The House Committee on Legislative Franchises on Monday approved a motion to launch a motu proprio (by own initiative) inquiry into the congressional franchise of the National Grid Corporation of the Philippines (NGCP), citing allegations of lapses and practices that unfairly burden consumers.
The panel, chaired by Parañaque City 2nd District Rep. Gus Tambunting, made the decision after uncovering NGCP’s potential shortcomings during a critical briefing on the readiness of power utilities to address the projected impacts of the La Niña phenomenon.
Deputy Speaker David “Jay-Jay” Suarez initially proposed a comprehensive review of NGCP’s performance under its existing franchise but later amended his motion to call for a formal inquiry.
“Given that we are touching on sections and articles of the franchise being enjoyed by NGCP, I therefore move that during the next committee hearing, we do a thorough review and we do a thorough analysis of the performance of NGCP with respect to its franchise. So moved, Mr. Chair,” Suarez said.
In amending his motion, Suarez emphasized the need for a more decisive approach.
“May I call on the members to vote on conducting a motu proprio inquiry for the review of the congressional franchise of NGCP. I move a referendum be made on this matter. So moved, Mr. Chair,” Suarez said.
Laguna Rep. Dan Fernandez seconded the motion, signaling strong support from lawmakers. With no objections raised, Tambunting declared the motion approved.
The upcoming inquiry will delve into NGCP’s compliance with its franchise obligations, focusing on delayed projects, alleged unfair charges to consumers for incomplete infrastructure, and the company’s prioritization of shareholder dividends over public service.
Committee members emphasized the importance of holding NGCP accountable for its franchise obligations.
“The power of oversight is within this committee,” Fernandez said. “We can and must review whether NGCP is living up to the expectations set by its franchise.”
The motion was prompted by allegations of widespread delays in NGCP’s transmission projects.
Energy Undersecretary Sharon Garin reported that of the 111 NCGP projects approved during the third regulatory period, only 83 were completed, with 77 of these delayed. Meanwhile, 27 projects remain unfinished, 26 of which are behind schedule.
Garin noted that projects such as the Hermosa-San Jose transmission line have been rescheduled up to eight times, causing significant disruptions.
These delays, she said, have cascading effects, including higher costs for consumers and disruptions in power supply.
Adding to lawmakers’ frustration was NGCP’s 91.2% dividend payout rate, which prioritized billions in returns to shareholders over infrastructure development.
“Dapat inuuna nila ang priority at ang pagbibigay ng tamang serbisyo sa taong-bayan, hindi ang mga shareholders nila (They should prioritize providing proper services to the public, not their shareholders),” Suarez said.
Fernandez also criticized NGCP for charging consumers for incomplete projects.
“Is it just and fair to impose and ask the consumers to pay for something that is still not operating?” Fernandez asked.
He continued: “More than P100 billion ang cost ng mga projects na ‘yan (is the cost of those projects). Yet our recovery for that is less than 1%. So what my point here in saying, it may not entirely be accurate that in all cases NGCP is collecting for projects that are not yet useful or being used.”
The Energy Regulatory Commission (ERC) also came under scrutiny for allowing NGCP to include “as-spent” costs in its Regulatory Asset Base, which permits charging consumers for projects as expenses are incurred.
“Hindi po pwede na ‘yang hindi pa natin ginagamit na mga project ay ikakarga sa taong-bayan (It’s not right to burden the public with projects that we haven’t even utilized yet),” Fernandez said.
ERC Chairperson Monalisa Dimalanta and Commissioner Catherine Maceda dissented from majority decision, arguing that consumers should only pay for completed and operational projects.
Dimalanta warned that under the as-spent position, transmission rates could increase by 12 centavos per kilowatt-hour over a 12-month period.
However, adopting the as-completed approach, where only finished projects are charged, could result in a refund of over P1 per kilowatt-hour.
“Charging for projects that are incomplete, not yet operating, and unproven efficient is fundamentally wrong,” Dimalanta said, noting that the ERC’s final determination is expected in January 2025.
The inquiry will assess NGCP’s operational and financial compliance with its franchise, established under Republic Act No. 9511 in 2009.
NGCP operates and maintains the country’s state-owned power grid, with State Grid Corp. of China owning a 40% stake and the remaining 60% held by Filipino investors, including tycoons Henry Sy Jr. and Robert Coyiuto Jr.
The House committee will invite NGCP officials, shareholders, and other stakeholders to shed light on the company’s performance.
The first session of the inquiry is expected to begin early next year.
Editor’s Note: This is an updated article. Originally posted with the headline “House eyes ‘thorough review’ of NGCP operations”.
