NGCP justifies spending: ‘We work hard and we play by the rules’

NGCP. INQUIRER FILES

MANILA, Philippines — The National Grid Corporation of the Philippines (NGCP) defended its spending after the Energy Regulatory Commission (ERC) flagged its large expenses on items that should not be part of the company’s operating and maintenance costs.

NGCP Assistant Vice President Cynthia Alabanza asserted that their disbursements reaching billions of pesos are “reasonable” considering their “big operations.”

The ERC called out NGCP’s massive expenditure on public relations and corporate social responsibility (CSR), representation and entertainment, advertising, COVID-19 donations, charitable contributions, and other miscellaneous items which, it stressed, should not be included in the operating and maintenance costs that NGCP passed on to consumers from 2016 to 2020.

READ: ERC flags NGCP for PR expenses recouped as pass-on charges

“If you really put this into perspective on how big our operations are, the numbers are reasonable. We have improved our services by ERC’s own parameters that they set in 2009. It was not changed. It’s not something NGCP wanted to happen. We work hard and we play by the rules,” Alabanza said in a statement Thursday.

Alabanza also said that the ERC did not respond to NGCP’s request for a regulatory reset.

She further said that the ERC suddenly created new sets of regulatory rules and decided to apply them retroactively.

“Without setting the rules prior to the period, ang hirap naman hulaan ng NGCP kung ano iyong allowed, disallowed, ano ang level ng budget, ano ba iyong mainam, ano iyong puwedeng itayo, ano iyong rationalized, ano iyong optimized,” she said.

(Without setting the rules before the period, it is difficult for the NGCP to predict what is allowed and disallowed, what is the budget level, what is ideal, what can be built, what is rationalized, and what is optimized.)

READ: NGCP not above the law

Additionally, Alabanza explained that disbursements like employee bonuses were legitimate business expenses counted as operational costs.

Based on the ERC’s partial review of NGCP’s expenditures for the fourth regulatory period covering 2016 to 2022, the NGCP’s annual maximum annual revenue or MAR from 2016 to 2020 was only P36.7 billion, as opposed to the P77.56 billion that the company had applied for and earned.

The review tackled only 2016 to 2020, as the ERC has yet to complete assessing the second phase covering 2021 and 2022 later this year.

The ERC found out that NGCP should have a MAR of only P183.49 billion for the five years, or 52.7 percent lower than the P387.8 billion in actual revenues made by the company.