DESPITE EMERGING as one of the fastest-growing economies in Asia, the demand for power in the Philippines far outstrips the country’s energy production capacity. Several attempts to reform the power industry such as the Electric Power Industry Reform Act (EPIRA) were made to privatize the sector and slash electricity bills. Despite the changes in energy policy, energy costs for consumers remain among the highest in Asia.
The COVID-19 pandemic has aggravated this issue as households face “shock surges” in their electric bills due to a lack of physical meter readings from power providers. The latter has since adjusted to reflect actual usage—however, Department of Energy (DOE) Secretary Alfonso Cusi urged consumers to remain wary of their power consumption as the industry struggles to meet demand.
In response to new energy requirements, voices in the energy sector have begun to heighten calls for diversity in fuel sources.
Powering a nation
Although the country aims for a greener and more diverse energy mix, most power plants still run on fossil fuels. According to Advocates of Science and Technology for the People (AGHAM) Secretary-General Feny Cosico, “Ang power industry dito sa Pilipinas is very much dependent on coal…nag-cocontribute siya ng 49.6% ng total power mix (The power industry in the Philippines is very much dependent on coal…it contributes 49.6% of the total power mix).” She added that the industry’s over-reliance on fossil fuels adds to the price of electricity as import costs and market fluctuations are shouldered by consumers as generation costs.
Cosico pinned the high fees on the private sector’s profit-driven management. While the privatization of the power industry through EPIRA aimed to reduce bureaucratic inefficiencies and costs, consumers remain saddled with a number of miscellaneous fees as “universal charges.”
Lights out
The energy sector’s efforts at reform have not been enough to meet the need for reliable, accessible, and affordable power. To this day, several regions continue to experience service interruptions or rotational brownouts. Experts attribute power outages to a lack of new plants and the age of active generators have persisted amid the COVID-19 pandemic. The issue of obsolescence, Cosico explained, stems from shifting the responsibility of plant construction and maintenance from the public to the private sector as a result of EPIRA. “‘Yung [mga ibang power plants] diyan ay na-build noong 1940s, 1950s and we’re saying na hindi na siya na-mamaintain well (Some of those power plants were built in the 1940s and 1950s, and we’re saying that they’re no longer well maintained),” she mentioned.
The obsolete or dilapidated plants, coupled by the brownouts that plant maintenance and derating cause, can be detrimental to community development. Findings of the Inter-American Development Bank (IDB) suggest that powering communities can improve the residents’ quality of life. Members of powered communities often have better access to education, employment, and higher income. In the Philippines’ case, access to electricity could improve household earnings by as much as 2 percent and employment by 0.59 percent because of increased productivity and investment.
Energy availability alone, however, is not enough to pull investment. The IDB report noted that unreliable power hurts firms as it limits overall productivity. This, along with high energy bills, have deterred foreign investment in recent years. Soaring power costs and regular outages have cost the country its momentum in economic growth.
The cost of darkness
In spite of the power industry’s embattled state, DOE officials have noted that the energy sector will be pivotal in guiding the country’s economic recovery. Although coal-based power has contributed to increasing supply and lowering costs, a paper published by Ateneo de Manila University’s Economics Department noted that coal-based power was particularly hit by the pandemic due to “lower sales at lower rates.” The International Energy Agency has since urged governments to adopt stimulus packages for renewable energy (RE)—that have thrived in low demand conditions—in the hopes of aiding economic recovery while promoting clean power.
Although energy demands from firms were cut due to the pandemic, DOE officials expect the demand from households to increase as social distancing measures are still active. Seeing an opportunity in the loss of coal demand, groups have since pushed for a shift from fossil fuels to RE to support sustainable economic recovery.
Critics of EPIRA and subsequent attempts at reform claim that these measures failed to provide the country with energy security. The embattled industry faces a new challenge with the current health and economic crises—to adapt to the energy requirements of the “new normal.” In order to do so, the energy sector must meet the challenge of providing affordable power to every household with innovative, clean energy solutions and transparent transactions if the economy is to recover from the pandemic.
