DOE wants NGCP's system operator function stripped off

By Kris Crismundo

January 5, 2024, 4:06 pm Updated on January 5, 2024, 5:23 pm

<p><strong>PANAY OUTAGE</strong>. Energy Secretary Raphael Lotilla holds a press conference at the Department of Energy Office in Taguig City on Friday (Jan. 5, 2023). The DOE is supporting the review of the NGCP franchise. <em>(PNA photo by Kris Crismundo)</em></p>

PANAY OUTAGE. Energy Secretary Raphael Lotilla holds a press conference at the Department of Energy Office in Taguig City on Friday (Jan. 5, 2023). The DOE is supporting the review of the NGCP franchise. (PNA photo by Kris Crismundo)

MANILA – Department of Energy (DOE) Secretary Raphael Lotilla on Friday reiterated the agency’s support to revisit the franchise of the National Grid Corporation of the Philippines (NGCP), following the three-day power outage in Western Visayas that started on Jan. 2.

In a press conference in Taguig City, Lotilla said the DOE will recommend to the Congress the separation and transfer of systems operation function from the NGCP so that the company can focus on delivering its transmission network projects.

The DOE is blaming the NGCP for the power outage in the Panay grid as the system operator was not able to immediately act on the power disturbance due to the trip offs of the Panay Energy Development Corp. (PEDC) Units 1 and 2 as well as the Palm Concepcion Power Corp. (PCPC) Unit 1, which also affected the delivery of power supply of other generation facilities in Visayas to the grid.

“The Independent Electricity Market Operator of the Philippines (IEMOP) has pointed out that there was a two-hour window when the National Grid Corporation of the Philippines could have proactively called on the distribution utilities and electric cooperatives in Panay to reduce their load in order to prevent a subsystem-wide collapse,” Lotilla said.

The DOE chief added that the island-wide blackout was preventable.

DOE Assistant Secretary Mario Marisagan said that as of 11:33 a.m. Friday, the PCPC unit has stabilized and the manual load dropping will no longer be needed.

This means the grid has started to resume power services down to household and commercial consumers in Western Visayas.

Marisagan said full power restoration on the island is possible within the day.

Moreover, aside from segregating the system operation function from NGCP, the DOE is also recommending to Congress to allow the Energy Regulatory Commission (ERC) to impose administrative penalties on the transmission concessionaire.

The proposed fee is at PHP2 million per day of violation or non-compliance with regulatory rules or 1 percent of the cost of the delayed project based on the ERC-approved project cost, whichever is higher.

It is also proposing to review the tax privilege of the NGCP of paying only 3 percent of franchise tax in lieu of all other national and local taxes.

“We will exert all efforts to exact full accountability for any failures in the delivery of the services expected from NGCP as the transmission concessionaire and the country’s biggest monopoly,” Lotilla said.

Amend or scrap

Camarines Sur Rep. Luis Raymund Villafuerte Jr. agreed that Congress might have to amend NGCP’s franchise agreement or scrap it in favor of a more suitable transmission concessionaire for the government to deliver cheaper, more stable and accessible electricity to consumers.

He said latest power outage in Western Visayas highlights the need to accelerate the interconnection of the country's islands via the national power grid, which is operated by the NGCP.

Villafuerte said NGCP's failure to keep up with its up with its transmission development and interconnectivity program for the country is standing in the way of President Ferdinand Marcos Jr.'s goal of "achieving 100 percent household electrification by 2028.”

He cited government data showing that the 68 delayed transmission projects covered 36 projects in Luzon, another 21 in the Visayas, and 11 more in Mindanao—with a combined PHP231 billion-worth of supposed investments by NGCP between 2009 and 2019.

He said the outcome of the DOE’s comprehensive performance audit of NGCP may guide Congress on how best to achieve stable, adequate and affordable electricity nationwide.

The legislature, he said, could look into proposing an amendatory law to Electric Power Industry Reform Act of 2001 or Republic Act (RA) 9136, alterations to the NGCP franchise beneficial to consumers and against regulatory capture, or a change of concessionaire.

“DOE’s performance review of NGCP may help guide us lawmakers on what reforms to pursue as regards this transmission consortium’s concession agreement, in light of crippling power outages believed caused by its failure to fully expand as committed its nationwide transmission system on which gencos (generation companies) and DUs (distribution utilities) depend on to deliver electricity to our people,” he said. (with a report from Filane Mikee Cervantes/PNA)