The ongoing performance audit on transmission firm National Grid Corporation of the Philippines (NGCP) is not a "punitive exercise", rather, it is a process that will allow industry regulators and policymakers to explore ways how service in this segment of the power supply chain could be improved that in turn ushers in massive renewable energy (RE) investments into the country, Energy Secretary Raphael P.M. Lotilla explained. “We’re not looking at this as a punitive exercise – because in the case of franchises, the one solution of course, rests with Congress. So that’s definitely one, then there are of course, for violation of other provisions of law, there are remedies for that and not necessarily a DOE (Department of Energy) remedy,” Lotilla further expounded. The comprehensive performance audit on NGCP will pore over critical concerns like project delays and whether or not the company has invested enough on warranted expansion of the country’s power transmission facilities in line with the Transmission Development Plan. Additionally, the audit will evaluate NGCP’s adherence to the concession agreement that it signed with the government when it was privatized by the state-run Power Sector Assets and Liabilities Management Corporation (PSALM) in 2009. There would also be scrutiny on compliance to its function as system operator, including those on Grid Code-mandated procurement of power reserves or ancillary services. “It’s a comprehensive review, so it looks at the performance because we want to find out exactly what are the obstacles regarding all these things,” Lotilla told reporters. On the timeline, he said that the entire process may take half a year from the issuance in June of a Circular mandating the conduct of an audit on the transmission company. “There is a Circular (Department Order No. DO2023-06-0018), so we hope that it would be finished before six months is over. From the time we issued, certain things can already be done. There have been audits on certain parts as done in relation to the rate rebasing. But that is basically more on the financial part; there has been a study on cybersecurity aspect – we’ve got to put all of these things together,” the secretary narrated. Relative to NGCP’s stance that DOE does not have authority to enforce performance audit on the concessionaire-firm, Lotilla stressed, “I didn’t hear them say that the President cannot direct them to do so. I think they have expressed full cooperation to what the President is doing and I expect them to live up to that.” In this week’s second State of the Nation Address (SONA) of President Ferdinand Marcos Jr. singled out NGCP as he declared, “We are conducting a performance review of our private concessionaire – the NGCP.” The President also highlighted the 68 delayed projects that he wants the company to deliver to commercial fruition at the soonest possible time. As prescribed in the Circular which fleshed out NGCP’s performance audit, the DOE fundamentally directed the concessionaire-firm’s attention to the function and authority vested upon it by the Electric Power Industry Reform Act (EPIRA), primarily in ensuring adequate, secure and reliable power supply for the country. The department emphasized “Section 78 of the EPIRA provides that the implementation of the EPIRA shall not be restrained or enjoined except an order issued by the Supreme Court of the Philippines.” It further specified the law’s Section 46, which provides that “Congress may, upon recommendation of the DOE and/or the ERC (Energy Regulatory Commission), revoke any franchise or privilege granted to a party who violates the provisions of the EPIRA.” When quizzed by the media if the end-goal of the audit process will reverse the privatization on the transmission assets of the country, the DOE secretary said “No, we’re not suggesting turning the clock around, but how do we improve things. I think the expectations of the President reflects the expectations of the country as a whole, which is: how do we get to deliver good service to our people.” He further stated one key consideration shall be investments to guarantee the grid integration of RE projects, which is now the focus of the government when it comes to enticing capital flow because this is aligned with the country’s energy transition agenda. “The current constraints on transmission do not even reflect the needs of the variable renewable energy. So, the moment we ramp up the percentage or the penetration rate of renewable energy, the more that we would need to have an intelligent and modernized transmission system,” Lotilla noted. The energy chief averred “I think from the statements of NGCP, they do recognize that there is such a need. But we should be more anticipatory, and that’s what we would like to do. And as I’ve stressed in the past, we want accountability but it doesn’t mean that we’re not going to help and assist the concessionaire in doing its task.”