"Here's a clarification from TransCo president Melvin Matibag."
"Here's a clarification from TransCo president Melvin Matibag."
We received a statement from National Transmission Corporation (TransCo) president Melvin Matibag seeking to clarify issues concerning the alleged sweetheart deal between the Independent Electric Market Operator of the Philippines and the Philippine Electricity Market Corporation, coursed through lawyer Larry Gadon.
In the spirit of fair play, we are publishing his statement in its entirety. Below is the full text of his statement:
TRANSCO ceased Administrative Supervision of WESM Sixteen Years Ago
1. The EPIRA (R.A. 9136 Sec. 30) mandated the DOE to establish a wholesale electricity spot market which shall be operated by an autonomous group of market operator constituted by DOE, with equitable representation from electric power industry participants, initially under the administrative supervision of the TRANSCO. The EPIRA also mandates that an independent entity shall be formed and the functions, assets and liabilities of the market operator shall be transferred to such entity with the joint endorsement of the DOE and the electric power industry participants. Thereafter, the administrative supervision of the TRANSCO over such entity shall cease.
2. In compliance with the EPIRA Law and direction of the DOE, TRANSCO created the ‘TRANSCO Market Operation” (TMO) unit and hired personnel ‘co-terminus with project’ (i.e., until turn-over of WESM administration to the independent entity that will be formed to operate the electricity market), in accordance with the Civil Service rules, to prepare and operate a WESM. The TMO started in March 2003.
3. With the joint endorsement of DOE and the electric power industry participants, TRANSCO transferred in October 2004 to Philippine Electricity Market Corporation (PEMC), the independent entity formed to be the market operator of WESM, all personnel, assets and liabilities associated with the market operation. Effective November 1, 2004, all TMO personnel were terminated and TRANSCO ceased its administrative supervision of WESM.
4. The Philippine WESM started commercial operation on June 26, 2006 with PEMC as Market Operator. TRANSCO functioned as System Operator independent from the Market Operator as required by EPIRA Law.
5. TRANSCO advanced the operation and capital expenditures for the development and operation of the WESM under a ring-fenced account audited by COA which amounted to PhP461,213,408 by October 31, 2004. This principal amount plus PhP260,527,432 representing interest at 12% per annum for a total amount of PhP721,740,840 had been fully paid by PEMC on November 15, 2015.
How and why did the Independent Electric Market Operator of the Philippines (lEMOP) get the deal to manage and operate the WESM?
Section 30 of Republic Act no 9136, otherwise as the Electric Power Industry Reform Act of 2001 (EPIRA) directs than an independent entity shall be formed, which shall assume the functions, assets and liabilities of an independent market operator (lMO) of the Philippine Wholesale Electricity Spot Market (WESM).
Pursuant thereto, the DOE promulgated Department Circular No.20'18-01-0002 dated 17 January 2018 and subsequently, the electric power industry participants through PEMC approved the lMO Transition Plan. Note that this should have been implemented not later than one (1) year after the commercial operations of WESM or before June 26, 2007.
ls a competitive selection process required?
NO. There is no categorical requirement in the EPIRA and its IRR to conduct a competitive selection process for the lMO. EPIRA and its IRR required that an independent entity be formed and the market operator functions, assets, and liabilities shall be transferred to such independent entity upon joint endorsement of DOE and the electric power industry participants. What is required expressly is the joint endorsement which was done through the aforementioned DOE Circular and IMO Transition Plan.
Moreover, PEMC is not a government agency nor a GOCC and is thus not covered by government procurement law.
ls 50 centavos the amount being collected by IEMOP?
NO. The collection is less than one (1) centavo. IEMOP collects in particular P0.086 per kwh for its operations and governance of WESM. This is in accordance with revenue requirements set and approved by the Energy Regulatory Commission.
Is it a sweetheart deal?
NO. It is not. As mentioned, the transition was implemented pursuant to the DOE Circular and IMO Transition Plan, both of which are in accordance with law. The Transition plan was duly approved by the Board of Directors of PEMC, composed of representatives from the electric power industry participants, as confirmed by PEMC's stakeholders in a special general membership meeting duly called for that purpose.
Why was IEMOP incorporated?
The IEMOP incorporation was approved by PEMC based on the aforementioned DOE Circular and IMO Transition Plan, both of which called for the formation of a separate, independent entity.
Does IEMOP have experience in operating the Market?
YES. The DOE Circular ensured this by requiring that the personnel of PEMC performing market operations be transferred to IEMOP, together with the market systems that are being operated by these personnel running the day-to-day operations of WESM.
PEMC used to perform the market operations, with the DOE Secretary as Chair and most of the Board Members coming from the power industry.
Sec. Cusi, pursuant to the EPIRA Law, gave up the chairmanship on the condition that the market operations be performed by an independent corporation with the necessary experience and expertise.
Thus, with the endorsement of the industry players as required by EPIRA, Sec. Cusi issued D.C. No. DC2018-01-0002. The House of Representatives, the Senate and the Joint Congressional Energy Commission (formerly JCPC) was given a report on all these steps that were made.
ls IEMOP or the PEMC being supervised by the National Transmission Corporation (TransCo)?
No. Both are governed by each individual set of directors and are independent of each other and in no way connected to Transco. TRANSCO under Atty. Melvin A. Matibag is not even a member of the IEMOP or PEMC Board because grid operation is transferred to NGCP thru a Concession Agreement.
It is in fact NGCP which is part of the PEMC Board. other members of the PEMC Board aside from NGCP are Meralco, SMC Global, First Gen, MECO, Team Energy, Aboitiz Power, lndependent Directors Oscar Ala, Rauf Tan, Jess Arranza and Peter Wallace and several Distribution Utilities.
What is the role of Ann Lourdes Matibag, wife of Transco President Melvin Matibag with IEMOP or PEMC?
Mrs. Ann Matibag is an employee of PEMC. She has no current role in IEMOP. She was one of the incorporating directors of IEMOP, but she was immediately replaced after the incorporation of IEMOP when independent directors were selected in June 2018. She does not receive any remuneration from IEMOP and receives only her salary as regular employee from PEMC.
What is the intent of the article?
It can be inferred that these so called "issues" are simply to discredit both Secretary Cusi and TransCo President Matibag before they appear in the Senate Committee on Energy on Monday Feb 03, 2020 on the hearing re: NGCP's Compliance with the Concession Agreement and issue of National Security. In addition, review of the Agreement is currently ongoing to determine if there are onerous provisions thereto.