Reaping what was sowed

In May last year, the Department of Energy warned of supply shortages in the Visayas region due to the delayed interconnection projects of the National Grid Corporation of the Philippines, or NGCP.

What was feared turned into a grim reality just after the New Year celebration after several parts of Western Visayas suffered blackout days, resulting in inconvenience and huge losses in the fast-developing region.

According to the Department of Energy, or DoE, completing the Visayas Mindanao interconnection project would mean that the Mindanao grid could have helped provide electricity to alleviate the recent shortfall in the Visayas region since only 70 percent of the southern island only used up 70 percent of its capacity.

Mindanao could have transported 450 megawatts to the Visayas region, which is more than enough to bridge the supply deficiency in Western Visayas had the grids been linked.

The problem had persisted for years, and the inaction of the previous leadership in the Energy Regulatory Commission, or ERC, under Agnes Devanadera, now Clark Development Corp. president and chief executive officer, was to blame.

Under the Electric Power Industry Reform Act or EPIRA, the DoE crafts policies, and the ERC ensures that the directives are followed through regulation.

Since 2016, the DoE, then under Secretary Alfonso Cusi, has issued circulars and orders seeking to ensure the power transmission sector is secured.

Among these orders were DC2017-05-0008, “Providing For the Policies and Guidelines on the Conduct of Performance Assessment and Audit for All Power Generation”; DC2017-12-0016, “Adopting the Guidelines for the Performance Assessment and Audit of All Power Generation, Transmission and Distribution Systems and Facilities”; DC2019-12-0018, “Adopting a General Framework Governing the Provision and Utilization of Ancillary Services in the Grid”; DC2021-10-0031, “Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator”; and DO2017-04-0004, “Designating TRANSCO as Grid Owner to Participate in the Preparation, Review and Evaluation of the Transmission Development Plan.”

Through ERC’s inaction, courtesy of Devanadera, NGCP defied the DoE directives. It consistently refused a performance assessment and audit of the power transmission operations, business, and assets; avoided converting ancillary contracts from non-firm to firm; it ignored guidelines for the conduct of competitive selection process, or CSP, for the procurement of ancillary services; and disregarded the requirements in the preparation and review of the Transmission Development Plan.

In contesting the authority of DoE, the NGCP hid behind the ERC as it argued that any directive issued outside the regulator was invalid.

According to the NGCP, only the ERC has jurisdiction over matters affecting the national transmission system and assets.

Among its assertions was that a performance assessment and audit is regulatory and can only be conducted by the ERC.

DoE, however, held that its policy-making mandate does not conflict with ERC’s function.

ERC’s authority should also be kept within the bounds of the policies and framework set by the DOE, whether under the implementing rules and regulations, through circulars, or by other issuances as provided for by the EPIRA.

The ERC and the private contractor were thus bound by the DoE circulars barring any judicial declaration invalidating its issuances.

Even the concession agreement supported the DoE position that the ERC’s regulatory jurisdiction does not and cannot preclude the exercise of the DOE of powers and authorities delegated to it under the EPIRA.

A relevant portion of NGCP’s contract with the government stated, “Nothing in this Agreement xxx shall (a) prejudice the powers of other Governmental Authorities, including the Congress of the Philippines, to regulate the Concessionaire in accordance with Applicable Law.”

Thus, the recent massive power disruptions and the ordeal of Filipinos in the Visayas region hark back to when the regulator coopted with big businesses to trade public welfare for maximum profit.

What Devanadera sowed, Filipinos are now reaping through the inefficient electricity system.