Senator Sherwin Gatchalian said the Energy Regulatory Commission (ERC) should penalize the National Grid Corporation of the Philippines (NGCP) appropriately for delayed transmission projects that adversely impact the country’s electricity supply.
Sen. Sherwin Gatchalian (Senate PRIB Photo)
Gatchalian’s call came following NGCP’s admission that most of its dividends go to shareholders and their apology over the delayed projects which they charge to consumers despite their non-completion, during a Senate Committee on Energy hearing on Wednesday, May 24.
“I strongly suggest to the commission to enforce fines and penalties so we can impose discipline on NGCP. We are not seeing discipline because a lot of projects are delayed,” Gatchalian said, referring to the delayed projects of NGCP that include backbone projects.
During the hearing ERC Chairperson Monalisa Dimalanta disclosed that about 66 transmission projects of the NGCP are currently delayed, excluding six projects of national significance.
“The bottom line is that the projects are delayed and what are the penalties involved because we can’t just let this go,” the vice chairman of the energy panel said.
“The reason why there is impunity is that there are no penalties imposed. The delayed projects are affecting the entire electric power industry and pose risks for the future of the country,” Gatchalian emphasized.
When it comes to the NGCP’s transmission projects, the lawmaker said it is imperative for the ERC to review the rate-setting methodology, which allows them to collect from consumers upon the commencement of the project without a defined timeline.
“This leads to perverse incentives because if the project is delayed for 40 years, they can also collect for 40 years, more so if their rate reset is also delayed),” he pointed out.
The ERC, then, should aim to complete its rate reset of transmission rates as soon as possible as this could potentially benefit consumers through improved services and transparent rates, the lawmaker explained.
“From where we stand, our consumers are greatly disadvantaged because we are not seeing the projects, we are not enjoying the benefits and yet they are mandated to pay for those uncompleted projects,” he said.
During the hearing, NGCP spokesperson Cynthia Alabanza defended the NGCP’s collection saying they are allowed to so under the Interim Maximum Annual Revenue (iMAR) and this is used to support the firm’s operational and capital expenditures.
Alabanza also said the collections go to completed projects that need operational funding as they also suffer both external and internal delays.
But Gatchalian remained firm that consumers are the one at a disadvantage over this policy as they are mandated to pay for uncompleted projects that NGCP should have diligently made efforts to finish.