DOE blames NGCP for Panay power shutdown

The Department of Energy (DOE) blamed the National Grid Corporation of the Philippines (NGCP) for the widespread power outage in Panay Island as it expressed support for a review of the grid operator’s congressional franchise.

At a press briefing in Taguig City on Friday, Energy Secretary Raphael Lotilla said the NGCP could have prevented the system-wide power shutdown in Panay Island had it proactively dealt with the situation.

“It is most lamentable that this island-wide blackout was preventable. The Independent Electricity Market Operator of the Philippines (IEMOP) has pointed out that there was a two-hour window when the NGCP could have proactively called on the distribution utilities and electric cooperatives in Panay to reduce their load in order to prevent a sub-system-wide collapse,” Lotilla said.

“From the time that a generator had an unscheduled breakdown past noon of January 2, NGCP did not do anything as the systems operator responsible for maintaining the stability and integrity of the transmission grid. The loss of supply covering more than 15% of the power generated from Panay Island should have alerted NGCP to call for manual load reduction,” the Energy chief added.

Lotilla also noted that the prolonged power outage in Panay and parts of Negros Occidental was the second incident in less a year. The first was in April 2023.

“The previous incident in April 2023 should have served as a lesson to take extraordinary precautions due to the fragility of the grid,” he said.

Earlier this week, a massive power outage hit Panay Island due to multiple tripping of power plants on the island.

The Energy Regulatory Commission (ERC) said that unplanned outages of a Panay sub-grid on Tuesday-January 2 caused the power shortage.

The ERC, on Friday, said the island power situation had returned to normal as affected power plants in Iloilo were working again.   

“At the same time, we will exert all efforts to exact full accountability for any failures in the delivery of the services expected from NGCP as the transmission concessionaire and the country’s biggest monopoly,” Lotilla said.

The NGCP responded that it was “alarming to hear policymakers immediately make conclusions based on assumptions contrary to fact.”

“We are firm in our position that the system prior to the 2:19 p.m. multiple tripping was normal, and our actions were undertaken within protocols. Any contrary statement is speculative,” the grid operator said in a statement.

“We firmly refute allegations suggesting that NGCP failed in its obligation to stabilize the transmission system.”

The NGCP added that rather than using it as a “scapegoat,” policymakers should be objective in their search for facts and not coddle certain sectors.

“This is not a time to push personal or political agendas, but a time for honest-to-goodness solution finding. We again reiterate our push for a comprehensive industry-wide approach to resolve the persistent power supply issues on Panay Island and elsewhere in the country,” the grid operator said.

Separation, transfer

The DOE chief said the Energy Department supported calls made by legislators and Panay locals for a legislative inquiry into the power incident to review the NGCP's congressional franchise.

Lotilla said the DOE would recommend to Congress to include in the review of NGCP’s franchise “the separation and transfer of the systems operation function from NGCP.”

The NGCP, in turn, would focus on being the transmission network provider so that the company can work on delayed transmission projects.

The Energy Secretary also said that the ERC would be authorized to impose administrative penalties on the NGCP of P2 million per day of violation and non-compliance or 1% of the cost of the delayed project, whichever was higher.

Lotilla also urged Congress to review the special tax privilege of NGCP to pay only a 3% franchise tax in lieu of all other national and local taxes.

In an interview with reporters, NGCP spokesperson Cynthia Alabanza said suggestions on amending the company’s congressional franchise “would really cement the reputation of the Philippines as a very risky investment area.”

“You have a private investment like NGCP that came into a contract, it was bid out by government… in an open competitive public bidding and yet in the middle of the franchise period, there is a move to amend this,” she said.

“In terms of whether it is ideal… in our opinion... it won’t be efficient if the systems operations would be separated because it is essential in running the transmission system. The physical aspect — maintenance, and operation of the transmission grid— as well as the trafficking and management of power that flows in that physical asset should not be separated,” she added.

Nevertheless, Alabanza said the NGCP welcomed moves to review the company’s franchise and was ready to face inquiry in both the House and Senate.

Root cause

Lotilla said the DOE, together with the ERC, “will get to the root cause of the tripping of the six power plants and conduct a technical analysis of the Panay grid in order that necessary grid enhancements are carried out.”

“The DOE will review the scheduled plant maintenance shutdown of all plants to widen the margin for regulation and contingency. To fully carry these out, we reiterate the instructions given by the President after the April 2023 incident for NGCP to be transparent to all stakeholders, local government units, distribution utilities, power generators and to the DOE and the ERC,” he said.

Alabanza said the NGCP called for an objective inquiry of the Panay power situation encompassing all the sectors involved. — DVM, GMA Integrated News