DOE urges Congress to review NGCP franchise amid energy transmission problems

The Department of Energy (DOE) on Tuesday called on Congress to review the National Grid Corporation of the Philippines (NGCP) franchise to operate and manage the country’s power transmission lines, which it described as "overly generous" yet lacking in terms of performance. 

The DOE believes that 80% of the country’s electricity problems are due to the "generous franchise" granted to the NGCP back in 2008.

"The concession agreement is very much in favor of the franchisee. It is within the powers of Congress to review it before expiration thereof,” said DOE Undersecretary Sharon Garin during a briefing on the Electric Power Industry Reform Act (EPIRA) of 2001 before the House energy panel.

Republic Act 9511 grants NGCP a franchise to engage in the business of conveying or transmitting electricity through a high-voltage backbone system of interconnected transmission lines. It will then pay a franchise tax equivalent to 3% of all gross receipts derived from its operation.

The said 3% tax is “in lieu of income tax and any and all taxes, duties, fees, and charges of any kind, nature or description levied, established or collected by any authority whatsoever, local or national, on its franchise, rights, privileges, receipts, revenues and profits, and on properties used in connection with its franchise, from which taxes, duties and charges.”

"This could be the most generous franchise that the government has given to a private entity," Garin argued.

Garin said that this is one of the main reasons why half of the amendments the DOE is proposing to amend the EPIRA law concern power transmission.

“One of the recommendations of DOE apart from reviewing the NGCP franchise is that if the transmission company fails to deliver projects on time, the government has to take over, be it in a form of PPP or any government funding,” Garin pointed out, referring to Public Private Partnership.

“There are delayed projects for two, four years. That is why we tried to craft something to make the transmission company accountable. But [amendments to the] franchise can also fix that. We are in agreement that 80% of the problem of energy will be fixed with these [solutions],” Garin added.

Aside from provisions on delayed projects, DOE’s proposed EPIRA law amendments included a clause on making the electric power a regulated public utility as defined under the Public Service Law and subject to the relevant policies issued by the DOE and rate-setting powers of the Energy Regulatory Commission (ERC). 

NGCP was not represented during the DOE briefing for the House energy panel.

GMA News Online has reached out to the NGCP for comment and will publish their comment as soon as possible. 

Congress has already sought an inquiry on power transmission disturbances following rotational blackouts after NGCP raised red and yellow alerts due to the tripping of the Bolo-Masinloc 230 kilovolt (kV) Line 2. 

The said alerts also affected the transfer of  generated supply from the Luzon Grid to the Visayas Grid, resulting in the Visayas Grid also being placed under yellow alert.

On May 9, the Manila Electric Company (Meralco) also reported power supply cuts due to a "temporary system imbalance". 

On Tuesday, Senator Raffy Tulfo in a statement said, he has also recommended to President Ferdinand Marcos Jr. to cancel the franchise of NGCP and proposed the return of the system's operation to the state-owned National Transmission Corporation because of supposed "violations and security concerns." —VAL, GMA Integrated News