In 2001, the Government enacted Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA), which set out major reforms in the power industry. The EPIRA aims to deregulate and restructure the power industry with the goal of increasing competition and attracting more private sector investments. The heightened competition is envisioned to increase efficiencies in the industry that will eventually redound to the benefit of the end-consumers. To achieve this, EPIRA mandated the restructuring of the Philippine electric power industry into four sectors: Generation, Transmission, Distribution and Supply.
Pre-EPIRA Industry Structure
Post-EPIRA Industry Structure
Renewable Energy Law
The Renewable Energy Act of 2008 or Republic Act 9513 was signed into law on December 16, 2008 and became effective on January 30, 2009. This landmark law aims to accelerate the development and use of the country's vast renewable energy resources through fiscal and non-fiscal incentives for investors. Among these incentives are seven-year income tax holidays for RE developers, exemption from VAT and duty-free importation of equipment and machinery, reduction of corporate income tax after the expiry of the income tax holiday to 10% of net income as well as a zero percent VAT rate for the sale of power from RE.
The law also seeks to institutionalize a Renewable Portfolio Standard requiring the country's electric utilities to obtain a certain portion of their electricity from clean, indigenous renewable energy sources. This mechanism is intended to promote the rapid development of these resources. Data from the DOE website reveal that, by 2013, the DOE forecasts RE-based capacity to reach 9,147 MW from the 2002 level of 4,449 MW. An additional capacity of 1,200 MW is expected from geothermal; 2,950 MW from hydro; 417 MW from wind; and 131 MW from solar, ocean and biomass.