This is like the Game of Thrones and it is perhaps as exciting to watch as the television series. There's an apparent greed for power - literally and at the center of the power grab is the country's grid.
I am talking about the National Grid Corp. of the Philippines (NGCP), the country's grid operator and what it describes as an apparent 'orchestrated plan' against it.
Recently, the Energy Regulatory Commission (ERC), the power regulator, slapped NGCP with a penalty of P5.1 million for not complying with the circular of the Department of Energy requiring the procurement of ancillary services (AS) or power reserves.
In its decision, the ERC considered NGCP's failure to submit to the DOE its terms of reference (TOR) and invitation to bid (ITB) as one violation; and its failure to publish and maintain on its website without the prior DOE approval of the TOR and ITB, another violation.
This is not surprising, coming from a regulator. One might say, the ERC is simply doing its job. Both parties will have to prove their respective positions. I heard the NGCP will file an appeal.
Revoking NGCP's franchise
But what I found alarming really is the last part of ERC's Nov. 4 statement explaining its decision.
All of a sudden, ERC is now talking about revoking the legislative franchise of NGCP.
Says the ERC:
'The ERC issues a stern warning to NGCP that its non-compliance with laws, rules, orders and regulations issued by authorities may result to the cancellation of its Certificate of Public Convenience and Necessity (CPCN) and the endorsement by the ERC to the Philippine Congress of the revocation of its legislative franchise.'
Is this even valid? What are the valid grounds for revoking a franchise or taking over the operations of NGCP, anyway?
I checked Republic Act 9511 of 2008 or the law that grants NGCP a franchise to operate the country's high voltage backbone system of transmission lines and substations and here's what it says:
'A special right is hereby reserved to the President of the Philippines, in times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, to temporarily take over and operate the transmission system, and/or the sub-transmission systems operated and maintained by the Grantee, to temporarily suspend the operation of any portion thereof, or the facility in the interest of public safety, security and public welfare, or to authorize the temporary use and operation thereof by any agency of the government upon due compensation to the Grantee for the use of the said transmission system and sub-transmission systems and any portion thereof during the period when they shall be so operated.'
We are certainly not in a time of war, rebellion, disaster or any of the conditions mentioned in the law so I can't help but wonder why we are talking about revoking the franchise. Isn't this an easy way out for any regulator? Doesn't this mean that the regulator is unable to properly regulate the entities under its watch?
The ERC can slap penalties; it can even slap higher penalties, if it deems necessary. I am sure that P5.1 million won't even hurt an entity as big as NGCP.
But revoking a franchise of any entity here in the country should be within the bounds of the laws and not part of any orchestrated plan.
Isn't this what happened to the franchise of Lopez-owned media giant ABS-CBN? How do we expect to attract local and foreign investors if threats such as these hang like dark clouds in the business environment and affect the country's investment climate?
The NGCP is, as expected, 'sorely disappointed at the recent turn of events,' noting that the grid operator is 'still dealing with the same economically motivated political maneuvers.'
'The relentless attacks we suffered, and the fault finding where there was no fault to be found, was a clear indication to us that this, and other contemporaneous moves undertaken by certain players in the industry, were part of a larger, orchestrated plan to put their economic interests above ours, even at the expense of the consumers,' it said.
Working with the new administration
The knives are out.
It is not surprising that the NGCP feels this way, especially after that high-voltage statement from the ERC. It can't help but feel that those with vested interests want to go after the company and take over its franchise.
Who might want to go after NGCP's franchise? The energy grapevine talks about it in hushed whispers. Time is the ultimate truth teller so we'll just have to wait and see.
Despite these threats, NGCP said it is willing to work with the DOE and power regulators.
'This year, we welcomed the new leadership and the fresh start it offered. We were hoping to foster a more cooperative working relationship, as we did with DOE officials prior to 2016. The current administration was ushered in on the wings of a campaign founded on calls for and promises of unity. We hope that the current crop of executive appointees in the energy industry heed this call, and do right by their President,' it said.
The privatization of the power sector was once the biggest, most successful privatization in the country's history, ending an era of power shortages. We certainly don't want to go back to that period. But threatening to revoke a legislative franchise on questionable grounds may lead to a crisis in the grid which, for sure, won't be good for all of us.