‘Power bill only as good as IRR’

The country’s independent power producers said yesterday the government’s initiatives in solving problems in the power sector through the passage of the Omnibus Power Act can only be successful if it is able to come out with fair and acceptable implementing rules and regulations (IRR) for consumers and power industry players.

David Tan, president of the Philippine Independent Power Producers Association (PIPPA), which supplies more than half of the country’s power requirements, said IPPs are encouraged by government efforts to solve the problems of the power industry. However, he said, the government should immediately address critical issues implementing the power bill to fully realize the benefits of privatization and power deregulation, Tan said.

Tan cited the following critical areas under the power bill that must be attended to immediately:

• Setting up acceptable implementing rules and regulations (IRRs).

• Establishing the terms of reference on National Power Corp.’s asset tenders/biddings.

• Design of spot market rules to ensure real competition in power rate setting.

• Ensure the integrity, competence, independence and judiciousness of the Energy Regulatory Commission (ERC).

Tan said IPPs are further encouraged by the government’s demonstrated adherence to the terms of the build-operate-transfer (BOT) contracts which will be looked at favorably when IPPs decide on where to invest in Asia and the third world.

Another area of concern which IPPs are keenly observing is whether the country’s environmental clearance rules as implemented by the new leadership at the DENR will reflect a balanced, enlightened and realistic view of environmental protection and economic-industrial development and the need for electric power, Tan said.

Tan said the country’s economic, environmental and energy development policymakers must learn from the lessons of California which continue to suffer crippling power outages, three-fold increases in power rates and severe disturbances in business and social activities because of the failure of IPPs to receive environmental clearances for new power plants for almost ten years.

"The power shortage in California has opened the eyes of governments all over the world for the need to harmonize and create realistic programs to balance environmental concerns with economic and energy development programs," Tan said.

Many of the PIPPA members are interested in participating in the Napocor’s privatization of its power generation assets and in the various energy-related businesses brought about by deregulation, Tan said.