The Energy Regulatory Commission should pursue a physical audit of the transmission network concessionaire National Grid Corporation of the Philippines after the agency called out the private firm for its failure to perform its contractual commitments.
Former Energy Secretary Alfonso Cusi said that the ERC made the right move in seeking accountability from the National Grid Corporation of the Philippines over its failure to comply with commitments under its contract.
On Sunday, the Energy Regulatory Commission requested the National Grid Corporation of the Philippines to account for its failure to comply with the government's mandate to contract enough power reserves to maintain the resiliency and security of the grid.
Last 16 September, the ERC issued show cause orders through ERC Cases 129, 130, and 131 to the NGCP for failing to follow the policies issued by the Department of Energy in October 2021.
Particularly, the ERC said the NGCP violated the DoE Department Circular 2021-10-0031 entitled, "Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator" which required the concessionaire to acquire firm contracts for reserve power.
ERC finally makes a move
"I am happy that finally, ERC is moving. It previously has been protecting NGCP in a period of regulatory capture. I hope that they don't stop pursuing this," he explained.
Cusi related the DoE was asking for an audit and they told us that they will only agree to an ERC audit but ERC is not doing anything.
"ERC then uses the excuse that they don't have the people to conduct the audit but the grid owner, National Transmission Corp., a government entity that is willing to do the audit," according to Cusi.
The problem is that ERC did not commission TransCo.
In the audit, TransCo wanted to review NGCP's compliance with the 2009 concession deal.
ERC, nonetheless, held a virtual audit in which questions were directed to NGCP officials through an online meeting which Cusi said should be a physical review of the operations of the concessionaire.
"System audit and operational audit must be conducted on NGCP. It defied DoE to let TransCo audit them," he said.
"ERC didn't audit because of lack of capabilities but refused to commission TransCo which has the capacity to do the job. What does it tell you?" Cusi indicated.
It's about time, Cusi said about the ERC ruling as he recalled that the previous leadership of the agency kowtowed to NGCP despite the efforts of the Department of Energy.
"We have been asking for that. The provision of reserve power is part of the Electric Power Industry Reform Act and is required under the concession agreement."
"But they have not complied. NGCP always use the justification that electricity prices will rise but that is not their concern. Their concern is to comply with the reserve requirement," according to Cusi.
On the demand for firm contracts for ancillary services, the excuse is that there is no available power plant (to provide ancillary services) but Cusi said plants will likely open once there is demand.
"What they do is that they compete with the market for electricity, thus prices go up so it is the consumers who suffer," Cusi indicated.
"We need reserves for stability, reliability. Since when did NGCP become concerned about rising prices, it is just using this argument to frighten consumers," he added.
