EPIRA at 25: The distribution utilities

The Electric Power Industry Reform Act of 2001 (EPIRA, RA 9136) turned 25 years old this year. I wrote a three-parts series last month in my column in BusinessWorld: “EPIRA at 25: More lights, less blackouts, fewer subsidies, lower prices?” (Part 1, Sept. 8), “EPIRA at 25” (Part 2, Sept. 15), and “EPIRA at 25: Goals reached, new issues for the future” (Part 3, Sept. 29).

The articles discussed the reforms and privatization of the country’s power generation, transmission (privatization of concession only, not the assets), privatization proceeds of P960 billion and their utilization, the comparative electric power industry structure in East Asia and briefly about power distribution.

This column will discuss in particular the distribution utilities (DUs) and electric cooperatives (ECs), so consider this as Part 4 of my “EPIRA at 25” series.

EPIRA’s Section 23, “Functions of Distribution Utilities” states that a DU must “provide distribution services and connections to its system for any end-user within its franchise area…and supply electricity in the least cost manner to its captive market.”

So the primary function of DUs is to help avoid blackout and ensure sufficient electricity supply to its customers. The secondary function of DUs is to provide cheap or competitively-priced electricity.

Then Section 57, “Conversion of Electric Cooperatives” states that ECs are “given the option to convert into either stock cooperative under the Cooperatives Development Act or stock corporation under the Corporation Code.”

And Section 58, about the National Electrification Administration that was created in August 1969 or 57 years ago, states that NEA should “prepare ECs in operating and competing under the deregulated electric market within five years from the effectivity of this Act,… strengthen the technical capability and financial viability of rural ECs; and… enhancing the viability of rural ECs as electric utilities.”

Many ECs in the provinces are notorious for violating Section 23 by having frequent blackout in their franchise area. See data from ERC regarding the System Average Interruption Duration Index or blackout minutes in a year of DUs vs ECs.

Two situations are considered: Scheduled maintenance and power supply or grid-related outages like supply deficiency, plant tripping, transmission maintenance.

In 2023, Scheduled maintenance, Meralco’s SAIDI was 51 minutes only while Batangas EC (BATELEC) 1 has 257 minutes (or 4+ hours) and BATELEC 2 has 1,386 minutes (23 hours).

For Power supply, Meralco’s SAIDI was 26 minutes while BATELEC 1 has 2,676 minutes (47 hours) and BATELEC 2 has 1,819 minutes (30 hours).

In Cebu, Visayan Electric Co. (VECO) SAIDI for Scheduled maintenance was 163 minutes (2.7  hours) while Cebu EC 1 (CEBECO 1) has 1,761 minutes (29 hours). In power supply, VECO has only 7.6 minutes while CEBECO 1 has 311 minutes (5.2 hours).

In Mindanao, Davao Light and Power Corp. (DLPC) SAIDI in power supply was 61 minutes (one hour) while Northern Davao EC (DANECO/NORDECO) has 1,256 minutes (21 hours).

I checked the electrification record of these two provincial DUs. VECO has 530,000+ customers covering 674 square kilometers and it has electrified 100 percent of their service area. For DLPC, it has 609,000 customers with a wide service area of 10,223 sq. kms. And it has also electrified 100 percent of all barangays in service area. Cool.

About NEA as a 57-years old bureaucracy, it has violated Section 58 and it has failed to strengthen the ECs’ technical and financial viability — high SAIDI as shown above, and high annual assistance to ECs.

The NEA budget, programmed plus unprogrammed appropriation amounted to as follows: P17.2 billion in 2020, P7.1 billion in 2021, P6.3 billion in 2022, P6.1 billion in 2023, P8.3 billion in 2024, P14.3 billion in 2025 and P13.2 billion programmed for 2026. Of this, loans to ECs are P2.94 billion in 2020-2023, and P6.11 billion in 2024-2026 (Sources: General Appropriations, Volumes 1-A and 1-B various years, and Budget of Expenditures and Sources of Financing 2027).

Private and urban DUs like Meralco are exposed to more public scrutiny and criticisms than rural ECs. Plus they are registered with and monitored by SEC and not NEA, they are subject to possible bankruptcy if they are wasteful.

Meralco COO Ronnie Aperocho emphasized that they understand the need for reliable investments in generation, distribution and grid infrastructure, instead of waiting for power supply shortages and congestion to occur before taking actions.

The RE law of 2008 (RA 9513) has prioritized and made mandatory dispatch of intermittent and weather-dependent sources like solar and wind. So Meralco and its sister company, Meralco PowerGen Corp. (MGEN) adjusted and adapted by going into distribution network strengthening, energy storage and having smart and more flexible grid to accommodate more decentralized electricity sources or distributed energy resources (DERs).

Modernization, automation and digitalization requirements of a smart grid and advanced controls are being laid out by DUs to manage a more complex electricity system and supporting the integration of emerging technologies.

Avoiding blackout is paramount to DUs. They must deal with more DERs coming in, higher demand from more EVs, data centers, industrial robotics and big rail projects. Cybersecurity and protection are also important. The “least cost” electricity in Section 23 of EPIRA now means not only in procurement of generation cost but the full system of generation-distribution and networks modernization.

“The future is here” somehow, but an even more complex future is still to come. Ensuring no blackout, stable, reliable electricity supply at competitive prices for consumers is the ultimate goal. Meralco and other DUs are forced by circumstances to provide the expectations of more demanding consumers, both households and companies, to prepare for that more complex future.

EPIRA is working. But the law should have made the conversion of ECs to stock corporation mandatory and not optional.

abtestabtest Meralco starts auction for 900-MW baseload power By Brix Lelis | 1 day ago Power utility giant Manila Electric Co. is seeking bidders for a 15-year contract to supply 900 megawatts of baseload... Business DOE orders monthly fuel cost reports By Brix Lelis | 1 day ago Oil firms are now required to submit monthly reports on the cost components of liquefied petroleum gas and kerosene as... Business GSIS chief named Asia’s Modern Hero for public service 1 day ago Government Service Insurance System president and general manager Wick Veloso has been named Asia’s Modern Hero... Business ‘Data residency law to drive up investments in data centers’ By Elijah Felice Rosales | 1 day ago Requiring local storage of applications and information, even those held by the private sector, would encourage data center... Business Security Bank retail banking head steps down By Keisha Ta-Asan | 1 day ago The retail banking head of Security Bank Corp. is stepping down in December as the lender undertakes a broad leadership reorganization... Business Latest More in Business Government debt piles up to P19.6 trillion in August Building tomorrow’s power grid ShopSM, Penshoppe, Bench among top Asian retailers ACEN takes in Dutch partner for solar project in India abtest ABS-CBN shareholders OK P6 billion placement By Elijah Felice Rosales | 2 hours ago Media giant ABS-CBN Corp. has received a P6-billion placement from the Lopez family and its new investor, increasing the company’s... Business Forex loans rise to $16.3 billion in Q2 By Keisha Ta-Asan | 2 hours ago Banks’ foreign currency loans rose by 5.6 percent to $16.31 billion in the second quarter from $15.44 billion in the... Business JTI backs unified tax on e-cigarettes By Aubrey Rose Inosante | 2 hours ago A proposed unified tax rate on e-cigarettes may help plug a loophole that provides an avenue for illicit traders to misdeclare... Business PHirst Park Homes merges with Century Properties By Richmond Mercurio | 2 hours ago The Antonio family’s Century Properties Group Inc. has secured the approval of the Securities and Exchange Commission for its merger with PHirst Park Homes Inc., with CPG as the surviving entity. Business Recommended AMLC records cleared for trial presentation September 28, 2026 - 12:00am Financial documents from the Anti-Money Laundering Council have been cleared for use as evidence in the ongoing impeachment trial of Vice President Sara Duterte. BusinessAMLC Pilde na si Sara? September 27, 2026 - 12:00am Angay na bang kuyawan si Bise Presidente Sara Duterte? Sa hukom sa mayoriya sa senator-judges pagpaubos sa gidaghanon sa mga boto nga gikinahanglan pagkonbikto niya? BusinessTRENDING Kalbaryo ni Sara September 25, 2026 - 12:00am Kon gamay nang tan-awon ang 14 ka boto pagkonbikto ni Bise Presidente Sara Duterte impeachment trial, dili pa kana mao. BusinessSARA DUTERTE next Recommended AMLC records cleared for trial presentation Financial documents from the Anti-Money Laundering Council have been cleared for use as evidence in the ongoing impeachment trial of Vice President Sara Duterte. 3 days ago AMLC Pilde na si Sara? Angay na bang kuyawan si Bise Presidente Sara Duterte? Sa hukom sa mayoriya sa senator-judges pagpaubos sa gidaghanon sa mga boto nga gikinahanglan pagkonbikto niya? 4 days ago TRENDING Kalbaryo ni Sara Kon gamay nang tan-awon ang 14 ka boto pagkonbikto ni Bise Presidente Sara Duterte impeachment trial, dili pa kana mao. 6 days ago SARA DUTERTE OK Are you sure you want to log out? Yes No X Login Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!