THE Energy Regulatory Commission (ERC) has directed the National Grid Corporation of the Philippines (NGCP) to pay a penalty of P5.1 million for not complying with the circular of the Department of Energy (DOE) requiring procurement of ancillary services (AS) or power reserves.
In its decision, the ERC considered NGCP’s failure to submit to the DOE its terms of reference (TOR) and invitation to bid (ITB) as one violation; and its failure to publish and maintain on its website without the prior DOE approval of the TOR and ITB, another violation.
The NGCP, when sought for comment, said it was “sorely disappointed at the recent turn of events,” and that the grid operator is “still dealing with the same economically motivated political maneuvers.”
“We were wary and defensive, given the overtly biased and intrusive political atmosphere prevailing at the time. The relentless attacks we suffered, 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,” NGCP said. It did not elaborate.
Under DOE Department Circular No. DC2021-10-0031, entitled “Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator” (AS-CSP Policy), the said policy requires all AS to be procured pursuant to an open and competitive process under a firm contracting agreement. This 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, the ERC said.
Section 7.4 of the policy requires NGCP, as System Operator (SO), prior to the publication of the ITB, to submit for DOE’s approval the TOR to determine if such is consistent with the CSP policy and the draft instruction to bidders.
In its explanation filed with the ERC, NGCP admitted that it did not comply with Section 7.4 of the AS-CSP since the said provision is allegedly not valid. Given this admission and what it deemed as an unmeritorious defense, the ERC found the NGCP in violation of its obligations under Section 7.4.
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 ITB in accordance with the periods specified in the DOE Circular. The ERC said it found that when NGCP proceeded to publish and post the ITB without prior DOE approval, it committed a violation of said provision of the AS-CSP policy.
NGCP said it submitted to the DOE the appropriate submissions on AS-CSP. However, “as if timed to the hour, the ERC show-cause [order] was issued the very next day,” the NGCP recalled.
“On the alleged willful disregard mentioned by the ERC, this has to be put in the proper context, and our acts shouldn’t be taken in isolation,” it added.
The NGCP is willing to cooperate with the industry leadership “if vested interests are set aside, and fairness made to prevail,” hoping that “national economic recovery and energy stability will be prioritized above self interest.”
The ERC decision further stated that no amount of monetary penalty can sufficiently equate to or compensate for the willful disregard by NGCP of validly issued regulations of the Philippine Government and its administrative agencies.
Image credits: Nonie Reyes