Reaction Paper On RA9513 EPIRA

University of San Carlos
Department of Electrical and Electronics Engineering

A.Y. 2014-2015
In partial fulfillment of
the requirements in
EE414
EPIRA: Reaction Paper
Submitted by:
Neil John Perez
Submitted to:
Engr. Phillip Wong-Marcon
The Republic Act 9136 which is known as the Electric Power Industry Reform Act
of 2001 or the EPIRA Law was enacted under the administration of former President
Gloria Macapagal Arroyo. According to Section 2 of the EPIRA Law, It aims to ensure
and accelerate the total electrification of the country, To ensure the quality, reliability,
security and affordability of the supply of electric power; To ensure transparent and
reasonable prices of electricity, To enhance the inflow of private capital and broaden the
ownership base of the power generation, transmission and distribution sectors; To
ensure fair and non-discriminatory treatment of public and private sector entities in the
process of restructuring the electric power industry; To protect the public interest as it is
affected by the rates and services of electric utilities and other providers of electric
power; To assure socially and environmentally compatible energy sources and
infrastructure; To promote the utilization of indigenous and new and renewable energy
resources in power generation in order to reduce dependence on imported energy; To
provide for an orderly and transparent privatization of the assets and liabilities of the
National Power Corporation (NPC); To establish a strong and purely independent
regulatory body and system to ensure consumer protection and enhance the
competitive operation of the electricity market; To encourage the efficient use of energy
and other modalities of demand side management. In short, EPIRA exists in due to
three main reasons: (1) to provide electricity to all Filipino people (2) to protect the rights
of the consumers as well as the producers of electricity and (3) To stabilize the price of
electricity.
Before we start, let us discuss first how electricity reaches our homes. First,
Electricity is generated in power plants then the voltage is stepped up in very high
voltages to be transmitted to the distribution units through transmission lines. The

distribution unit then steps down the voltage to a moderately high degree in order to
transmit it to the local transformer which is located on our electric posts. Then from the
local transformer, the voltage is stepped down further to the desired voltage that is
consumed by the people which can usually range from 110V to 440V depending on the
use. From what we have learned, electrical power goes to different hands first before it
reaches our homes. Once the government through the National Power Corporation
(NAPOCOR) totally owns the power industry but because of heavy corruption in
NAPOCOR, it was forced to be disbanded and through energy privatization, the power
industry was sold to private entities and also limiting government power on the said
industry. Through the privatization, our electrical bills now lie on these private entities.
As good as the aims of EPIRA sounds to our ears, it contains a lot of flaws. It is
due to EPIRA that electricity prices are difficult to control since private entities are the
only ones that can decide the price. It is also because of EPIRA that the government is
forced to go under unfair deals with the Independent Power Producers (IPP). Another
flaw is that the government is forced to buy the overall power capacity of the plant
instead of the power it produced or in other words, A Take or Pay Contract. It means
that the government is also buying the power that is not used by the consumers which is
eventually passed down to the latter. Though EPIRA made electric billing more
transparent, it was not absolute. There are still hidden charges that exist like some
items in the Power Price Adjustment (PPA) and the notorious System Loss Charges.
Another flaw is the vulnerability of some government agencies like the ERC to
corruption making then not only inefficient but also useless, rendering the benefits of
EPIRA null. It is because of the corruption that delaying tactics became more frequent
when investigations are done regarding the unauthorized electric price hike. EPIRA also
failed to destroy the electricity monopoly in the country since some IPPs and DUs still
exceed the limit imposed to them by the law. The consumers are also made to pay the
non-technical system loss charge which are in fact, not their fault to begin with; in
addition the cap on the system loss is too high that the DUs are collecting more than
what is actually lost. Law forbids to impose E-VAT on basic necessities like food, water
and electricity so the irony exists since E-VAT on electricity exists.
We can make EPIRA reduce our electricity costs by: (1) reduce E-VAT on
Electricity. I decided not to remove but to reduce since the tax revenues on the power
sector is still helpful in powering government operations . Reducing E-VAT might reduce
government tax revenue but will really help in lightening the load in the consumers
shoulders. (2) Another way is to impose penalties on consumers or establishments that
did not exert effort In conserving electricity. This is in order to motivate people to
conserve their electricity. (3) Reducing the cap on the systems loss charge will also
prevent DUs from taking advantage to consumers by collecting excessively than what
is actually lost. (4) Buying electricity on IPPs that offer the most affordable power rather
than choosing based on cronyism and nepotism. And also allowing these IPPs to
generate 100% power and cutting the deals with IPPs that are unfair. (5) Impose a limit
on a DU on the percentage it supplies energy In order to prevent monopoly and allow
fair competition. (6) Strictly impose a limit on the electricity consumption on a DU and
impose penalty if proven that they are inefficient in their consumption in order to force
DUs to save electricity they consume that they pass on to consumers. (7) Establish a
sole agency that will continuously audit energy related institutions in order to investigate
any irregularities if any are found. Lastly, appoint leaders that are trustworthy and has a
high sense of moral integrity in government offices like the ERC in order to minimize
corruption happening within these agencies
The corporate sector can also contribute to minimize electric bills by investing
more on renewable, efficient and clean sources of power like solar power and wind
power. Helping the government in investing in drilling projects in our oil and natural gas
fields can also help make our country self-sustaining in fossil fuels thus reducing
Ordinary people can help in their own little ways by conserving electricity in their homes
and using power efficient appliances in order to minimize thei electric bill collection.

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University of San Carlos

Department of Electrical and Electronics Engineering

EPIRA: Reaction Paper

voltages to be transmitted to the distribution units through transmission lines. The

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