Senators question the benefits of bill to develop local natural gas sources
Two senators have expressed concern that the recently passed bill to fully develop the Philippine natural gas industry may not result in lower electricity costs.
Senate Bill (SB) No. 2793, known as the Philippine Natural Gas Industry Development Act, was passed with 14 affirmative votes, three negative votes, and no abstention on third and final reading on Monday.
Senate Minority Leader Aquilino “Koko” Pimentel III, Deputy Minority Leader Risa Hontiveros, and Sen. Sherwin Gatchalian voted against the measure. Those absent during the approval of the proposed bill were Senators Bong Go, Lito Lapid, Loren Legarda, Imee Marcos, Bong Revilla, and Mark Villar.
The measure aims to promote the development of the natural gas industry, which also covers the transmission and distribution of natural gas supply.
Explaining her vote, Hontiveros said the measure could potentially undermine the “least-cost” principle, which, she said, is a crucial safeguard for Filipino consumers against unreasonable electricity prices.
She said that under the bill, the “domestic natural gas sector would be under no pressure to match their selling price with what is available from regional and global markets.”
Hontiveros said that the Philippine energy sector would be required to purchase everything it produces, and even the most inefficient wells will be guaranteed a market.
“This abandonment of the ‘least cost’ principle may even affect, without categorically saying, the greatest potential of renewable energy to drive down electricity costs, especially when more and more investments are encouraged into this sector, rather than to another fossil industry which future is clearly defined in climate negotiations as a false solution and unsustainable,” she said.
Also, according to Hontiveros, the bill’s stance on cross-ownership is particularly “troubling.”
Her proposed amendment, which would have granted the Energy Regulatory Commission (ERC) the authority to determine cross-ownership limits for liquified natural gas facilities, was rejected by Sen. Pia Cayetano, who sponsored the bill as chair of the Senate energy committee.
“This amendment was inspired by concerns over badly regulated, potentially misbehaving monopolies, particularly in the transport segment of the gas industry,” said Hontiveros.
She added that the bill, in its current form, “could perpetuate past mistakes in our energy sector.”
Giving priority to indigenous natural gas
Gatchalian, for his part, expressed particular concerns about the provisions in the bill that give priority to indigenous natural gas over conventional sources of energy, even if the latter offers a lower bid. He also noted the absence of a competitive bidding or price discovery mechanisms for the procurement of indigenous natural gas.
“Our responsibility to the Filipino people is to protect their interests and to act as guardians of consumer welfare. For these reasons, and with the goal of ensuring a fair and balanced energy market that puts consumers first, I cast my no vote on this bill,” he explained.
While recognizing that developing indigenous natural gas would boost energy security, Gatchalian said that this must be balanced with the cost impact on consumers.
Transparency
But Cayetano clarified that “we have prized mechanisms, we have transparency.”
“The law is very clear about fair and open access. It’s not true that the price will not be disclosed. It’s not true that consumers will be forced to pay high prices… Historically, the price of indigenous gas has been extremely low,” she said.
“Let’s not scare our countrymen that electricity costs will increase if we prioritize indigenous gas. That’s not true. What I’d also like to emphasize is that currently, power plants are negotiating the prices of their fuel supplies. I’m not replacing or removing anything from the bidding process, because there is no bidding at that level. Those are negotiated supply agreements, and that’s the same policy. It’s fair and open access to all available information,” Cayetano added.
She said the legislation aims to prioritize indigenous natural gas development, ensure energy security, and provide more affordable prices for consumers.
Transition fuel
“This is a momentous step forward as we strive to achieve energy security and sustainable economic growth,” Cayetano said, noting that natural gas serves as a crucial transition fuel towards renewable energy.
The senator assured that the law includes strong provisions for transparency and fair pricing, highlighting how indigenous gas has historically been more cost-effective than imported sources.
“This bill is good for the country, good for the environment, and good for Filipino consumers,” she added, underscoring the measure’s significance for future generations.
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