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‘ERC colludes with NGCP’

ERC has the teeth, except that the ERC, how do you call it?… Regulatory capture? In other words, bribed

Former Senator Sergio Osmeña III has proposed a massive reform in the Energy Regulatory Commission (ERC) as he accused the government body of corruption.

In an interview Monday night on TeleRadyo, Osmeña underscored the need to form a new regulatory body to audit the National Grid Corporation of the Philippines (NGCP) and other power companies.

“We can’t abolish the ERC, but we will have to put up a ‘new ERC’. We abolish the old ERC, so we have a ‘new ERC’. (It has) a crucial job in ensuring that power industry players are doing their job,” said Osmeña, who previously headed the Senate Committee on Energy.

His remarks came after Luzon suffered from recent power outages, which the Department of Energy (DoE) blamed on NGCP’s supposed failure to generate energy reserves.
The ERC is tasked to supervise NGCP operations. To date, it could not release the results of its own audit of the transmission company.

“ERC has the teeth except that the ERC, ano tawag dito, regulatory capture? In other words, bribed. (ERC has the teeth, except that the ERC, how do you call it?… Regulatory capture? In other words, bribed.),” Osmeña said He did not substantiate his claims.

“I don’t know. You will find out the fact is that you got the ERC to (do the) job,” the former lawmaker said.

As a regulatory body, Osmeña said the ERC should flex its muscles in governing the NGCP.

“The ERC is not forcing the NGCP to do what it’s supposed to do,” he said.

“(It) should tell the NGCP that what (it is) doing is wrong. For example, the wage average cost of capital of the NGCP is 15 percent. That is too high. This is only about 10 percent or lower than the generation companies. Why is ERC allowing NGCP to get a higher rate?” Osmeña added.

Wanted: Duterte intervention

Meanwhile, an industry insider familiar with the situation told Daily Tribune that the President needs to use his strong political will to rectify the alleged non-compliance and “onerous” contract of electricity network concessionaire NGCP.

Returning the system operations of the national grid to the government is a shot in the dark but President Rodrigo Duterte has the power to turn things around — only if he would want to.

“Just like what he did with water concessionaires and ABS-CBN… the President just needs to make an announcement,” the source said, referring to Duterte’s power to expedite the long-delayed comprehensive system audit and review of the franchise of the NGCP.

The source pointed out that Duterte, as the chief executive, needs to revisit the Electric Power Industry Reform Act (EPIRA), which privatized the National Power Corporation’s assets — including power plants.

The law, which took away the power of the government over the grid, allowed NGCP, a corporation partly controlled by China state-run firm, to operate the transmission network through a 50-year franchise.

Even DoE Secretary Alfonso G. Cusi repeatedly expressed the urgent need to amend EPIRA so that the government would have more control in performing its mandate to ensure power sufficient power supply at all times.

Cusi said the persistent power interruption, especially during the summer months, could be avoided once the government operates the system of the grid
By then, the energy chief said the government would hold full accountability should a power shortage happens again.

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