38th Status Report on EPIRA Implementation

I. EXECUTIVE SUMMARY

The 38th Status Report on Republic Act No. 9136 titled “Electric Power Industry Reform Act (EPIRA) of 2001” covers the implementation period November 2020 to April 2021. This highlights significant accomplishments, strategies and policies undertaken by the Department of Energy (DOE), the Energy Regulatory Commission (ERC), the DOE Attached Agencies as well as other private sector instrumentalities so mandated by the EPIRA.

Following are the significant accomplishments and developments in the power sector through the DOE, its attached agencies and the private sector, as mandated under the EPIRA:

  1. The Power Sector Assets & Liabilities Management Corporation (PSALM) continued the activities for the privatization of the government’s remaining assets focusing for the report period on the preparations for the 3rd Round of the Negotiated Sale of the Malaya Thermal Power Plant (MTPP) and its underlying Land to be held on 23 April 2021. Similarly, a study through the assistance of the Asian Development Bank is being conducted to determine options in the privatization of Casecnan Multi-Purpose Project (CMP) and CBK Hydroelectric Power Plants (CBK).
  2. Power demand in 2020 continued to be lower than the 2019 level as non-coincident peak demand was recorded at 15,282 MW, which is 299 MW or 1.9% lower than the previous year level. This decline in demand is attributed to the COVID-19 pandemic, which put the country under different levels of community quarantine beginning 15 March 2020. On the supply side, there was 662.7MW new power generation capacity for grid and off-grid areas that went on commercial operation during the report period, November 2020 to April 2021 (if there was no capacity that went on commercial operation, we can state that the limited and restricted movements of people and materials have affected the timely completion of the power projects despite the support provided by the DOE in the issuance of IATF IDs for local backliners and endorsements to concerned government agencies for the entry of foreign experts).
  3. The “Advisory on the Moratorium of Endorsements for Greenfield Coal-fired Power Projects in line with Improving the Sustainability of the Philippines’ Electric Power Industry”, was published on 22 December 2020. This directive aims to support and effectively implement policies issued by the DOE with the aim of improving energy sustainability, reliability, and flexibility by: (1) Increasing the Renewable Energy (RE) share in the energy mix; (2) Promoting new technologies; (3) Increasing system flexibility; and (4) Adhering to higher environmental standards. With this moratorium, the DOE will not process applications for greenfield coal-fired power generation facility projects requesting for endorsements.
  4. A minimal growth in the Wholesale Electricity Spot Market (WESM) registered capacity was observed in February 2021 compared to September 2020 despite the entry of new power plants. The decelerated growth by 3.29% was attributed by the decrease in capacities and cessation of registration of some power plants. The electricity demand was observed to have an unusual trend compared to previous years due to the implementation of community quarantine brought about by the COVID-19 pandemic. Further, the average system demand consistently decreased as the year progressed from September 2020 to January 2021. The lower demand was due to the cooler weather during the season, as well as the prevalence of holidays, which had a significant impact on power demand. This is on top of the several powerful tropical depressions, including Typhoon Quinta, Typhoon Rolly, and Typhoon Ulysses during the latter part of the year, that disrupted the country's power grid and resulted in a drop in demand. However, the average system demand increased after a previous 4-month decline in February 2021. Based on the yearly trend, the uptick in demand this month followed the increasing pattern going into February in previous years. With this, electricity demand plus reserve fell by 9% from an average of 11,278 MW in September 2020 to 10,233 MW in February 2021. The average effective supply also dropped by 3% from September 2020 to February 2021 as fewer capacities were available in the market due to an increase in outage capacity and capacities not offered by generators. As a result of the supply-demand mix, average supply margin increased by 35%. The level of supply margin during the community quarantine period was still at a remarkable high as compared to previous years of similar months.
  5. In terms of the market share limitations as provided in Section 45 of the EPIRA, it remained that no power generation entity has exceeded the installed generating capacity and market share limitation of 30% per grid and 25% for the national grid. The country's electricity market reflected a moderately concentrated market, as measured by Herfindahl Hirschman Index, indicating the level of competitiveness of the power industry in the country;
  6. In this report, the implementation of Retail Competition and Open Access (RCOA) covered a comprehensive analysis of the retail market performance and RCOA participation rate. As of February 2021, there was a recorded increase of 546% on the number of registered Contestable Customers (CCs) and a 172% on the registration of Suppliers as compared from June 2013 commencement of RCOA implementation. The average monthly metered quantities from October 2020 to February 2021 is recorded at 1,499 GWh of which 90% of the contracted energy was accounted through bilateral contracts and the remaining 10% was transacted through the spot market.
  7. In terms of electricity pricing for the retail market as of December 2020, the country's average electricity rate was around PhP8.13/kWh, PhP0.07 centavos lower compared with September 2020 level national average systems rate.
  8. For the report period, the household electrification level is around 94.36% based on the latest status of energization provided by the National Electrification Administration, Local Government Unit-Owned Utilities and Private Investor-Owned Utilities. Said level corresponds to 25.10 million energized households, surpassing the 22.98 million identified and targeted household population based from the 2015 Census of the Philippine Statistics Authority (PSA).
  9. On March 16, 2021, the Congress’ Bicameral Conference Committee unanimously agreed and adopted the DOE’s proposed extension of the lifeline rate subsidy by another 30 years starting June 2021, upon expiration of the extension provided under Republic Act No. 10150. Said extension was manifested by the DOE during the deliberation of the Bicameral Conference on the disagreeing provisions of House Bill No. 8145 and Senate Bill No. 1877 where both bills proposed for the extension of the Lifeline Rate Subsidy for only 10 years or until 2031.
  10. Lastly, in line with DOE’s mandate to ensure continued development and enhancement of policies and programs on the WESM, the DOE promulgated eight (8) policies pertaining to Adoption of Further Amendments to the WESM Rules (Provisions for the lmplementation of lndependent Market Operator), WESM Industry Code of Ethics, Adoption of Further Amendments to WESM Rules and Market Manual on Procedures for the Monitoring of Forecast Accuracy Standards for Must Dispatch Generating Units for the Implementation of Enhancements to WESM Design and Operations, Load Forecasting Methodology for the Implementation of Enhancements to WESM Design and Operations, Dispatch Protocol for the Implementation of Enhancements to WESM Design and Operations, Management of Net Settlement Surplus, Implementation of Policy and Framework Governing the Operations of Embedded Generators, and Adoption of a General Framework Governing the operationalization of the Reserve Market in the Wholesale Electricity Spot Market and Providing Further Policies to Supplement DC2019-12-0018. Further to this, the DOE drafted three (3) policies on Test and Commissioning of Generation Facilities, additional policies on Ancillary Services and Disconnection Policy, among others..

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