NGCP Statement on the Acquisition of Transmission Assets

QUEZON CITY – The National Grid Corporation of the Philippines (NGCP) has reiterated its position that acquiring assets that are performing transmission functions, but are currently under the control of other entities, will be beneficial to electric power consumers in the long run.

Some groups have opposed NGCP’s planned acquisition, saying that the purchase will be a violation of the Electric Power Industry Reform Act (EPIRA) or RA 9136.

On the contrary, NGCP said that it has the legal basis to acquire at fair market price the said assets. NGCP – the power transmission service provider and grid operator – made the clarification as it looks to acquire power facilities classified as transmission assets in a move to better manage and uphold the security and integrity of the nationwide power grid.

Among PEDC’s transmission assets are a switchyard, transformers, power circuit breakers, transmission line, SCADA and microwave system, and the lot where the switchyard is constructed.

“While Section 9 of the EPIRA allows a generator to own, operate and maintain a dedicated point-to-point limited transmission facility, this is only on the condition that said facility is solely used by the generator to connect to the grid and that it will not be used to connect other users. Distribution utilities and/or other generators and large customers are not allowed to connect to the facility,” said Atty. Cynthia P. Alabanza, NGCP Spokesperson and Adviser for External Affairs.

Section 21 of the EPIRA mandates that NGCP, as TransCo’s concessionaire, is the entity solely responsible for the improvement, expansion, operation, and/or maintenance of the nation’s transmission assets. It is the only entity which possesses the required technical expertise to maintain and operate the nationwide power grid. “No other entity is legally authorized to operate transmission assets, and NGCP is the only company technically competent to do so,” stressed Alabanza.

NGCP had earlier filed an application with the Energy Regulatory Commission (ERC) to seek approval of its capital expenditure for the acquisition of power facilities classified as transmission assets, including those under the control of Panay Energy Development Corporation’s (PEDC). PEDC, a generation company, is connected and currently supplying power to the grid through NGCP’s Sta. Barbara Substation. 

“In the case of the PEDC assets subject of NGCP’s application with the ERC, the assets are not only used to connect PEDC to the grid, but are also used to directly supply power distributor Panay Electric Company Inc. (PECO). The assets are also used by another generator Panay Power Corporation. Therefore, the facility is not a ‘dedicated point-to-point limited transmission facility’ and must be turned over to NGCP,” Alabanza said.

Acquisition by NGCP of the transmission assets currently under the control of other entities will revert the operation and maintenance of the same to NGCP, enabling it to better discharge its mandate under EPIRA and its franchise of managing and upholding the security and integrity of the nationwide power grid. 

Once NGCP has acquired the PEDC assets, NGCP will be able to connect these assets to the grid. “The most important consequence of NGCP’s acquisition of these transmission assets is that consumers of power distributor PECO will then have the option of sourcing electricity supply with lower generation charge from sources other than PEDC, including the wholesale electricity spot market (WESM),” Alabanza added.

PECO is the only distribution utility in Panay island that is not connected to the grid.

It should be noted that compared with other distribution utilities in Panay island, PECO consumers are paying the highest generation charge. Based on data provided by the distribution utilities themselves, PECO charged its residential customers a generation rate of Php8.2637/kWh for the month of May 2012. By comparison, ANTECO, which sources its supply from the WESM, billed a generation rate of Php5.8160/kWh to its residential customers for the same period.

For the other distribution utilities like ILECO I, GUIMELCO, AKELCO, ILECO II, ANTECO, and ILECO III, the combined generation and transmission charge per distribution utility is still lower compared to the generation charge alone of PECO.

“The application was filed with adherence to EPIRA in mind. NGCP will faithfully discharge its responsibility as mandated by the law. That responsibility entails making sure that all assets performing transmission functions are under its operational control and maintenance. All of this,” Alabanza added, “will fall under the strict scrutiny of the ERC.”(NGCP/PIA Sorsogon)

 For media inquiries, please contact: Atty. Cynthia P. Alabanza, Spokesperson/Adviser for External Affairs (cpalabanza@ngcp.ph/09175707884); Released: Aug. 13, 2012