In the wake of last week’s Red Alerts that led to rotational brownouts in Luzon, Energy Sec. Alfonso Cusi said that he wants the government to regain control of the country’s power grids.
At the hearing of the Senate Committee on Energy on the outages Thursday, Cusi specifically blamed privately-owned National Grid Corporation of the Philippines (NGCP) for failing to comply with existing government regulations. The Department of Energy (DOE) issued its ancillary services (AS) policy in 2019, to which it says NGCP has not fully complied with.
Simply said, AS acts as a spare power source in case plants bog down, so that grids can continuously provide electricity.
Cusi then proposed to amend Republic Act (RA) 9511, or NGCP’s 50-year franchise, and transfer the grid’s control back to the state, citing the fact that the firm is “a private corporation with substantial foreign ownership.” NGCP is 40% owned by the State Grid Corporation of China, which means there are Chinese citizens sitting in its board of directors.
Enacted in 2001, RA 9136 or the Electric Power Industry Reform Act (EPIRA) privatized the National Power Corporation’s assets, which included power plants and transmission facilities. EPIRA, then, mandated that a private firm operate, maintain, and further develop the transmission network. Thus, NGCP was granted its franchise in 2008. However, the government retained ownership of the network through the creation of the National Transmission Corporation.
Meanwhile, NGCP insisted that it has a healthy mix of firm and non-firm contracts.
Its president Anthony Almeda also lamented that the grid firm has been “bullied” and used as a scapegoat for the rotational brownout in Luzon. He particularly insisted that the brownouts reflected a supply problem, as it constantly coordinated with various power players in the hope of averting the power crisis.
Almeda further pointed out that EPIRA prohibits them from putting up plants or celling power, emphasizing that it’s like blaming an expressway when there is a shortage of goods in the market.
NGCP also said that AS is a “pass-on cost,” meaning that consumers will have to pay for them, whether these are used or not.
Before Thursday’s hearing, committee chairman Sen. Sherwin Gatchalian on Wednesday called on regulators to implement the AS policy, stressing that NGCP should be punished by the Energy Regulatory Commission (ERC) for allegedly not contracting the right amount of reserves. He cited that the Supreme Court already ruled that the DOE formulates the policy and that the ERC implements it.
