological limits and climate change require a power industry which is adaptable, decentralized, and based on need and the common good over profit. The stimulus for the new normal must be a green stimulus— one which provides immediate relief and provides sustainable work and livelihood to those affected while transitioning to a low-carbon economy. A program for renewable energy should be a cornerstone of such a stimulus.
Even amidst the global health crisis, renewable energy sources have shown themselves to be more flexible and resilient than traditional sources, providing low-cost, clean electricity to consumers. The expansion of renewable energy, while addressing the climate emergency, can at once also provide an enormous opportunity for job creation, jumpstarting investment and even 100% electrification. Finally, its replacement of fossil fuel plants, particularly through its deployment via smart/micro-grids can create a future power sector which includes end-users in the management and ownership of their energy source, ensuring that their needs are met, particularly in times of crisis and instability.
It is in this context that the Power for People Coalition, a broad network of civil society organizations, cooperatives, consumers, faith groups, and communities advocating for access to clean, affordable, and reliable electricity for all, calls for the following power sector reforms and relief measures to power the people’s recovery from the COVID-19 crisis, and to pave the path for a better-powered new normal:
- Expansion of the exemption of electricity bill payment for households consuming up to 200kwh.
- Suspension of EVAT on power (range, like system loss).
- Monitor the implementation of all existing exemptions such as payment exemption for customers whose consumption falls below 100kwh, Universal Charge, FIT-ALL, and others.
- Monitor and push for the immediate refund to consumers of payments made to the bill shock collection.
- Push for the immediate release of pending refunds to Meralco consumers.
- Monitor the environmental and social impacts of the implementation of power projects, including generation plants and connection infrastructures.
- Push for the renegotiation of all existing contracts detrimental to electric consumers.
- Push for the investigation by an independent body of all onerous contracts and proposals, with the end goal of nullifying existing onerous contracts and denying problematic proposals.
- Ensure that new contracts have a carve-out clause or opt-out clause to protect electric consumers.
- Push for policies on triggers for renegotiations of contracts.
- Pave the way for mainstreaming of renewable energy through renegotiations.
Renewable Energy Electrification and Transition
- Suspend all coal plants that are in the pipeline, prioritizing first the updating of air pollution standards and the strict implementation of existing rules before any environmentally destructive power project is proposed. Pursuance of the Competitive Selection Process must also be ensured, while making certain that no pass on costs are included in resulting power supply agreements. A review of the country’s overall energy plan and projections is also necessary to prevent excessive electricity supply resulting from the construction and operation of any new coal or fossil fuel power plant.
- Begin the decommissioning process of coal-fired power plants on the basis of air pollution standards and the low efficiency and loss of productivity of existing plants.
- Shift of PSAs to more renewable energy especially for big Distribution Utilities like Meralco, VECO and Davao Light.
- Expedite the deployment of renewable energy technologies towards 100% electricity access and the creation of green jobs.
- Ensure that government buildings are solarized to reduce electricity costs and that all new infrastructures under the Build Build Build program of the Philippine government will also utilize renewable sources of energy.
- Pursue microgrids policy and rules.
- Reject the privatization of government managed renewable energy facilities, such as the Agus Pulangi hydro power plant.
- Cease exploration of detrimental energy technologies such as nuclear and waste-to-energy, and reject their identification as renewable sources.
- Monitor the implementation of newly passed mechanisms under the Renewable Energy Law and set in place measures to evaluate their effectiveness in advancing renewables.
- Promote energy efficiency among power consumers.