Exasperated by the alleged non-compliance and delays in the implementation of transmission projects, Department of Energy (DoE) Secretary Alfonso G. Cusi said Monday the National Grid Corporation of the Philippines (NGCP) should have lost its franchise years ago if not for his agency’s lack of power.
“If the DoE had the power to revoke, we would have done so in 2017. The executive department cannot dictate upon Congress but can make proposals,” Cusi said in a phone message.
“That is what DoE is doing, it is asking Congress to consider and discuss the amendment of the NGCP franchise because it is so disadvantageous to the government and to the people,” he added.
In amending or revoking a franchise given to any private corporation, only Congress has the power to rule out such a privilege. The DoE, as policy maker in the power industry, can only propose to start a probe.
When asked if the Congress’ slow action, if not inaction, on enforcing a comprehensive system audit of the NGCP is influenced by the electricity network concessionaire’s Chinese ties, Cusi said: “I have no idea if that’s the reason.”
It can be recalled that a Senate investigation in 2020 found out that the NGCP allowed Chinese nationals in the highest management position, which raised concerns on possible national security risks.
Under Section 11, Article XII of the 1987 Constitution, however, hiring of foreign executives are prohibited in any public utility enterprise.
The Daily Tribune sought comments from the embattled NGCP about its supposed non-compliance but to no avail.
Cusi said that his agency “firmly” believes that the NGCP failed to comply with its obligations, as the System Operator (SO), to secure urgently needed Ancillary Services (AS) or power supply reserves and reduce its transmission fee, instead of making excuses to justify continued non-compliance with the Department’s issuances.
Under Department Circular (DC) DC2019-12-0018, “Adopting a General Framework Governing the Provision and Utilization of Ancillary Services in the Grid,” the NGCP is mandated to procure 100 percent firm power reserves, as well as engage in the forward contracting of reserve requirements to ensure grid reliability.
He said such steps would help secure the availability of power services during untoward occurrences, such as the simultaneous plant outages and deratings which led to the series of Red and Yellow Alerts on 31 May and 1 June 2021.
“We at the DoE have been proactively seeking to protect and uphold the welfare of consumers through our policies and programs. This holds true most especially with electricity prices,” Cusi said.
“To prevent electricity price spikes, the power industry players must comply with their obligations to increase the generation capacity. This can be done through the purchase of replacement power by the distribution utilities and the procurement of ancillary services or reserves by the NGCP,” he added.
Cusi reiterated that the NGCP does not have the power to declare any electricity rate increase if they comply with the reserves required of them.
“Having the required reserves is not optional. If NGCP wants to help consumers, be magnanimous, and lower the cost of electricity, they should just reduce their transmission fee, reduce the Weighted Average Cost of Capital, and finish the transmission projects on time,” he said.
“The DoE emphasizes that the operation of our national power grid is a matter of national security. It is time for the government to take back our grid’s Systems Operations.”