Our power sector might have been unprepared had the economy taken off from the strong 2019 growth platform. But the pandemic intervened and pushed us into a deep recession.
Had we continued with the growth path indicated by our 2019 performance, demand for power might have outstripped available supply. We saw this scenario before. When our economy bounced back from a slump in the first years of the Cory Aquino presidency, our power supply ran short and electricity had to be rationed through long rotating brownouts.
The messy energy situation in the late eighties was aggravated by two unwise policy decisions made by the president installed on the back of an uprising. Among her first acts was to abolish the Ministry of Energy headed by a brilliant Marcos technocrat. Then she ordered the mothballing of the Bataan Nuclear Power Plant.
Crippled by energy shortages, our economic takeoff was aborted. We labored under a debt crisis because the economy could not outgrow our debt obligations. The domestic economy fell into some sort of suspended animation under an austerity regime that postponed public investments in infrastructure and decreased spending for social services.
When Fidel Ramos took over the presidency, he understood that the key to unlocking our economic growth was to have enough power generating capacity. That required a lot of investments. To attract those direly needed investments, the Ramos administration sweetened the pot, offering such things as take-or-pay provisions that guaranteed revenues for the investors. But the power produced by the generating companies was far too expensive for our consumers.
We consoled ourselves with the thought that having no power was a far more expensive prospect. At least, through the nineties up until the Asian Financial Crisis hit us, we began growing our economy again – although not enough to dramatically bring down poverty levels.
Over the last two decades, we had much work to do cleaning up the energy sector. This task involved modernizing our regulations, encouraging real competition among energy players and weeding out the illogical costs imposed that only raised costs for consumers.
The Energy Regulatory Commission (ERC) had to play the lead role in modernizing our power sector. The first task was to rescue this vital agency from regulatory capture by the very firms it is supposed to police.
The ERC is as central a regulatory agency to the energy sector as the SEC is to our capital markets. Over the past few years, both regulatory agencies delivered well in modernizing our policies and processes, including digitalizing transactions.
Through the Duterte administration, the irrepressible Agnes Devanadera chaired the ERC.
Although she tends to be low-key, Devanadera assumed office with the most impressive credentials. She served as acting secretary of justice and then justice secretary during the Arroyo administration. It was during her time there that the DOJ led in the prosecution of those responsible for the Maguindanao Massacre.
She also served as the country’s solicitor-general. At one point, she held the DOJ leadership and the post of solicitor-general concurrently.
Much earlier, she served as government corporate counsel for three years. During this period, she prosecuted for the Manila International Airport Authority and the Maynilad Water Services Inc. The decisions on these cases benefited government immensely. She was honored by the ADB for the best country deal in a transaction that generated more than $500 million for the government.
In her long history of public service, she likewise served as DILG undersecretary for Legal and Legislative Affairs. She served as trustee for the Local Government Academy and chaired the Philippine Development Alternatives Foundation.
For an entire decade (1988-1998), she served as mayor of Sampaloc, Quezon. In that capacity, she served as national president of the League of Municipalities of the Philippines (1995-1998). The many awards and recognition she won for her work is too long to list here.
Devanadera, by the way, is rumored to be on the shortlist for secretary of energy of the incoming Bongbong Marcos administration.
Since Russia invaded Ukraine last February, she put the ERC on war footing to deal with the unholy fallout from this conflict. It was clear this war would push up energy costs globally. She led in outlining short- and long-term plans to shield our consumers as much as possible from an energy cost surge.
In the first 100 days of the new term, ERC recommends a temporary suspension of excise taxes on fuel products. This will help hold down generation charges, among others.
The regulator is also asking the BIR to clarify VAT computation on gross receipts of distribution utilities. A clarification of revenue policies could help mitigate energy charges.
Related to this, the regulator is asking for a temporary reduction of VAT charges on the generation rate. It is also recommending the continuation of fuel subsidies for public transport and the grant of subsidies to farmers and fishermen to help hold back price surges of food items.
ERC is also seeking discontinuation of the collection of environmental charges on energy, also to help hold back prices. It recommends setting specific target capacities for all technologies generating power. This will help us define our energy mix into the future.
As soon as possible, the ERC recommends the enactment of a law enshrining our policy on the use of nuclear power. This will help us plan our energy mix.
The agency likewise recommends issuance of a definite policy requiring reliability on all renewable energy projects, including pairing them with Battery Energy Storage Systems.