Green Energy Option

Interested players listen intently during the launch of the NREP

As we speak, the Philippine Energy Regulatory Commission (ERC) is busy hearing the application for the Feed-in-Tariff.

On  the (far?) horizon for Renewables is another mechanism called the “Green Energy Option” mandated under Section 9 of the Renewable Energy Law (RA 9513), to wit:

“Section 9. Green Energy Option. – The DOE shall establish a Green Energy Option program which provides end-users the option to choose RE resources as their sources of energy. In consultation with the NREB, the DOE shall promulgate the appropriate implementing rules and regulations which are necessary, incidental or convenient to achieve the objectives set forth herein.

Upon the determination of the DOE of its technical  viability and consistent with the requirements of the green energy option program, end users may directly contract from RE facilities their energy requirements distributed through their respective distribution utilities.

Consistent herewith, TRANSCO or its successors-in-interest, DUs, PEMC and all relevant parties are hereby mandated to provide the mechanisms for the physical connection and commercial arrangements necessary to ensure the success of the Green Energy Option. The end-user who will enroll under the energy option program should be informed by way of its monthly electric bill, how much of its monthly energy consumption and generation charge is provided by RE facilities.”

Insofar as it allows end-users to “directly contract from RE facilities their energy requirements distributed through their respective distribution utilities,” the  Green Energy Option (GEO) is similar to the concept of “open access under Section 31 of the Electric Power Industry Reform Act (RA 9316), thus:

“SEC. 31. Retail Competition and Open Access. – Any law to the contrary notwithstanding, retail competition and open access on distribution wires shall be implemented not later than three (3) years upon the effectivity of this Act, subject to the following conditions:

“(a) Establishment of the wholesale electricity spot market;

“(b) Approval of unbundled transmission and distribution wheeling charges;

“(c) Initial implementation of the cross subsidy removal scheme;

“(d) Privatization of at least seventy (70%) percent of the total capacity of generating assets of NPC in Luzon and Visayas; and

“(e) Transfer of the management and control of at least seventy percent (70%) of the total energy output of power plants under contract with NPC to the IPP Administrators.

“Upon the initial implementation of open access, the ERC shall allow all electricity end-users with a monthly average peak demand of at least one megawatt (1MW) for the preceding twelve (12) months to be the contestable market. Two (2) years thereafter, the threshold level for the contestable market shall be reduced to seven hundred fifty kilowatts (750kW). At this level, aggregators shall be allowed to supply electricity to end-users whose aggregate demand within a contiguous area is at least seven hundred fifty kilowatts (750kW). Subsequently and every year thereafter, the ERC shall evaluate the performance of the market. On the basis of such evaluation, it shall gradually reduce threshold level until it reaches the household demand level. In the case of electric cooperatives, retail competition and open access shall be implemented not earlier than five (5) years upon the effectivity of this Act.”

The initial impression seems to be that the GEO may have the effect of partially superseding the conditions prescribed for open access under the EPIRA. The question therefore, is whether the Renewable Energy Law authorizes the implementation of the Green Energy Option Program (GEOP) even if all the conditions of open access are in effect.

Unfortunately, it does not seem that an answer is immediately forthcoming given the status of the implementation of the RE Law and the rate the current deliberations for the more important incentives are going.

Nonetheless, our firm has rendered an opinion that official debates before the members of the Lower House and the Senate strongly suggest that the GEOP was intended to be implemented even prior to open access and hence, regardless of whether the conditions for open access are met.

A contrary interpretation would also mean that the GEOP should be “synchronized” with open access. However, implementing the GEOP at the same time that open access is declared and under the same parameters or limits would have the effect of making the green energy option legally indistinguishable from open access. In other words, when open access is declared, end users which fall within the open access demand thresholds would already have the right to directly contract with RE facilities whether or not a GEOP is in place. This interpretation would render Section 9, Chapter III of RA 9513 a surplusage which is generally not favored under certain deeply entrenched rules of statutory construction.

While that may be the case “strictly speaking,” a way out for the NREB could be the same Section 9 of the RE law which  provides that the right of end users to “directly contract” their energy requirements with RE facilities is conditioned on the determination by the Department of Energy of its “technical viability.”    This would imply that the DOE has the authority to limit or restrict the GEO for reasons of technical viability.


An Uneasy Peace and Hard Choices

Soldiers Carry `Lucky' Wounded

`They Kept Coming' (Photo and caption from Philippine Daily Inquirer)

It can’t be easy to be Marvic Leonen  in Mindanao these days.

While achieving peace is Mindanao remains an overriding ideal, to say that the Al-Barka incident strikes a serious blow to the peace talks does not quite capture the complexity of the issues surrounding the Mindanao insurgency.

The ambush of  19 soldiers by the Moro Islamic Liberation Front (the single most brutal skirmish in years)  resurfaces some old questions, not least of which is the legal status of the conflict as well as the MILF themselves. The government at least seems unable to make up its mind whether this breakaway group of Nur Misuari’s Moro National Liberation Front (MNLF) should be treated as legitimate belligerents under international law or common bandits.  Perhaps they are something else entirely.

From a more pragmatic standpoint however, it raises doubts as to whether peace itself is attainable under the present framework.

For one, the ambush at Al-Barka begs the question of whether government is talking to the right people. If MILF admits responsibility for Al-Barka, then its sincerity and good faith are both vulnerable to scrutiny. On the other hand, if another group is responsible, the status of the MILF as “top dog” would appear to be disputable at best.

Indeed, the MILF’s insistence on a Bangsamoro sub-state presupposes their ability to preserve the peace themselves and to keep “splinter groups” such as Umbra Kato’s Bangsamoro Islamic Freedom Fighters (BIFF) in tow. If the MILF can’t prevent “disgruntled” members from taking up AK-47s and running amok amidst the scores of the Philippine Army’s best trained soldiers,  how can they possibly keep peace using a motley crew of ex-farmers?

If the MILF gets their sub-state, what are they going to do with it? One certainly can’t look at the ARMM for inspiration.

 

 


The First Hundred

The overarching strategy appears to hinge on the promotion of Public-Private Partnerships (or PPPs). Other than the fact that this is by no means an innovation, infrastructure development by itself is not a recipe for bringing the country out of its status as the perennial bridesmaid of Southeast Asia into the club of the sought after. There are tough choices to be made regarding population control, balancing the budget, peace and order plus of course, the manner and degree of aggressiveness in fighting corruption. Hard decisions require deft political handling and large political capital. While there is still hope, the President has to make these choices soon before his coin runs out.


PPPs and Risk, Part 1

Finally, opening the floodgates to indiscriminate government guarantees is short-sighted and counter-productive. At the end of the day, the increased cost of a government guaranty against regulatory risk will be borne by the tax payers. Since most PPP contracts will outlive President Aquino’s administration, he should be wary about putting his signature on a piece of paper which will doom his successor (and the one after that) to additional fiscal burdens, especially where the benefit is not clear or the need is not immediate.


Noynoy, Gibo, Villar and the new EDSA Revo-lections

Critics bemoan the fact that many Filipinos are reduced to electing the “least corrupt” rather than the “most competent” candidate for the highest post in the land. But that argument presupposes that the two concepts are mutually exclusive. On the contrary, we cannot deny that it is precisely the sad state of the country which calls for a comparison not of one’s track record of real and hyperbolic accomplishments but a demonstration of what one has NOT done despite being possessed of power. In this, Noynoy is head and shoulders above all. As it turns out, Noynoy has shown by his previous conduct that he is the most competent to wield the awful powers of the President by showing its grandest manifestation — that of RESTRAINT.


Who’s Holding the Purse? The Line Item Veto and other Fun Facts Part I

The true “power of the purse” does not arise from the requirement that all revenue bills must originate from Congress as stated in Article VI, Section 24 of the Constitution. Rather, it lies in the dynamic created by the concept that the President must ask Congress for money. Thus, more than the authority of Congress to institute revenue measures, the true nature of the power shows itself in the authority of Congress to WITHHOLD money from the President.


The Acting Secretary of Justice: Error or Something Else?

Amidst a storm of public protests and faced with mutiny from his own lieutenants (the Department’s high level career prosecutors ), Acting Secretary Agra stands pat on his unpopular decision to move for the discharge of Autonomous Region of Muslin Mindanao (ARMM) Governor Zaldy Ampatuan and former Maguindanao Vice Governor Akmad Ampatuan from the criminal charges stemming from the Maguindanao Massacre.

The Resolution has been the subject of all manner of punditry from armchair lawyers to conspiracy theorists.  In essence, most critics decry both the unholy speed by which the Secretary issued his decision and the fact that he sustained the legally weak defense  of alibi over positive testimony of one of the witnesses.   Adding my own two cents worth to these, most litigators will tell you (as well as anyone else who has had experience petitioning the DOJ) that if there’s one thing that the Department is NOT known for, it’s promptness.  Setting aside the possibility that the Acting Secretary may have precisely chosen to break with this particular DOJ tradition, it is still puzzling that he would act contrary to what prosecutors have historically been inclined (even told) to do , which is to prosecute in the event of conflicting evidence.

Whether Secretary Agra (a former advocate of volunteer legal aid for the poor) deserves the vilification that he is receiving today depends on another question which has only been asked implicitly — whether the resolution to absolve two of the high profile principals in the massacre constitutes simple error which is arguably the Secretary’s to make or rather bears the earmarks of something more sinister.

During the earlier part of my legal career, I was part of the team of private prosecutors that appeared in the case of “People of the Philippines v. Hubert Webb.” Webb, the son of a Philippine Senator, was one of the accused in the brutal rape of Carmela Vizconde and the slaughter of the entire Vizconde household.

Immediately after Hubert Webb was indicted, he questioned the finding of probable cause against him by the DOJ Panel despite producing exculpatory evidence in the preliminary investigation consisting of, interestingly enough , alibi.  Specifically, he presented documentary evidence that would supposedly place him in the United States  at the time that the crime was committed.

The Supreme Court, in Webb v. De Leon [GR No. 121245 (23 August 1995)], ruled that faced with “conflicting pieces of evidence,” the DOJ correctly found probable cause to indict the accused. It also explained that probable cause was synonymous with “probability of guilt” and therefore required a LOWER QUANTUM AND QUALITY of evidence than that required for conviction, to wit:

Given these conflicting pieces of evidence of the NBI and the petitioners, we hold that the DOJ Panel did not gravely abuse its discretion when it found probable cause against the petitioners. A finding of probable cause needs only to rest on evidence showing that more likely than not a crime has been committed and was committed by the suspects. Probable cause need not be based on clear and convincing evidence of guilt, neither on evidence establishing guilt beyond reasonable doubt and definitely, not on evidence establishing  absolute certainty of guilt. As well put in Brinegar v. United States, while probable cause demands more than “bare suspicion,” it requires “less than evidence which would justify . . . conviction.” A finding of probable cause merely binds over the suspect to stand trial. It is not a pronouncement of guilt.

Considering the low quantum and quality of evidence needed to support a finding of probable cause, we also hold that the DOJ Panel did not, gravely abuse its discretion in refusing to call the NBI witnesses for clarificatory questions. The decision to call witnesses for clarificatory questions is addressed to the sound discretion of the investigator and the investigator alone. If the evidence on hand already yields a probable cause, the investigator need not hold a clarificatory hearing. To repeat, probable cause merely implies probability of guilt and should be determined in a summary manner. Preliminary investigation is not a part of trial and it is only in a trial where an accused can demand the full exercise of his rights, such as the right to confront and cross-examine his accusers to establish his innocence. In the case at bar, the DOJ Panel correctly adjudged that enough evidence had been adduced to establish probable cause and clarificatory hearing was unnecessary.

In other words, the Philippine Supreme Court directs that if the Secretary were to err in the exercise of quasi-judicial powers of determining probable cause, he should do so on the side of INDICTING the accused, instead of setting him free.

From all accounts, the Acting Secretary seems to be as astute as any individual who had previously held his position.  Thus, it becomes difficult to justify his decision on account of a mere catastrophic failure to appreciate the ruling in Webb v. De Leon.  Yet the other conclusion is simply too scary to contemplate.


What It Will Probably Take Part II: More on Including the Poor in the Equation

Theoretically, higher income per capita should offset the effects of either a lower minimum wage or a moratorium on wage increases. Stated otherwise, a lower legislated minimum wage would cease to be relevant when a larger part of the workforce is doing higher level jobs and are therefore earning way beyond any floor set by government.


What It Will Probably Take Part 1: Inclusion

At the end of the day, people will not sign on to any plan to overhaul the economy if they don’t see more food coming to their table or if the food is not coming soon enough. This is significant because that plan may ultimately involve reforms that are designed to increase country competitiveness by liberalizing trade laws or lowering the cost of Filipino labor.


The Bastard and the Messiah: Problems With the Philippine Presidential System

Rightfully or wrongly, the 1987 Constitution adopts such a pessimistic attitude towards the President that it almost seems to be betting that more often than not, Filipinos will elect the bastard. In the process, it also hampers a “good” President with restrictions that make it extremely difficult for him to deliver the monumental course changing performance that the collective dreams about.