CONSUMER WELFARE | More lawmakers are supporting calls for the National Grid Corp. of the Philippines to return to consumers the fees it collected for transmission projects that the company has yet to complete. (Photo by GRIG C. MONTEGRANDE / Philippine Daily Inquirer)
MANILA, Philippines — Senators Risa Hontiveros and JV Ejercito on Monday backed Sen. Sherwin Gatchalian’s proposal to seek a refund of the amount that the National Grid Corp. of the Philippines (NGCP) had collected from consumers for unfinished transmission projects.
The country’s lone power grid operator, however, found an ally in Sen. Francis Escudero, who said it was wrong to fault NGCP since it was natural for businesses to “always look for and seek a profit,” and that it was the Energy Regulatory Commission’s (ERC) job as state regulator to “prevent [and] correct abuses in the market.”
Ejercito and Hontiveros said the ERC should likewise impose fines on the privately owned firm for allegedly violating provisions of its congressional franchise.
Penalties, discount
“Apart from [returning] the collected fees, NGCP should also be made [to pay] penalties,” Ejercito told the Inquirer.
“If consumers lose their power connection for failure to pay (their monthly) electricity bills on time, why is the NGCP not being penalized for the delays in its services?” he pointed out.
He said NGCP might directly return the amount to consumers or return it in a form of discount in their electricity bill.
According to Hontiveros, she has been calling on the ERC since the previous Congress to temper NGCP’s “unconscionable greed” for accumulating profits from special tax privileges granted by the government.
But Escudero said the Senate should not focus on NGCP, noting that ERC Chair Monalisa Dimalanta already admitted that the state regulator had allowed the collection of fees from ongoing and delayed transmission projects.
“So if ERC allowed it, how can it be illegal? If it is wrong or unfair, then, as I said, the solution and remedy is with the ERC, not NGCP,” he said. “They are barking [up] the wrong tree.”
Spending priority
Hontiveros said the grid operator had also amassed money from its weighted average cost of capital (WACC), which she previously described as “anomalous and exorbitant.”
The ERC should carry out its mandate to safeguard the public interest by penalizing the “abuse of market power in the electricity industry,” the senator added.
“If not, the problems of the energy (sector) will just happen again and again if nobody will be made liable,” she pointed out.
“If the ERC fails to punish NGCP,” she stressed, “we’re letting down Filipino consumers too.”
As Gatchalian had argued, the opposition senator said directing NGCP to pay penalties was necessary to ensure that state policies were being observed “in this very profitable business.”
Dividends
In addition, she said, the ERC should pull the plug on the policy that authorized NGCP to declare its annual net income as “retained earnings under shareholder’s equity.”
This, she argued, allowed the firm to prioritize the distribution of dividends among its stockholders instead of spending more for its capital expenditure.
“Even in the absence of an ERC order, as a condition of their franchise, NGCP must pass a resolution restricting the payout of any dividend where [capital expenditure] for transmission expansion remains unfulfilled during the five-year rate recalibration period that allows them to collect subject to an allowable WACC ceiling,” Hontiveros said.
In a radio interview on Sunday, Gatchalian said the charges that NGCP had imposed on expansion projects it failed to deliver was among the reasons why power rates in the country had remained expensive even after the passage of the Electric Power Industry Reform Act in 2001.