NGCP, however, missed the point of the law, which is that it does not allow the monopoly of the grid company.

The law’s rejection of the existence of a business monopoly was the reason for members of the House of Representatives to put electricity network operator National Grid Corporation of the Philippines (NGCP) under the lens due to its reluctance to launch an initial public offer (IPO) and other breaches in its franchise and concession agreement.

House Committee on Energy vice chairman Rep. Jericho Nograles said the House is not giving substance to the reason that NGCP gave in delaying its public offering.

“According to the law (Electric Power Industry Reform Act (EPIRA)) and the franchise of NGCP, an initial public offer of a minimum of 20 percent of their shares within 10 years was mandated,” Nograles said.

He said what NGCP did was to delay. Within two months before the IPO deadline expired in 2009, it petitioned the Energy Regulatory Commission (ERC) to delay its IPO because of the unfavorable market conditions.

“NGCP, however, missed the point of the law which is that it does not allow the monopoly of the grid company,” he said.

“What’s more important is review. We review the conditions of the franchise if it is followed appropriately,” according to Nograles.

He said the IPO requirement was clearly disregarded by NGCP without a proper explanation or approval from Congress.

“There is also the issue on tax payments that are below expectations. Also, the delays in implementation of the modernization programs despite the billions of profits of NGCP,” according to the legislator.

He pointed to a noticeable decrease in tax payments by the NGCP as compared to the time when the transmission grid was still with state-own National Transmission Co. (TransCo).

TransCo was paying more than P10 billion worth of taxes while NGCP pays only P2 billion. Nograles likewise noted the yearly dividends of the NGCP reach up to P25 billion.

“Ever since NGCP has operated the grid, tax collections of the Bureau of Internal Revenue (BIR) dropped, while collaterally NGCP’s dividend earnings grew,” he said.

The solon said House members were surprised that the company had accumulated P16 billion to P18 billion in dividends yearly, but the implementation of their required capital expenditures and investments in the grid were delayed.

“NGCP was given a franchise by Congress and the EPIRA to improve the country’s grid and transmission lines, but they refuse to go to Congress to explain,” he noted.

The House Committee on Energy chaired by Marinduque Rep. Lord Allan Velasco will investigate NGCP’s supposed non-compliance of its mandated IPO.

Velasco told Daily Tribune that his panel will invite NGCP officials in a hearing to discuss issues confronting them and to address complaints impeding the full implementation of the terms of the franchise agreement.

NGCP holds a 25-year concession agreement with the government to operate and maintain the transmission business.

In a hearing last 30 September, PHILRECA partylist Rep. Presley de Jesus inquired on the reason for the IPO delay.

NGCP assistant corporate secretary Ronaldo Concepcion explained that the delay was due to the current market condition, which is not suitable for the listing of its shares and pending the determination of the price control set by the ERC.

Zamboanga del Norte 3rd District Rep. Isagani Amatong decried the frequent power outages in Mindanao and attributed these to poor service due to the existence of a monopoly in the electric network industry. He stressed that free competition should prevail in the industry so that there will be better quality of service.

Asked by APEC partylist Rep. Sergio Dagooc, a member of the House Committee on Energy, on the charges imposed by the NGCP, Concepcion said that it collects transmission, systems operations and metering charges.

Dagooc then chided the NGCP for charging generation cost and systems loss to customers, which constitute double charge due to NGCP’s “inefficiency” in the delivery of service.

TransCo president and chief executive officer Melvin Matibag told the committee that while the NGCP has acquired the rights to the transmission business through a congressional franchise granted to it by the Congress, the government through TransCo retains the ownership of transaction assets.

“Since the NGCP is imbued with public interest, the public must have a share and must have a say through ownership,” according to Nograles.

Dagooc added the NGCP should return to consumers the unnecessary costs charged due to its inefficiencies.

In an interview, he attributed the increasing systems loss to the low voltage transmission of the NGCP.

“Since systems loss is rising due to the low voltage of the transmission grid, it is equivalent to customers paying the generation charges twice since systems loss is part of the generation service,” he explained. “It is contributing to the increase in the cost of electricity.”

Asked how much would the NGCP return to its consumers, he said: “That will be big since, for example, the systems loss is five centavos, for the whole country that would total into a huge volume in gigawatt hours. How many years have they been doing that? The ERC can make a computation.”

He said the NGCP violated the Philippine Grid Code of the ERC.

“They have a list of violations, but the grid code does not have provisions for penalties, which I have repeatedly brought up with ERC,” he added.

Dagooc said he asked the ERC to review the grid code.

He said the NGCP also violated the conditions in the franchise given by the Congress and the concession agreement with TransCo.

He added it is now up to Congress if it will review Republic Act 9511, which is the law that gave NGCP franchise and if TransCo will revoke the concession agreement with NGCP.