National Grid Corp. of the Philippines is acquiring the transmission assets of Manila Electric Co. (Meralco) and Visayan Electric Co. (Veco), two of the biggest power distributors in the country, in an effort to consolidate all critical transmission facilities under its wing.
According to NGCP, this move will allow it to better manage and uphold the security and integrity of the nationwide power grid and, at the same time, ensure a level playing field among power generation companies that share those transmission assets.
NGCP also revealed that it would also evaluate other power facilities currently owned and operated by distribution utilities or power generation companies to determine whether these assets are performing “transmission functions.”
The move to consolidate all transmission assets was in compliance with the resolution issued by the Energy Regulatory Commission, where it defined the boundaries of connection assets for customers of NGCP.
“The ERC’s resolution provided clarification on what is considered a transmission asset,” said Cynthia Y. Manrique, head of NGCP’s revenue and regulatory affairs department. “This gave NGCP cause to assess the existing assets on the grid, and determine whether all the essential and crucial assets performing vital transmission functions were within its operational control.”
Manrique explained that the planned acquisition of transmission assets would allow NGCP to take over the operation and maintenance of these facilities, enabling it to better discharge its mandate under Electric Power Industry Reform Act (Epira) and its concession agreement with the government.
Under Section 21 of the Epira, NGCP, as concessionaire of the state-run National Transmission Co. (Transco), is mandated to be “solely responsible for the improvement, expansion, operation, and/or maintenance of the nation’s transmission assets. It is the only entity that possesses the required technical expertise to maintain and operate the nationwide power grid.”
At the end of the 25-year concession agreement with Transco, all transmission assets acquired by NGCP during the concession period will be turned over to the government.
“It’s not an issue of asset acquisition for its sake. NGCP merely wants to faithfully discharge its mandate under the Epira. And we cannot do that unless all assets performing transmission functions are under our operational control. Besides, all this will fall under the strict scrutiny of the ERC,” Manrique said in a statement.
The NGCP has already filed applications for the acquisition of P620 million worth of transmission assets owned by Panay Energy Development Corp. and the facilities of Cebu Energy Development Corp. worth P216 million.