Only ERC can audit our system operations—NGCP

By Lenie Lectura – May 26, 2023
from Business Mirror

The National Grid Corporation of the Philippines (NGCP) said Thursday the Energy Regulatory Commission (ERC) is the sole agency that could conduct an audit on its system operations.

NGCP on Thursday addressed concerns on its alleged resistance to a comprehensive system audit and inspection to be conducted by the Department of Energy, (DOE), PSALM, and National Transmission Corp. (TransCo).

“For the record, NGCP is not opposed to a proper inspection or audit of the grid or its system operations in accordance with the Epira (Electric Power Industry Reform Act) and the Concession Agreement. But the audit of the System Operations, which the DOE, TransCo, and PSALM wished to conduct, may only be conducted by the ERC, because it is an exercise of regulatory authority over NGCP,” the company said.

NGCP said it recognizes the right of PSALM and TransCo “to inspect the transmission assets and witness any aspect of the performance of the Concession Agreement.” It also acknowledges PSALM’s right to “audit NGCP’s compliance and performance with its obligations under the Agreement and other Transaction Documents.”

In fact, it added, TransCo has conducted periodic physical inspections of substations and transmission assets, as well as regular examinations of NGCP’s books and financial records.

Under Section 2.01 of the Concession Agreement, either PSALM nor TransCo has any regulatory rights, for any act or inaction of the Concessionaire that are within the regulatory authority of the ERC, to (i) make its own determination, or (ii) impose any penalties” on NGCP.

The exercise of such authority is beyond the powers of the DOE, said NGCP.

Section 37 of the Epira expressly carved out the authority to “regulate private sector activities” from the DOE’s functions under the Department of Energy Act of 1992. This power, stressed NGCP, was transferred to, and must now be exercised by the ERC, in conjunction with the ERC’s authority to promulgate and enforce the Philippine Grid Code, or the “set of rules and regulations governing the safe and reliable operation, maintenance and development of the National Grid.”

“NGCP reiterates that it will participate in a system audit to be undertaken by the ERC, in  accordance with the letter and the spirit of the Epira,” stressed NGCP.

Penalize NGCP—Gatchalian

Lamenting the adverse effects of uncompleted vital power projects, Senator Sherwin Gatchalian on Thursday goaded the ERC to penalize the NGCP for the delayed projects, which NGCP had acknowledged, even as it cited the reasons for the delays—all beyond its control.

Gatchalian sought appropriate sanctions on NGCP for the unfinished projects adversely impacting the country’s electricity supply.

“I strongly suggest to the commission to enforce fines and penalties so we can impose discipline on NGCP. We are not seeing discipline because a lot of projects are delayed,” Gatchalian said in a statement.

The lawmaker also urged ERC to review the rate-setting methodology when it comes to NGCP’s transmission projects.

“Why are we allowing them to collect from consumers upon the commencement of the project without a defined timeline as to when they can continue to collect for a project? This leads to perverse incentives because if the project is delayed for 40 years, they can also collect for 40 years, lalo na’t delayed pa ang rate reset nila,” he said.  With Butch Fernandez