NGCP hits ERC for failure to conduct regulatory reset

MANILA, Philippines — The National Grid Corp. of the Philippines has branded as unfair the Energy Regulatory Commission’s decision to disallow some of the NGCP’s expenses, saying the ERC should be blamed for its failure to conduct the needed regulatory reset.

In a radio interview, ERC Chairman Monalisa Dimalanta admitted the agency’s failure to conduct a regulatory reset, which is supposed to be done every five years.

“This happened because the regulatory reset that should be done every five years did not happen. Now we’re cramming. We’re doing some catching up so we can proceed. We can’t proceed if we don’t fix the things that we’re supposed to fix,” Dimalanta said in Filipino.

In response, NGCP assistant vice president Cynthia Alabanza said the matter stemmed from the ERC’s failure to address the two requests of the NGCP for a regulatory reset.

“Before you join a game, you should know the rules, and to apply this retroactively, we think there’s no fairness in that decision,” Alabanza said.

The ERC’s pronouncement will have a long-term impact not only on NGCP but on the consumers and other businesses as well, Alabanza added.

“At the end of the day, what should be considered here is the welfare of consumers and their right to good service and right cost,” Alabanza said.

“We should also factor in the concerns of businessmen or investors so they can get good returns on their investments,” she added.

She also defended NGCP’s expenses mentioned by the ERC, saying these are legitimate business costs under the same rules applied to the National Transmission Corp. (TransCo).

“These are legitimate business expenses. In fact the rules we’re following in conducting business are the same rules being applied for TransCo,” she added.

The NGCP took over the operations and management of the national transmission system from TransCo in 2009 as part of the privatization of the power grid operations and maintenance.

Alabanza said there’s nothing wrong with passing on to consumers some cost from legitimate expenses, especially if such recourse is part of the rules in the business.

She said employees’ bonuses are legitimate business expenses as they are part of operational expenses usually included in the cost of a product being charged by a business for a particular service or product.

“This had been a practice of TransCo when it was still state-run, but this was not considered questionable,” she added.

As for the public relations and advertising expenses, Alabanza said they cover information campaigns, including safety and right-of-way clearance.

“We usually come up with ads in national and local radio and newspaper to remind the public of the dangers around transmission lines, because it’s our obligation to the people,” she pointed out.

Alabanza added that ERC rules also mandate the NGCP to conduct corporate social responsibility (CSR) efforts to give back to the communities affected by the transmission lines and towers.

“During the time of TransCo, it had no CSR and it did not pay for lands it utilized. Nurturing relationship with people did not get much attention then. But now, it’s our mandate.”