EPIRA at 25: More lights, less blackouts, fewer subsidies, lower prices?

Last week, on Sept. 3, I attended the launch of the Department of Energy's book, EPIRA at 25: 25 Years of Power Reform in the Philippines. It is a commemoration of the Electric Power Industry Reform Act (EPIRA) of 2001 or RA 9136 that turned 25 years old this year. The contents of the book were discussed with Energy Undersecretary Rowena Guevarra. She also moderated a panel discussion with the following speakers: Energy Secretary Sharon Garin, Energy Regulatory Commission (ERC) Chairman Nino Juan, Independent Electricity Market Operator of the Philippines (IEMOP) President Robin Descanzo, National Electrification Administration (NEA) Administrator Antonio Almeda, and Nicole Kranz, head of Germany's International Climate Initiative (IKI) which supported the book's publication. So, after 25 years, has EPIRA improved the electricity situation in the Philippines? I assessed five metrics and sub-questions to answer this large question: 1.) Was there a substantial increase in power generation? 2.) Was there a shift from expensive oil to cheaper non-oil electricity sources? 3.) Were taxpayers unburdened from fiscal bleeding of the National Power Corp. (NPC)? 4.) Were there efficiency gains from the privatization of power generation assets? And, 5.) Are electricity rates cheaper now than pre-EPIRA? On No. 1, the answer is 'Yes.' The Philippines' power generation has substantially increased, from 47 terawatt-hours (TWh) in 2001 to 129.3 TWh in 2025, or a 175% increase after 24 years. This is larger than the 98% increase in Thailand in the same time frame, 53% increase in Taiwan, and is similar to the 178% increase in Malaysia (see Table 1). On No. 2, the answer is also 'Yes.' The share of oil-based plants to total generation was 21% in 2001 and was only 0.5% in 2024, or a decline of 20.4 percentage points, the largest among the six countries (see Table 2). The share of oil in total generation was 50% in 1985 when the Bataan nuclear power plant was not allowed to operate and was then officially killed with no alternative offered in 1986. By 1991, the share of oil in power generation remained at 50% and there were daily blackouts nationwide. By 1992, the government took the desperate measure of getting take-or-pay contracts with independent power producers (IPPs) which delivered more oil plants. By 1996, blackouts had declined, but oil still made up 50% of total power generation. On No. 3, the answer is also 'Yes.' Prior to EPIRA, the NPC was the single biggest budget deficit generator yearly in the Philippines. Its liabilities reached P831 billion in 2001, and peaked at P1.2 trillion in 2003 as contractual obligations were fully recognized. After a series of privatization efforts that started around 2005, the government generated P960 billion as of March this year. The privatization of NPC power plants generated P218 billion. The privatization of NPC contracts via the IPP Administrators (IPPAs) framework brought in P449 billion in revenue. The privatization of the transmission concession generated P260 billion. The IPPAs framework transferred the offtake position — 'the right and obligation to take the output of the plant, dispatch into the market or into bilateral arrangements and pay the developer under the contract terms,' as explained in the book. The transmission assets themselves were not privatized; they are still owned by the government through the National Transmission Corp. (Transco). What was transferred was the transmission concession — the National Grid Corp. of the Philippines (NGCP) paid an upfront concession fee of P223 billion plus a balance of P37 billion in the future, to the Power Sector Assets and Liabilities Management Corp. (PSALM). NGCP also pays operational revenues to Transco which the latter uses for its regular operations. The bulk (P523 billion) of privatization proceeds — P897 billion collected as of last March — were utilized for debt service (principal amortization) of NPC debts. Then there are interest expenses or lease obligations of P301 billion, and debt prepayment of P58 billion (see Table 3). On No. 4, the answer is yet again 'Yes.' Let us look at two examples: a.) the Magat hydroelectric power plant (HEPP), whose original installed capacity was 360 megawatts (MW), became 380 MW after privatization in 2007; and, b.) the Ambuklao HEPP, whose original capacity was 75 MW, became 112.5 MW, an expansion of 37.5 MW even without raising the height of the dam. Both HEPPs are owned by SN Power (Norway) – Aboitiz Power (SNAP). Norway is the most sophisticated hydropower producers in the world. On No. 5, also 'Yes.' Until June of 2001 when EPIRA was enacted, Meralco's average residential rate was P4.87 per kilowatt-hour (kWh). After EPIRA, there was a mandated P0.30/kWh reduction for residential users starting August 2001. In today's prices, 2001's P4.87/kWh is equivalent to P12.40/kWh. Meralco's residential rate in February this year, before the Iran war started, was P13.17/kWh. But current prices include charges that were not present in 2001 or even a decade after, like the ancillary service (AS) charge of around P1/kWh in the transmission charge, the universal charge for missionary electrification (UCME) of P0.27/kWh, and the feed-in tariff allowance (FIT-All) of P0.21/kWh that increased to P0.34/kWh starting last August. So, if we remove those three items alone (P1 AS + P0.12 VAT on AS + P0.27 UCME + P0.21 FIT-All = P1.60), residential customers would have paid only P11.57/kWh (P13.17 minus P1.60), which is lower than the P12.40/kWh in 2001. To conclude: Looking at EPIRA at 25: Are there more lights, less blackouts, fewer subsidies, and lower prices? Yes. Hands down. EPIRA does not need a major overhaul. What needs a major overhaul is the renewable energy law of 2008 (RA 9513) which has many provisions that favor renewable energy and promote cronyism in the sector. The real energy transition we should aspire to is not moving towards renewable energy, rather it is the transition from energy poverty to energy abundance. We should target increasing our power supply from 129 TWh in 2025 to 170 TWh by 2030, an increase of 8 TWh/year vs. the current 5 TWh/year. And further increasing it to 220 TWh by 2035, or an increase of 10 TWh/year starting 2030. We should be putting up more coal and gas plants, like the approved and committed coal plant project in Atimonan, a 1,200-MW super-critical plant in Quezon Province. Plus, we should go nuclear plants soon to ensure sustained big annual increases in the power supply, a step towards Philippine energy abundance. Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation. minimalgovernment@gmail.com