Electricity in the Philippines:Concentration, not Competition

by Maitet Diokno-Pascual

Presented at the ACF-FES Conference on“ENERGY SECURITY: Reshaping Policy Options for the

Asian Region and the Philippines,”January 31, 2012, Subic Bay, Zambales, Philippines

PH Electricity Sector vis-à-vis Asia

Production (in billion kWh)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

27 9 33

836 621

61 73 149

1,040

3,457

1990 2008

Consumption (kWh per capita)

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

376 98 162

6,486

511 588 799 591

8,071

2,455

1990 2008Source: Asian Development Bank

PH Electricity Rates vis-à-vis Asia

South

Korea

Singap

oreChin

aInd

ia

Indon

esia

Vietnam

Thailan

d

Malaysi

a

Philipp

ines

Japa

n0

2

4

6

8

10

12

5.22

9.57

7.39 8.70

4.35 5.22

4.35 5.22

11.30 10.43

Electricity Rate (US cents / kWh)

Source: JETRO, March 2006, cited in http://www.doe.gov.ph/e%20summit/presentation/Energy%20Conservation%20-%20Nagayama.pdf

View of Southeast Asia Night Sky

In 1992 … … and in 2009 (17 years later)

Not much progress for the Philippines. It’s classified as dark night light for a country with a large population density. Source: ADB

Electricity not for AllHouseholds without access to electricity, 2002 and 2008

Percent of FamiliesNumber of Families

(‘000)

2002 2008 2002 2008

All Families 20.3 16.1 n.a. 2,908

Lowest 30% 49.5 36.2 n.a. 1,962

Highest 70% 8.8 7.5 n.a. 948

Source: National Statistics Office, Annual Poverty Indicators Survey, 2002 and 2008

My Points Exactly

• Philippine electricity sector too small to subject to costly reforms

• Especially when access to electricity is not enjoyed by all, especially the poor and/or those in the rural areas

• Rather than bring the electricity sector forward in terms of more affordable and more reliable electricity, the EPIRA is making concentration the main driving force in the sector

Concentration of DemandLuzon (Meralco franchise area)

rest of Luzon, Visayas & Mindanao

Source: Philippine Electricity Market Corporation (PEMC)

Luzon Market Concentration

Source: Philippine Electricity Market Corporation

Concentration of Cross-Ownership

• Big Three Players– Lopez: distribution (LV), generation (LVM)– Aboitiz: distribution (VM), generation (LVM)– San Miguel Group: generation (L), transmission

(LVM)• Emerging Players– Manny Pangilinan: distribution (Meralco)– Henry Sy Jr: transmission

• Suspected Silent Player: Mike ArroyoL – Luzon; V – Visayas; M – Mindanao

Concentration of Generation, Luzon

Lopez Aboitiz San Miguel NPC

Privatized NPC/PNOC plants 262 1,275 655IPPs 1,596IPPA contracted capacity 700 2,545

TOTAL, in MW (10,931 in 2010) 1,858 1,975 3,200 1,863 % of total installed capacity in Luzon 16.99% 18.07% 29.28% 17.06%Share in 2004 (total cap 12,162MW) 16.47% 0.78% 0.00% 80.9%EPIRA prescribed limit within a grid 30%

Sources: UP National Engineering Center, “Philippine Electric Power Industry Market and Policy Assessment,” May 2011; Department of Energy, Power Statistics 2004

Implications for RE Development

• RE development in the Philippines is following the same track as conventional electricity under the EPIRA framework

• This is unfortunate because RE development could be an opportunity to push for the development of– Sustainable energy utilities– Devolved, decentralized utilities– Greater community and consumer participation

• In short, democratization of the electricity sector

Maraming salamat po!