Regulatory intervention towards the empowerment of electric utilities as agents of lighting market transformation in the Philippines

Alexander Ablaza and Ruben Lambuson, IFC/GEF Efficient Lighting Initiative - Philippines

Keywords

Efficient Lighting Initiative (ELI), compact fluorescent lamp (CFL), demand-side management (DSM), government-certified CFL, sub-standard CFL, ELI-qualified CFL, Philippine National Standard (PNS), Energy Regulatory Commission (ERC), Philippine Department of Energy (DOE), Philippine Department of Trade & Industry (DTI), Philippine Bureau of Product Standards (BPS), Smartlight CFL Program, Global Environment Facility (GEF), International Finance Corporation (IFC), Soluziona Ingeniería, Soluziona Philippines, Iberpacific, Manila Electric Company (Meralco), Cagayan Electric Power & Light Company (Cepalco)

Abstract

The efficient lighting market in the Philippines suffers from an influx of sub-standard and black-market CFLs. According to market research that the IFC/GEF Efficient Lighting Initiative (ELI) conducted in early 2000, residential users preferred inefficient and sub-standard products to high-quality energy-efficient CFLs particularly at the time the retail price difference between high and low-quality CFLs reached 10:1 levels. To make matters worse, the market reach of the inferior quality products exceeded 60 % of residential users in certain urban centers.

Although electric utility demand-side management (DSM) programs can be an effective tool for transforming the markets for energy-efficient products, a five-year old regulatory framework for DSM had not been effective in encouraging most of the country’s 136 utilities to implement energy efficiency programs.

Therefore, in the year 2000, ELI identified agencies and organizations that could modify the existing regulatory framework so as to make it easier for electric utilities to implement DSM programs. As a result, the Philippines has developed an amended regulatory framework for DSM that assures utilities of recovery of program costs and lost revenue, plus additional incentives for those investing a larger portion of gross revenues in DSM. In parallel, ELI is working with the two large utilities to develop business plans for their respective Smartlight CFL leasing programs. These can serve as models for other utilities.

This paper provides an Asian model of electric utility regulatory interventions as a potent tool in promoting high-quality, energy-efficient lighting technologies.