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ERC takes a stand

  • Written by Dennis F. Fetalino
  • Published in Opinion
  • Read: 205

Ped xing

“Don’t let  the fear of the time it will take to accomplish something stand in the way of your doing it.” – Earl Nightingale, American broadcaster and leadership guru.

A little is better than nada: better late than never.

It has taken the government a long time to do it, but at least, it is now being done.

PedXing refers to the overdue reforms in the electric power sector, particularly those that have to do with breaking monopolies and allowing competition. Finally, we are seeing government, through the Energy Regulatory Commission take a firm stand.

The opposition to the needed reforms is likewise certain to take a similarly firm adversarial stance.

Competition is good for the consumers. When service providers compete for their share of the market, the cost of products and services tend to take a dip. This is the hope triggered by the reforms being pushed by the ERC.
   
As PedXing mentioned in past columns, there is now what is called a “contestable” electricity market. These are consumers with relatively large power requirements. Today, if you need one megawatt or more per month to power your home or business, you can actually choose which distribution utility to buy your electricity from.
   
ERC Chairman Jose Vicente Salazar took the reform one step further. He prohibited distribution utilities which currently hold franchises for specific service areas to join the battle for a share of the contestable market.
   
For example, based on Salazar’s approach, the Manila Electric Company cannot offer to sell electricity to a factory which requires one megawatt or more – even if that factory happens to be in Caloocan City which is part of the Meralco franchise area.

To be able to vie for the contract with that factory, Meralco has to do it through an affiliate which it has to set up and apply a license for. That affiliate is called the Retail Electricity Supplier.
   
PedXing likes Salazar’s idea. The RES requirement prevents the big utilities from having the advantage in the new competitive arena. It “levels the playing field” as the cliché goes.
   
The public wants this. If competition succeeds, the field can be expanded gradually. And, who knows? Maybe, one day every household’s requirement can become “contestable”. That means we can all get to choose where to buy power from. Sellers of electricity will have to court us  for our business.
   
When that day comes, there would only be two considerations. First, who sells cheapest? Second, who provides the best service?
   
To be sure, there would be a price to pay for these major reforms. Already, the ERC is being sued by those who disagree with the moves. Salazar should expect more.
   
The latest suit against the ERC was filed by a group of big businessmen led by the Philippine Chamber of Commerce and Industry.
   
Why the PCCI is leading the fight against this particular reform is baffling to many. PedXing is sure the PCCI has its reasons.
   
What has particularly earned the ire of the PCCI appears to be the requirement for a RES. This is puzzling since even Meralco itself appears to have acceded to this requirement. Based on media reports, the utility has already applied for a license for its own RES.
   
The bottom-line is very simple: there would be birthing pains. They would surely hurt a lot.
   
It is possible they would hurt Salazar most. Somebody has to pay the price for decisive reforms. Unfortunately for Salazar, he is pushing for these game-changing reforms at a time when he is most vulnerable.
   
It may be recalled that Salazar was in the middle of a controversy following the suicide of an underling who was emotionally troubled over a measly P300-thousand audio-visual project for the ERC.
   
Salazar should expect the nemesis of reform to exploit his vulnerability.
   
He should also learn not to take the vilification efforts against him personally. Here, he stands to be mere collateral damage. He is not the real target. The goal of ERC’s adversaries is to delay or derail the reforms as long as possible. The best way to do that would be to cripple the person at the helm of the agency pushing for such reforms.
   
Salazar should see the mounting lawsuits to stop the reforms as a sign that the ERC may actually be doing a good job. He should have faith that the Supreme Court has enough wisdom to discern and appreciate the value of such reforms.
   
Salazar should remember Isaac Newton’s law: “For every force, there is an equal and opposite reaction”.
   
He is an electrical engineer. He should know what this means, not just as it applies to physics, but to government.