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Home Blogbox Who will benefit from a national franchise for solar power? (Conclusion)

Who will benefit from a national franchise for solar power? (Conclusion)

What makes HB 8179 attractive especially to those who have not read it in full or analyzed it in detail is that it appears to support bringing power to unserved areas.

If this is the main goal of “Solar Para Sa Bayan” (SPSB), then it does not need a franchise because first, current laws already encourage this; and second, there are already power distributing units (DUs) and electric power cooperatives (EPCs) that do exactly the same.

They all operate under the EPIRA’s provisions on Qualified Third Parties (QTPs) and for missionary electrification, as well as the DOE’s Circular No. 2014-09-0018, which gives DUs authority to operate minigrids in support of the Household Electrification Plan.

The generation of power is not considered a public utility operation; this is why power generation entities don’t have to secure a franchise. As for the supply sector, except for distribution utilities and electric cooperatives with respect to their franchise areas, supplying electricity is not considered a public utility operation either so it doesn’t require a franchise. Suppliers of electricity to the contestable market should only get a license from the ERC, which will also regulate its electricity rates.

Although the EPIRA requires a congressional franchise for transmission and distribution, a franchise is not needed for associated power delivery services for DPTs and minigrid systems. Based on industry practice, DPTs and MGs generally generate electricity for end-users at or near the point of generation and are allowed to include associated power delivery systems. That means DPTs and minigrid systems engage in transmission or distribution activities only to deliver electricity to end-users at or near the DPT or minigrid system facility: they don’t engage in the transmission or distribution of electricity as a separate facility.

There are also several DOE circulars that enable private sector participation in providing electric services in remote and unviable areas, and that prescribe the qualification criteria for QTPs.

These include DOE Department Circular Nos. 2004-02-002, 2004-06-006, and 2005-12-01. These guidelines encourage the inflow of private capital and regulate the manner by which DUs and QTPs can participate in the MEDP in order to protect the consumers.

All in all, HB 8179’s premise that giving SPSB a national franchise will help further the cause of rural electrification is not justified.

RAILROADING THE FRANCHISE?

Despite the problematic and alleged illegal provisions of the HB 8179, critics view Congress as seemingly prepared to railroad the approval of the franchise.

Earlier on Aug. 29, the HOR’s legislative franchises committee held its first and only deliberation on the original measures for the SPSB franchise, HB 8013 and HB 8015. A mere four days after, on Sept. 3, the committee approved and released the committee report and HB 8179, the substitute bill for the two bills.

While some government agencies such as the Department of Energy (DOE), the Energy Regularity Commission (ERC) and the Philippine Competition Commission (PCC) were invited to attend the initial hearing, private sector stakeholders from the renewable energy industry were not asked to attend or to submit their position papers—a stark deviation from the usual practice in committee hearings (Sec. 26, Rule IX of the House Rules as adopted by the 17th Congress).

In response to criticism by lawmakers opposing the bill and groups like PSSEA and Philreca, bill main sponsor Rep. Arthur Yap called for an “informal consultation” on November 14. Yap led the activity after being prodded by Buhay Party-List Rep. and former Manila mayor Lito Atienza. The consultation—even as it was attended by members of the groups opposing the bill such as board members of various electric cooperatives from Visayas and Mindanao—was also attended by a large contingent of SPSB supporters. Former Batangas governor Antonio Leviste was also present, as well as his son, SPSB founder and executive Leandro Leviste.

Observers said that only senator Loren Legarda was missing.

Now, HB 8179 is on second reading in the plenary session. Rep. Yap delivered his sponsorship speech on the same on Nov. 14, but deliberations on the bill was stopped after Nueva Ecija 3rd District Rep. Rosanna Vergara and Rep. Atienza raised their concerns about several questionable aspects of the bill.

Vergara called the bill “‘discordant” and “unfair,” and she and Atienza made a motion on the floor to have the bill returned to the committee level for amendments and revisions, also taking into consideration reactions and suggestions from the private sector and energy industry players.

For his part, Rep. Yap is determined to see his franchise bill turned into law.

An infrastrucure-oriented thinktank, Infrawatch PH, has also raised serious concerns over the franchise issue and how it is being rushed by Congress. Atty. Terry Ridon, convenor of Infrawatch PH and former urban poor chief of President Rodrigo Duterte, said that the franchise proposal included “very special entitlements” which were never put in any other power-related legislative franchises.

Ridon was previously a member of the House committees on legislative franchises and energy, and his view is that HB 8179 seeks to exempt the SPSB from ERC’s regulatory powers. He pointed out that the ERC’s regulatory and rate-setting authority was over all aspects of the power industry, from generation to distribution, but the proposal doesn’t provide for any mechanism for dispute and settlement on rates and services, which is a function of the ERC.

The former lawmaker also expressed surprise over how the bill doesn’t have a standard franchise provision that requires legislative franchise holders to seek congressional approval prior to the sale, transfer or assignment of controlling interest in any franchise.

“This standard provision is included in the grant of legislative franchises. This is in recognition of the status of franchises as public utilities serving the public interest. HB 8179 also contains a different   standard equality clause compared to previous legislative franchises. It requires congressional approval in order for previous franchise holders to possess the same entitlements as the proposed microgrid franchise,” Ridon said.

Previous legislative franchises had equality clauses which automatically granted new entitlements without need for congressional approval.

Another former lawmaker and spokesperson of the Bagong Alyansang Makabayan (BAYAN) Teodoro Casiño also called the franchise proposal “a bad idea.”

“The SPSB will gloat and use its franchise to aggressively market itself, and its products and services. It will be ‘the only solar power company granted a franchise by the government.’ The franchise will give them undue market advantage over other companies. It’s a tool to establish a monopoly. Sure, technically SPSB is not monopolizing the industry because the franchise proposal does not vest exclusive rights on it to operate, but the bill makes it appear that SPSB is the only company sanctioned by government to provide such services as the ones it’s offering,” Casiño said.

MONOPOLIES, SMALL PLAYERS

Parties against the franchise for SPSB each have put together their own respective proposals as alternatives to HB 8197. In a nutshell, they call on Congress to set aside the bill and instead work on proposals that promote the development of DPTs and minigrid systems—for all prospective developers of these technologies and not just for SPSB.

The bill, they argued, should provide a clear definition of DPTs and minigrid systems, and the conditions under which DPTs and MGSs can operate distribution and transmission in unviable or unserved areas.

They also suggested that the DOE revise its Qualified Third Party (QTP) guidelines to make the legal requirements for the operations of DUs and cooperatives easier.

The goal to provide electricity for the majority is not and cannot be the mission of just one company. Ensuring the Filipino people’s access to clean, safe, and affordable energy can only be made possible through the collective efforts of all concerned sectors and players, where each operates within the boundaries of the law, with fairness and transparency.

At the same time, credible small players and ethical companies that seek to engage in the industry should be given support and encouragement. They should be enabled to pursue their plans to expand and develop clean energy   projects, and provide more affordable, reliable services to Filipinos, especially in the harder to reach communities in the country. G

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