The Energy Regulatory Commission (ERC) has slapped a P5.1-million fine against the National Grid Corp. of the Philippines (NGCP) for violating a Department of Energy circular on transparency.
In a statement posted on its website on Tuesday, the ERC said the NGCP violated DOE’s Department Circular No. DC2021-10-0031, entitled “Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator” or AS-CSP Policy.
Under Section 7.4 of the policy, the NGCP, as System Operator (SO), is required to submit the Terms of Reference (TOR) prior to its publication of the Invitation to Bid (ITB) for the DOE’s approval.
In its own statement, the NGCP expressed disappointment over the decision for its alleged failure to contract ancillary services.
“We were sorely disappointed at the recent turn of events. It seems that duplicity is still the name of the game, and we are still dealing with the same economically motivated political maneuvers,” the transmission operator said.
The ERC also threatened to push for revoking the grid operator’s congressional franchise should it continue to violate the DOE’s rules on procuring power reserves.
“The ERC finds that when NGCP proceeded to publish and post the ITB without the prior approval of the DOE, it committed a violation of the said provision of the AS-CSP Policy,” the regulator said.
In its decision dated October 24, the ERC said it considered NGCP’s failure to submit to the Energy Department its TOR and ITB as one violation and its failure to publish and maintain on its website the ITB without the prior DOE approval of the TOR and ITB as another violation.
The NGCP however said that appropriate submissions to the DOE were made hours after its meeting with the leadership of the department two months ago, during which the issue of the AS-CSP submission was raised.
But the ERC said no amount of monetary penalty could sufficiently equate to or compensate for the “willful disregard by NGCP” of validly issued regulations of the government and its administrative agencies.
The regulator warned NGCP that its non-compliance with laws, rules, orders, and regulations issued by authorities might result in the cancellation of its certificate of public convenience and necessity and the endorsement by the ERC to Congress of the revocation of its legislative franchise.
But the company said: “The alleged willful disregard mentioned by the ERC… has to be put in the proper context, and our acts shouldn’t be taken in isolation. We were wary and defensive, given the overtly biased and intrusive political atmosphere prevailing at the time.”
NGCP said the relentless attacks the company suffered previously and the “fault-finding where there was no fault to be found was a clear indication to us that this, and other contemporaneous moves undertaken by certain players in the industry, were part of a larger, orchestrated plan to put their economic interests above ours, even at the expense of the consumers.”
The company said it welcomed the new leadership and the fresh start it offered as it hoped for a more cooperative working relationship with the government energy agencies.
“This was the tone we wanted to set when Messers. [Henry] Sy and [Anthony] Almeda paid a courtesy call to the newly installed DOE leadership about two months ago. This very issue on the AS CSP [ancillary service competitive selection process] submission was raised by the secretary, and the appropriate submissions to the DOE were made within hours of that first meeting. As if timed to the hour, the ERC show cause was issued the very next day,” NGCP said.
NGCP said it remained willing to work with the industry leadership “if vested interests are set aside, and fairness made to prevail.”
“We are still hopeful that national economic recovery and energy stability will be prioritized above self-interest,” it said.
In its explanation submitted to the ERC, the NGCP admitted that it did not comply with Section 7.4 of the AS-CSP since the said provision is allegedly not valid, according to the regulator.
“Given this admission and its unmeritorious defense, the ERC finds that the NGCP violated its obligations under Section 7.4,” it said.
“On the other hand, Section 7.5 of the AS-CSP policy requires the Third-Party Bids and Awards Committee (TPBAC) to publish and post the Invitation to Bid in accordance with the periods specified in the DOE Circular,” it added.
The AS-CSP Policy requires all ancillary services or reserves required by the grid to be procured pursuant to an open and competitive process under a firm contracting agreement, the ERC said.
The regulator said the policy aims to improve transparency, competitiveness, and wide dissemination of bid opportunities among qualified facilities.
“For energy security, it is crucial for NGCP to meet and maintain the required reserve levels,” it said.