The Process and the Players
(Disclaimer: This is an unofficial, layman-focused attempt to describe how we, ordinary people, get electricity in our homes.)
We Filipinos get power through a “collaboration” of private and public sector facilities. To help us understand how we get electricity and why it costs so much, we will look at how it really is produced, and the business-economics behind it.
Generally, the power is generated by power generation companies with their power plants. The power they generate is transmitted through a network of transmission lines to substations, which then transmit the electricity to distribution utilities (DUs) like Meralco. These DUs will then distribute the electricity to residential and commercial consumers.
Based on this simple description, we could then classify the players in the power sector into power generation, power distribution and power distribution.
Power generation sub-sector involves both private and government-owned entities involved in generating electricity. The most prominent player in this sub-sector is the National Power Corporation, or NPC, which is a government-owned and controlled corporation (GOCC). With the implementation of RA 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) power generation ceased to be a public utility, and NPC's generation assets (both fossil-based and renewables-based) were to be privatized. The logic of this mandate is to give this utility to the private sector which has better interest in pursuing efficiency and can manage the risks of power generation as a good with fluctuating value in the market (I think).
Transmission sub-sector is mostly a monopoly, with the National Transmission Corporation (TransCo) as the only participant. TransCo, as provided for in EPIRA, has contracted its operation and maintenance responsibilities to the National Grid Corporation of the Philippines (NGCP), while retaining asset ownership of their 19,425 circuit kilometers of transmission lines and 23,853 MVA of substation capacity (as of end-2009).
Distribution sub-sector is a combination of private DUs and public utility cooperatives. Meralco and Davao Light and Power Corporation are two of the few private DUs. In the countryside, electricity is mostly distributed by electric cooperatives (ECs). These private DUs and ECs make electricity available to us, families as well as commercial entities, and we pay them for the whole process--from generation, through transmission, to distribution, as well as the business of doing it.
Of course, not all parts of the Philippines have access to grid power (i.e., power that is received from the nationwide network of electricity supply, or power grid). While President Gloria Arroyo reported in 2009 that 99.99 percent of barangays in the country already have access to grid power (umabot na sa halos lahat ng barangay ang elektrisidad), it is different from access of power on the household level. Yes, it is possible to say that all barangay halls have access to power, but not all households in those barangays have electricity yet. (I will talk about this in another post, “Rural Electrification in the Philippines.”)
For now, we will stop here. So we have three players in this simple process. But how come we have brownouts in this age when there are more cellphones than Filipinos? There is more to it than the obvious.
