ERC keen on pushing strong regulation of power industry
Thursday, October 12, 2006
By MYRNA M. VELASCO
WASHINGTON D.C. — The Philippines’ regulatory body for the power industry has told audience of prospective global investors that it is keen on taking light-handed regulation as it helps stir up the envisioned competitive environment for the country’s electricity market.
Speaking before the World Forum on Energy Regulation III at the Omni Shoreham Hotel here, Energy Regulatory Commission (ERC) chairman Rodolfo B. Albano, Jr. intimated that "even with a light-handed regulation, we can achieve efficiency in, and lower cost of, power delivery service in the long-run."
He added with such approach of regulation, the Commission would be able to better balance the need of its stakeholders — primarily the bid of consumers for affordable electricity rates and the investors requisite for reasonable return on invested capital.
Along this fashion, Albano emphasized that the regulatory body already employed several methodologies, chiefly on the sphere of tariff-setting via the so-called performance-based regulation (PBR) first implemented for the transmission and distribution sub-sectors.
The ERC chief told the international audience of policymakers and investors that the Philippines opted to adopt such tariff-fixing methodology given the successful experience of other jurisdictions, such as Victoria in Australia; Ontario in Canada and the United Kingdom.
"The PBR employs incentives to induce cost-cutting measures that is expected to result in lower electricity rates in the long-term, encourages efficiency in service delivery through performance incentive schemes…it is a win-win proposition for both investors and consumers," Albano stressed.
With talks rife in the global power market that "invisible hands" (which could take the form of political influence) trying to reign over industry regulators, Albano averred that although "we are not casting a heavy hand in regulating the power industry, we can confidently say that we maintain to be strong and independent."
This is not to say, however, that ERC’s regulatory powers are not plagued by hurdles, especially with the penchant of judicial courts to overrule or nullify policies or rulings it laid down.
On one hand, Albano has also showcased the models and policies adopted by the Philippine government in providing access to electricity - even for the citizens living in far-flung areas.
The schemes of implementing electrification programs in the country include "missionary electrification" and the engagement of "qualified third parties" or QTPs to service the energy needs of the considered "unviable areas" or those uneconomical to be served by franchised distribution utilities.
Such models of implementation have so far stirred the curiosity of markets in other parts of the globe mainly for countries in the African continent; thus, Albano was swamped with questions on how they can employ such in their respective jurisdictions.
Broader access of the consumers to electricity has captured attention of global policymakers as this is being equated with the attainment of economic progress.
It is likewise set as a consensus that "ensuring access to electricity comes with challenges of attracting investments in new capacity and in making sure that it reaches the needy areas and populations in a sustainable manner." (MMV)
posted by philpower @ 7:56 AM,
