Silver lining

Role of government, particularly the regulator in ensuring order in the crucial power industry, is indispensable for the economy to quickly get back on track.

It should have made the move long before, but still the Energy Regulatory Commission took an encouraging step in checking abuses in the energy sector, as it required the usually omniscient National Grid Corporation of the Philippines to account for its failure to secure reserve electricity.

The move of the regulator brings hope that other pending issues, including the atrocious P4.80 rate hike petition of SMC Global Power Corp., be resolved in favor of consumers who are struggling to recover their livelihood after more than two years of the pandemic.

ERC issued show cause orders to NGCP for failing to follow the policies issued by the Department of Energy, particularly the directive in October 2021.

The DoE issued Department Circular 2021-10-0031, entitled “Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator,” to acquire firm contracts for standby electricity to prevent perennial brownouts, particularly during summer.

Just last week, the Luzon grid again went on rationing electricity through rotating brownouts.

Aside from the discomfort it causes the public, the recurring problem of power outages has been a constant disincentive to investors and thus a hurdle to economic recovery.

NGCP has been granted the franchise as operator of the electricity grid, a huge responsibility that comes with equally gargantuan profit prospects.

Nonetheless, it had failed to deliver on most of its commitments embodied in its contract with the government.

Despite a constant demand from the government, the DoE in particular, NGCP reneged on its vow to secure firm ancillary services contracts. An auction initially set for such reserve power was shelved last February.

Also, instead of an initial public offering required in its franchise, Synergy Grid and Development Philippines Inc., which is its majority holding company, undertook a back-door listing in the stock market, depriving the public of direct participation in the lucrative power transmission business.

The option prevented NGCP from being covered by the bourse’s tough disclosure requirements and, at the same time, shielded its foreign partner, State Grid Corp. of China, from scrutiny.
NGCP also has been remiss in building sufficient infrastructure.

The lack of transmission lines led to more than 1,000 megawatts of stranded capacity in Luzon, particularly in Bataan and Pagbilao, or, in short, surplus electricity in a particular area never reaches consumers because of the lack of transmission lines

The recent power shortfall caused by the tripping of lines may also have been the result of poorly maintained equipment, particularly as delivery of parts was delayed by supply chain trouble from producer countries.

The role of government, particularly the regulator in ensuring order in the crucial power industry, is indispensable for the economy to quickly get back on track.


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