Energy regulators step up pressure on grid operator

MANILA  -The Energy Regulatory Commission (ERC) has ordered the country’s grid operator to explain the delays in the completion of 37 crucial transmission projects to avoid penalties and deliver on its promise to improve the national grid.

In a show cause order dated June 14, the ERC said that while it had approved National Grid Corp. of the Philippines’ (NGCP) capital expenditure (capex) applications for the projects, the company failed to follow its proposed timelines.

The first phase of the Bataan-Cavite/Metro Manila transmission line project, which was originally targeted for completion on June 8, 2016 based on the ERC’s approval, has been delayed for at least 2,561 days and is instead set to be energized on June 30 next year.

The Cebu-Negros-Panay 230-kilovolt backbone project stage 2 has also been delayed for over 2,000 days, as its completion was scheduled on Aug. 28, 2017. NGCP aims to energize the project this year.

“Some of these projects [have] already been approved by the commission. Subsumed within this approval of capex applications of NGCP is the approval of the proposed timeline for completion of said projects,” the ERC said in its order.

NGCP was required to submit a verified explanation and show cause as to why the ERC should not impose penalties on the company for violating Sections 21 and 9(d) of Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (Epira).

Under the Epira, NGCP, as the concessionaire of the transmission assets owned by the National Transmission Co., “shall be responsible for the improvement, expansion, operation and/or maintenance of its transmission assets and the operation of any related business.”

NGCP, which won the bid to operate and manage the state-owned power grid in 2009, is likewise mandated by the law to craft a plan for the improvement and expansion of transmission facilities that must be approved by the ERC.

NGCP has not responded to requests for comment.

Revisit policies

Earlier this week, NGCP urged the ERC and the Department of Energy (DOE) to revisit policies to accelerate the expansion of transmission lines and ensure that the power grid was capable of integrating high levels of variable renewable energy.

NGCP seeks regulatory support for renewable energy grid integration

Among the company’s concerns was that the ERC implemented low capex ceilings for its projects.

In a text message to the Inquirer, ERC Chair Monalisa Dimalanta explained that capex allowance under the previous regulatory reset was at around P5 billion per year.

“As you know, we are undertaking the reset now and, once completed, new capex allowance will be put in place,” she said.

ERC begins reset process for power transmission rates

During a five-year regulatory reset, the ERC assesses the expenditure items of NGCP to ensure that only necessary costs are being passed on to consumers.

The DOE has also called out the NGCP for the project delays, saying that it was among the reasons why the Luzon grid suffered widespread power interruptions in May.

Energy Secretary Raphael Lotilla also noted that investors were discouraged from participating in the second Green Energy Auction Program due to the undelivered projects that could have increased the grid’s capacity to accommodate more renewable energy facilities.

In a statement, the ERC said that of the 37 delayed projects, 26 were still uncompleted while 3 were yet to commence.

NGCP says ‘proper grid planning’ with DOE needed to prevent project delays

The ERC also noted that the transmission grid had only increased by 8 percent in terms of line expansion since the NGCP took control of the national grid in 2009.

“During prepandemic years, NGCP’s line expansion, on the average, is only at 1.05-percent progress rate per year,” the regulator said, adding that the country’s transmission lines increased to only 21,027 circuit-kilometers in 2022 from 19,425 ckm in 2009.