Sen. Sherwin Gatchalian (File photo by Senate Public Relations and Information Bureau)
MANILA, Philippines — The National Grid Corp. of the Philippines (NGCP) must return to consumers the fees it collected for the electricity transmission projects that have not been completed, Sen. Sherwin Gatchalian said on Sunday, as he urged the Energy Regulatory Commission (ERC) to flex its oversight muscles on the country’s sole power grid operator.
NGCP, however, defended the charges, saying this had been in place since the government operated the grid. It also maintained that it has “outspent government” and improved power transmission since it took over.
Gatchalian, citing NGCP’s own financial records, said the privately owned consortium, which took over the operations of the state-owned National Transmission Corp. in 2009, raked in some P286 billion over the past 10 years, making it one of the most profitable former government assets.
Of this amount, he said P208 billion had been distributed as dividends among its shareholders, which includes the State Grid Corp. of China which owns 40 percent of the company. Monte Oro Grid Resources Corp. and Calaca High Power Corp. equally share the controlling 60-percent stake in NGCP.
Gatchalian, the Senate energy committee vice chair, said he has asked ERC Chair Monalisa Dimalanta to compute the total charges that NGCP had collected for the transmission projects that it failed to deliver on time.
Consumers, he noted, usually pay an average of 3 percent of their monthly electric bill for transmission fees, but this could be higher in some areas.
“We are being charged for [transmission] projects that have not been finished. This makes the price of electricity more expensive,” Gatchalian told radio dzBB’s “Bantay Balita sa Kongreso.”
“[NGCP] should return that money to us,” he said. “And they should not only refund that amount. They should also be penalized [by the ERC] for that.”
After initially raising national security concerns, the senators had been zeroing in on NGCP’s finances as they criticized the consortium’s supposed penchant to prioritize its shareholders’ payouts than to spend for the improvement in its transmission services.
P300-B capex
In a statement, however, NGCP responded to criticisms at the Senate energy committee hearing that the company had been giving the bulk of its profits to its private shareholders instead of using the money to finish its transmission projects.
While it declared up to 93 percent of its net income as dividends to investors in 2014, 2015, 2017, and 2019 as disclosed in the hearing, NGCP said it has spent P300 billion in capital expenditures to improve its services since 2009, on top of the 25-year, $4-billion concession contract that it was obligated to pay the government, NGCP said.
It said a total of 3,729 circuit kilometers of transmission lines, 28 new substations, and an additional 31,190 MVA of transformer capacity were installed in the past 14 years when it completed a total of 56 projects.
NGCP said that, in contrast, capital expenditures from 2003 to 2008 — when it was still run by the government — amounted to only P33 billion.
In addition, it noted that the rates consumers pay for transmission charges have significantly gone down compared to the time it was run by the government.
The consortium likewise pointed out that “proper, mindful, and responsible generation and transmission planning are key to a stable grid.”
Causes of delay
“Most importantly, we stress the need for a holistic approach to power planning. Development in all sectors involved in the power industry must be coordinated, with due attention given to each,” NGCP said in the statement.
As for the delayed projects being mentioned by lawmakers, NGCP earlier blamed mobility restrictions at the height of the COVID-19 pandemic and right-of-way (ROW) issues.
“COVID happened. That’s the reality. The right-of-way happened. It’s a problem. Even the government admitted that right-of-way is a difficulty,” NGCP spokesperson Cynthia Alabanza said in an interview on the cable news channel ANC last week.
NGCP also noted that power transmission has improved since it took over operations from the government.
Alabanza said the company has invested some P300 billion into the transmission system which has resulted in such benefits as lower power rates.
“[We] outspent government, we’ve lowered rates. Our performance in terms of managing the grid has increased, ERC record will bear that out,” she said.
Alabanza also defended NGCP’s charging consumers for its transmission projects, including those that have to be finished, adding that this form of billing has been in place even when the government-owned National Transmission Corp. (Transco) still operated the grid.
“It sounds so bad, but in reality, it’s for the consumers so we don’t have to pay ‘one time, big time’ so it’s spread out over a long period of time. It is similar to when you buy a condo on preselling. The reason you buy it in preselling is because you don’t want to pay up in one go. So that’s what the ERC is trying to do when they rationalize how we charge things,” she said.
Alabanza also said the company could not be solely blamed for recent power outages as it does not generate or distribute electricity, only transferring it in bulk.