Marcos orders ERC to reset NGCP rates after Panay grid failure

Metro Manila (CNN Philippines, January 5) — President Ferdinand Marcos Jr. ordered the Energy Regulatory Commission (ERC) to swiftly reset the rates of the National Grid Corporation of the Philippines (NGCP), which he blamed for the Panay sub-grid failure that led to a massive power outage in parts of Western Visayas. 

The rate reset is to ensure the NGCP’s compliance with its obligations, Marcos said. This includes maintaining grid stability.

“The National Grid Corporation of the Philippines (NGCP) had a crucial two-hour window to prevent the system collapse, as highlighted by the Independent Market Electricity Operator of The Philippines or IMEOP,” he said in a video message on Friday.

He continued: “Accountability lies with the NGCP. They are tasked with grid stability. Stability involves proactive responses to breakdowns and unexpected events, a duty that NGCP unfortunately has not fulfilled adequately.”

Marcos said that while power has been restored, the damage has already been done. “The situation has caused significant hardship to our people, crippling businesses, compromising livelihoods and endangering those in need of healthcare.”

On Friday, the NGCP defended itself, saying that the outage was not its fault and that its mandate is to provide transmission services and not intervene in power generation.

READ: NGCP: Panay sub-grid fully restored

Transmission rate reset is done every five years to assess if the NGCP’s allowed revenues are valid and reflective of the current costs, as the grid operator passes this expense to consumers.

In December 2022, the ERC rejected the NGCP’s petition to postpone its reset for the period 2016 to 2020. In the same month, the grid operator filed for a rate reset which the ERC said would lower transmission charges for consumers.

READ: NGCP files for transmission rate reset  

During deliberations on the 2024 budget, a lawmaker sponsoring the ERC said its decision on the NGCP rate reset for the fourth regulatory period (RP) would be released by October.

However, though the ERC in November cut the NGCP’s total allowable revenues from 2016 to 2020 by more than half – from ₱387.8 billion down to ₱183.4 billion – and determined that consumers should get a refund, it has not yet acted on the rate reset on the grid operator.

Meanwhile, In March 2023, the NGCP applied for a reset covering 2021 to 2025, which is still pending.

READ: Energy regulator cuts NGCP’s allowable revenues for 2016-2020     

The NGCP last saw a rate reset in 2010, for the period 2010 to 2015.

But, in text correspondence with CNN Philippines, ERC Chairperson Monalisa Dimalanta said the commission was working on completing a new rate reset which would cover 2016 to 2022, the fourth RP, and 2023 to 2027, the fifth RP, which could be what Marcos was referring to.