COA flags ERC for requiring power firms to pay for inspectors’ travels

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MANILA — The Commission on Audit has called on the Energy Regulatory Commission to stop requiring power firms applying for certificates of compliance to pay for the travel costs of the agency’s technical inspectors.

In its annual audit report, the CoA said the ERC’s policy has cast doubt on the independence and objectivity of its inspectors since the issuance of the CoCs has partly been depending on the result of their inspections.

“The Commission should avoid putting any doubts… by not allowing the applicants any opportunity to influence the results of such inspections,” the COA said.

Section 1, Rule 5 of the implementing rules and regulations of the Electric Power Industry Reform Act requires power generation companies (GCs), qualified end-users (QEs), and self-generation facilities (SGFs) to obtain first a CoC before they can operate facilities to produce electricity.

Although the commission agreed to revisit its policy during the 2015 audit, the CoA observed that the practice of making power firms shoulder its inspectors’ travel costs continued in 2016, as shown by 70 travel orders issued to ERC personnel.

The CoA said the practice has not only been problematic in terms of ethics, it has also been inconsistent with the State’s policy on full disclosure of government transactions since the amounts were not accounted for in the agency’s books.

It noted that the ERC did not require the power generation companies, the qualified end users and self-generation facilities to submit reports on the travel costs they shouldered, even as the agency paid its inspectors per diems for the duration of the work.

The ERC management in a Dec. 5, 2016 letter explained to CoA that the inspectors have not been receiving the compensation and expenses directly from the CoC applicants. It said that applicant firms were informed beforehand of the schedule so they could just prepare the accommodations ahead of time.

The CoA reported that the ERC would still be forced to continue the practice in 2017 because the traveling expenses was not covered by the budget for this year.

But, the ERC Market Operations Service agreed to submit its budget proposal for the traveling expenses for the year 2018. For now, the applicant firms would be required to submit a certification breaking down the amounts they spent on the inspectors.  SFM