Solons seek probe on NGCP expenses passed on to consumers 

A congressional inquiry on the alleged questionable expenses of the National Grid Corporation of the Philippines (NGCP) which are being passed on to consumers has been sought in the House of Representatives.   

House Deputy Minority Leader France Castro of ACT Teachers party-list, House Assistant Minority Leader Arlene Brosas of Gabriela party-list and Kabataan party-list lawmaker Raoul Manuel made the call under their House Resolution 1352 which tasks the House Committee on Energy to conduct a probe.   

The lawmakers cited that no less than the Energy Regulatory Commission (ERC) said it will evaluate NGCP’s actual expenditure for the fourth regulatory period covering 2016 to 2022, which will include a comprehensive examination on the necessity and efficiency of the projects implemented.  The costs of the projects were subsequently integrated into the firm's annual revenue requirement (ARR). 

A day earlier, the ERC also slashed the grid operator’s allowable revenues by more than half of what the company applied for under a review of power transmission rates, setting the total allowable revenues for Phase 1 of the fourth regulatory period to be at P183.491 billion or an average of P36.7 billion annually which is way lower than NGCP’s claims of P387.803 billion for Phase 1 or an annual average of P77.56 billion. 

“Amid the expensive cost of electricity in the Philippines, brownouts in the Luzon Grid, the widespread lengthy brownouts in Negros and Panay, and delayed projects, the public deserves to be informed about whether NGCP is imposing unjustly heavy rates on consumers due to the lack of transparency in its transactions,” the lawmakers said.   

“There should be a regular review of the rates imposed by the NGCP to the consumers, not just after more than ten years. It is high time to conduct a thorough independent audit to determine if a rate reset is necessary. The ERC should not only thoroughly assess the rates, transactions and income, it should also expedite the audit,” the lawmakers added.  

The Makabayan legislators also cited previous concerns raised by Senator Risa Hontiveros on NGCP expenses being passed on as transmission charges from 2009 to 2022 such as:  P12.2 billion for repairs and maintenance; P8.7 billion for janitorial and security services; P2.3 billion for public relations and corporate social responsibility activities; P1.67 billion for representation and entertainment; and, P1.1 billion for advertising.

“NGCP, despite being a private company, operates in a sector imbued with public interest, and therefore, its operations, profits, and even the salaries and perks of its Board of Directors, should be subjected to scrutiny by government agencies such as the Commission on Audit (COA) and Congress,” the lawmakers added.  

In a separate statement, NCGP Assistant Vice President Cynthia Alabanza said the disparity in allowed revenues computation is caused by the ERC’s failure to address NGCP’s two requests for a regulatory reset.  

“To apply this retroactively lacks fairness. Rules should be forward looking to have a level playing field. The ERC’s pronouncement will have a long-term impact not only on NGCP but on the consumers and other businesses as well,” Alabanza said. 

“At the end of the day, what we balance here is the concerns of the consumer and their right to an efficient service at a fair price. We also have to consider that an investor needs to get a fair amount of return on investment,” Alabanza added.   

In addition, Alabanza said NGCP’s expenses are all legitimate business costs under the same rules applied to the National Transmission Corporation (TransCo), the state-run entity which used to operate and maintain the grid system before it was taken over by NGCP in 2009 thru privatization. 

Alabanza, however, did not dispute that there are NGCP expenses passed on to the consumers.  

“Pag sinasabi niyong pinasa sa taumbayan pero lehitimong business expense, hindi dapat  masama iyan, lalo na kung iyan ay nakapaloob sa patakaran na nakalatag noong kami’y pumasok sa negosyo,” she said.  (When you say it was passed on to the public but it is a legitimate business expense, it should not be wrong, especially if it is provided for by the rules set when we entered into the business.)  

Alabanza said employees’ bonuses are legitimate business expenses as they are part of operational expenses that are usually included in the cost of a product being charged by a business for a particular service or product.  

Further, NGCP said in a separate statement that its corporate social responsibility (CSR) and public relations (PR) expenses are also legitimate business expenses.

"These are part of the business expenses applied and approved by the ERC. Like any other business, all legitimate business expenses are included to determine pricing. NGCP is a highly regulated entity where our revenue is capped, margins are determined by regulators, expenses reviewed and rationalized, and our recoveries regulated," NGCP said.

"Whatever we bill our customers is only what the regulator allows us to,” NGCP added.—LDF, GMA Integrated News