MANILA — Philippine senators are pushing to give the government emergency authority to regulate fuel prices during supply disruptions and other crises, arguing consumers need protection from excessive increases as the prolonged Middle East war puts pressure on global energy markets.

Speaking at a Senate hearing on Thursday, Senate President Sherwin T. Gatchalian proposed amending Republic Act No. 8479, the Downstream Oil Industry Deregulation Act, to allow government intervention when external shocks threaten fuel supplies or trigger extraordinary price increases.

Enacted in 1998, the law lifted state price controls on the downstream oil industry, leaving pump prices to track world market movements — the framework Mr. Gatchalian's proposal would carve emergency exceptions from. Under that setup, price shifts in world markets, such as those driven by the prolonged Middle East conflict, feed directly into local pump prices, which is the consumer exposure the senators are seeking to address.

"During abnormal crises or abnormal situations, the government cannot be rendered helpless," Mr. Gatchalian said at the hearing. "The government must have the power to protect consumers."

He argued the proposed changes would help prevent oil companies from imposing arbitrary price increases during emergencies. "If our consumers are being abused because of an abnormal situation, their only hope is the government," he added.

Electricity costs also drew scrutiny. Mr. Gatchalian noted the Philippines has the second-highest power rates in Southeast Asia at P14.75 per kilowatt-hour (kWh), behind only Singapore, where rates stand at P17.09 per kWh.

Clarice Ann Bernal, a lawyer representing the Energy Regulatory Commission (ERC), attributed the higher electricity costs partly to Manila Electric Co.'s reliance on liquefied natural gas.

Senator Erwin T. Tulfo questioned why electricity generated from coal had become nearly as expensive as gas-fired power despite differences in fuel costs, urging the ERC to examine the pricing of coal-fired generation and determine whether the increases were justified.

Ms. Bernal said the country's reliance on imported coal had also pushed up generation costs, and she committed to submitting a report explaining the increases in coal-related electricity prices.

Regional power costs were another concern. Mr. Gatchalian said electricity rates in the Visayas and Mindanao had climbed to P12.42 and P12.61 per kWh, respectively, raising concerns about regional power costs and supply adequacy across the archipelago's three island grids.

Energy Undersecretary Riolita D. Inocencio said the Visayas relies partly on electricity supplied through interconnections with the Luzon and Mindanao grids. She said transmission and interconnection facilities need upgrading to improve electricity delivery to the region, adding that private-sector power barges would be deployed to help address supply shortages.

Separately, Mr. Tulfo questioned the frequency of gasoline price adjustments, saying the regular changes confuse consumers and could encourage fuel stockpiling when price increases are expected.

"So we're really at the mercy — the Department of Energy, the oil industry, the government [are] at the mercy of the companies," he said. "I'm not saying they're evil, but my point is, I suppose, what about the protection of the consumer?"

The Department of Energy backs the expanded authority. Ms. Inocencio said the agency supports stronger government powers to intervene when fuel prices become extraordinarily volatile, and wants provisions allowing intervention when evidence of fuel hoarding emerges.

"This is really a necessary amendment," she said, citing the need to boost the government's intervention powers during extraordinary circumstances.

She added that the proposed changes would also improve the government's access to industry information, enabling regulators to establish permissible ranges for fuel price increases and decreases during emergencies.
With the proposal still at the hearing stage, the ERC's promised report on coal-related power prices and the planned deployment of private-sector power barges to the Visayas are the near-term items to watch, while the amendment itself would still need to pass both chambers of Congress and be signed into law before any new emergency powers could take effect.

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Source: Francessca S. Abalos, BusinessWorld — Senators eye powers vs fuel price surges