Transmission firm National Grid Corporation of the Philippines (NGCP) objected to the planned audit by the Department of Energy (DOE) and two other state-run companies – the Power Sector Assets and Liabilities Management Corporation (PSALM) and National Transmission Corporation (TransCo), stating only the Energy Regulatory Commission (ERC) should be allowed to review the performance on its systems operations (SO) functions. In a statement released to the media, NGCP firmly stipulated that the audit of its SO functions “may only be conducted by the ERC because it is an exercise of regulatory authority over NGCP. “ But the DOE, TransCo, and PSALM would like to take part in the performance audit following recent alerts in the energy supply in the country, allegedly caused by the NGCP’s tripping lines. The DOE is the main government agency ensuring energy supply sufficiency, reliability and security for the entire country; and PSALM is the agency which privatized the country’s transmission assets via a 25-year concession deal that was awarded to NGCP in January 2009; while TransCo is the owner of the transmission facility. “Under Section 2.01 of the Concession Agreement, [n]either PSALM nor TransCo has any regulatory rights, for any act or inaction of the concessionaire that are within the regulatory authority of the ERC, to: make its own determination, or impose any penalties on NGCP,” NGCP pointed out. The transmission firm similarly emphasized that “the exercise of such authority is beyond the powers of the DOE.” NGCP primarily cited Section  37 of the Electric Power Industry Reform Act (EPIRA), to have purportedly carved out  “the authority to regulate private sector activities from the DOE’s functions under the Department of Energy Act of 1992.” The transmission firm argued that the DOE’s regulatory powers had instead been transferred to the ERC, hence in its viewpoint, such audit on its system operations role “must now be exercised by the ERC, in conjunction with the ERC’s authority to promulgate and enforce the Philippine Grid Code.” It expounded that the Grid Code, in particular, enforces the “set of rules and regulations governing the safe and reliable operation, maintenance and development [of the national grid].” Based on that, NGCP stated that it will just “participate in a system audit to be undertaken by the ERC, in accordance with the letter and the spirit of the EPIRA.” But the transmission firm further said the other agencies are allowed to carry out warranted audits on  the other facets of review to be done on the company, including those on assessment of compliance as well as performance relating to its obligations under the concession agreement; or physical inspection of the assets. “NGCP recognizes the right of PSALM and TransCo to inspect the transmission assets and witness any aspect of the performance of the concession] Agreement. It also acknowledges PSALM’s right to audit compliance and performance with its obligations under (the] agreement and other transaction documents,” it stressed. It added that TransCo has, in fact, “conducted periodic physical inspections of substations and transmission assets, as well as regular examinations of NGCP’s books and financial records.”