Metro Manila (CNN Philippines, November 9) — The Energy Regulatory Commission (ERC) has imposed a ₱5.1-million fine on the National Grid Corporation of the Philippines (NGCP) for not complying with the Department of Energy (DOE) circular on the procurement of required reserves.
According to the ERC, the grid operator violated DOE’s Department Circular No. DC2021-10-0031 titled “Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator” (AS-CSP Policy).
The policy stipulates that all ancillary services or reserves required by the grid must be procured in an open and competitive process under a firm contracting agreement. According to the ERC, the policy intends to increase transparency, competition, and widespread distribution of bid chances among qualified facilities.
Under Section 7.4 of the policy, the NGCP, as system operator, should submit the terms of reference (TOR) for the DOE’s approval prior to its publication of the invitation to bid (ITB). Section 7.5 requires the Third-Party Bids and Awards Committee to publish the invitation to bid in accordance with the periods specified in the DOE Circular.
According to the ERC, the NGCP admitted that it did not comply with Section 7.4 of the procurement policy because the provision is allegedly invalid.
“Given this admission and its unmeritorious defense, the ERC finds that the NGCP violated its obligations under Section 7.4,” the regulator said in a statement released on Nov. 4.
“The ERC finds that when NGCP proceeded to publish and post the ITB without the prior approval of the DOE, it committed a violation of said provision (Section 7.5) of the AS-CSP Policy,” it added.
In its decision dated Oct. 24, the ERC said the NGCP committed two violations: “failure to submit to the DOE its TOR and ITB” and “failure to publish and maintain on its website the ITB without the prior DOE approval of the TOR and ITB.”
“The ERC underscores the fact that no amount of monetary penalty can sufficiently equate to or compensate for the willful disregard by NGCP of validly issued regulations of the Philippine government and its administrative agencies,” the regulator said in the statement.
The ERC also warned the NGCP that “its non-compliance with laws, rules, orders, and regulations issued by authorities may result [in] the cancellation of its Certificate of Public Convenience and Necessity and the endorsement by the ERC to the Philippine Congress of the revocation of its legislative franchise.”
Despite its earlier admission, the NGCP in a statement on Tuesday alleged that there are people in the energy industry who are behind “relentless attacks” against the corporation.
“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 wrote.
The NGCP said it submitted appropriate documents to the DOE around two months ago, but the ERC still issued its show cause order the very next day.
“We were sorely disappointed at the recent turn of events. It seems that duplicity is still the name of the game, and we are still dealing with the same economically motivated political maneuvers,” the corporation added but did not elaborate.
