Electricity industry uproar: mini-outfit, mega-franchise

A small new company that will electrify a puny 40,000 homes in 12 scattered towns has the entire power industry in uproar.

The reason is in the congressional franchise that Solar Para Sa Bayan (SPSB) Corp. is seeking. Mini-grids are to be set up for the un-served far-flung barrios. At long last those isolated communities can be modernized and connected to the rest of the world, through cheap clean energy.

But the way the congressional bill is worded, SPSB will be a mega-franchise. It can enter into all aspects of power: generation, transmission, distribution and supply. That violates the 2002 Electricity Power Industry Reform Act (EPIRA), which forbids multi-role giants. Under the EPIRA, no generator may go into distribution or vice versa. The Philippine Electric Plant Owners Association is grumbling. Unlike them, SPSB never won any competitive bidding to produce power.

SPSB can operate outside its franchise area. Despite its application, it is not to be limited to the hinterlands of Mindoro, Palawan, Masbate, Cagayan, and Aurora. That would put it in direct competition with provincial electricity cooperatives that already have local franchises. The Philippine Rural Electric Cooperatives Association is up in arms. SPSB would also duplicate the function of the national grid.

SPSB can opt to not use solar. That angers even renewable energy technologists, equipment makers, and home suppliers. Against SPSB are industry groupings: Philippine Solar and Storage Energy Alliance, Renewable Energy Association of the Philippines, Confederation of Solar Developers of the Philippines, Center for Renewable Energy and Sustainable Technology, and Organization of Socialized and Economic Housing Developers of the Philippines.

SPSB will enjoy tax breaks and exclusions from universal charges that all other industry players must pay. It will even be exempt from rate and service quality control by the Energy Regulatory Commission. Yet it will not have any franchise obligation to the areas to be energized. Other companies are tied to strict deliverables under their service contracts. They decry unequal protection of law, a breach of the Constitution.

SPSB is a subsidiary of Solar Philippines, Southeast Asia’s largest solar energy provider. It may be small at present, but the mega-franchise can enable it to eat up other players.

It can become a monopoly. Unrestrained by rules of competition and regulatory oversight, and with no social duty, it will be one of a kind. That is the fear in the industry.

Behind SPSB and Solar Philippines is energy entrepreneur Lean Leviste. He ventured into clean energy on influence of his mother, environmentalist senator Loren Legarda.

Allegedly the SPSB franchise is being railroaded. Congressmen complained that only one committee hearing was held. Instead of being allowed to speak, concerned companies and industry organizations merely were told to submit position papers. Four days later SPSB’s franchise was endorsed for floor deliberations, to start this week.

Fifteen majority and minority lawmakers have asked for return to the committee for further evaluation: Ricardo Belmonte, Virgilio Lacson, Teodoro Montoro, Michael Romero, Enrico Pineda, Arnel Ty, Sabiniano Canama, Joselito Atienza, Ron Salo, Ciriaco Calalang, Carlos Roman Uybarreta, Salvador Belaro, Benhur Salimbangon, Manuel Dalope, and Milagros Aquino-Magsaysay.

Rep. Arthur Yap, principal bill author, denies any undue haste. Two three-hour-long hearings were held, he maintains: “Everyone was given a chance to comment.” He twits the 15 colleagues for belated opposition to the bill.

News reports say, however, that the second hearing was a closed-door executive session of the committee members. Even then, Leviste allegedly was invited to join the exclusive meeting.

Leviste avows that SPSB aims “not to make the most profit but to serve the most number of people” – 200,000 barrio folk. He twits the power industry’s closed tendency to competition, saying: “We believe consumers should be given new choices for better service at lower cost, especially if it means zero government subsidies and does not prejudice the non-exclusive right of anyone else to offer even better options to consumers. If the mere specter of competition inspires electric utilities to improve their services, that is an affirmation of the need for healthy competition.”

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