NGCP to appeal ERC penalty

MANILA, Philippines — The National Grid Corp. of the Philippines (NGCP) will appeal the P5.1-million penalty imposed by the Energy Regulatory Commission (ERC) for its non-compliance with the ancillary services (AS) policy as it found the order part of an “orchestrated plan” to sabotage the company.

Its holding company, Synergy Grid & Development Phils. Inc., disclosed yesterday that NGCP intends to file a motion for reconsideration with the ERC within the allowed period.

This was  after the power regulator, in a decision dated Oct. 24, slapped NGCP with a P5.1-million penalty for failure to submit to the Department of Energy (DOE) its terms of reference (TOR) and invitation to bid (ITB), as well as publish and maintain on its website the ITB without  prior DOE approval.

The ERC then directed NGCP to submit the TOR and ITB to the DOE within 30 days from the receipt of the decision.

The regulator also warned the company that its non-compliance with the laws, rules and orders could lead to the cancellation of its certificate of public convenience and necessity (CPCN) and the endorsement to Congress to revoke its legislative franchise.

In a phone interview, NGCP spokesperson Cynthia Alabanza said this could have a chilling effect on the investment climate since the privatization of the country’s transmission network is among the biggest privatization programs of government.

“NGCP is a private company, and we have invested almost P300 billion in government infrastructure. What kind of a message does this threat on our franchise send to other potential investors?,” she said.

NGCP said it was “sorely disappointed” at actions undermining the company during this administration.

“It seems that duplicity is still the name of the game, and we are still dealing with the same economically motivated political maneuvers,” it said.

The NGCP said it had submitted the requirements to comply with the AS policy when its chairman of the board Henry Sy Jr. and co-vice chairman Robert Coyiuto, Jr. met with DOE Secretary Raphael Lotilla who  was newly-appointed two months ago.

“This very issue on the AS CSP submission was raised by the secretary and the appropriate submissions to the DOE were made within hours of that first meeting. As if timed to the hour, the ERC show cause was issued the very next day,” the grid operator said.

The DOE, under former Energy Secretary Alfonso Cusi, had previously scored the NGCP for not having enough firm-contracted reserves as of end-2020.

This was the reason the DOE issued circular  DC2021-10-0031,  “Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator,” or the AS-CSP Policy in 2021.

The AS-CSP Policy requires all ancillary services or reserves required by the grid to be procured pursuant to an open and competitive process under a firm contracting agreement.

This aims to improve transparency, competitiveness, and wide dissemination of bid opportunities among qualified facilities.

For energy security, the DOE said it is crucial for NGCP to meet and maintain the required reserve levels.

However, the NGCP said its alleged willful disregard mentioned by the ERC should “be put in the proper context, and our acts shouldn’t be taken in isolation.”

“We were wary and defensive, given the overtly biased and intrusive political atmosphere prevailing at the time. The relentless attacks we suffered, and the fault finding where there was no fault to be found was a clear indication to us that this, and other contemporaneous moves undertaken by certain players in the industry, were part of a larger, orchestrated plan to put their economic interests above ours, even at the expense of the consumers,” it said.

NGCP also cited the common backgrounds in the leadership, which “are not by coincidence and are clearly by design.”

Cusi was connected with the Aboitiz Group in the 1980s, handling the family’s maritime transportation business. He left the organization in the 1990s to form his own shipping line, Batangas-based Starlite Ferries Inc.

Lotilla, on the other hand, was an independent director of Aboitiz Power Corp. prior his appointment as Energy chief.

Despite what it claims as attacks, the NGCP said it is willing to work with the DOE if only self-interests are removed.

“Still, we are not unwilling to work with the industry leadership if vested interests are set aside, and fairness made to prevail. We are still hopeful that national economic recovery and energy stability will be prioritized above self-interest,” it said.

“The current administration was ushered in on the wings of a campaign founded on calls for and promises of unity.  We hope that the current crop of executive appointees in the energy industry heed this call, and do right by their President,” the grid operator said.