In a recent session at the House of Representatives, the chair of the Ways and Means Committee, Albay Representative Joey Salceda, advocated for new laws to ensure that the National Grid Corporation of the Philippines (NGCP) refunds an estimated PHP204.3 billion in excess earnings to its consumers. Salceda argued that any profits exceeding the permitted threshold should be returned to the public, emphasizing the need for a structured process to reclaim these funds.
Salceda pointed out that the Energy Regulatory Commission (ERC) had set NGCP’s revenue at PHP183.5 billion for the period from 2016 to 2020, yet the actual earnings reached PHP387.8 billion, leading to the significant surplus. He criticized the absence of legal mechanisms to handle such excesses, particularly under the Weighted Average Cost of Capital (WACC) framework.
Highlighting NGCP’s favorable tax situation, Salceda noted that the company only pays a 3% franchise tax, much lower than other utilities like PAGCOR and Cebu Pacific, which pay 5%, or horse racing entities at 8.5%. He also criticized the lack of a cap on NGCP’s profits, suggesting that the ERC’s use of the Performance-Based Regulation (PBR) system, which relies on WACC, is insufficient.
To address these issues, Salceda proposed amending NGCP’s franchise to adjust its tax and profit structures. He suggested lowering the WACC from 15.04% to around 10.3% to align with global standards and ease the burden on consumers. Additionally, he recommended implementing a windfall tax on NGCP’s excess profits to fund consumer subsidies.
Salceda also raised concerns about potential violations of the Anti-Dummy Law by NGCP, focusing on the company’s ownership structure and foreign influence. Despite NGCP’s claim of maintaining 60% Filipino ownership, Salceda questioned the actual control, pointing to the involvement of Chinese nationals in key positions and the complex ownership layers involving Synergy Grid and Development Philippines and China’s State Grid Corp.
He called for a thorough investigation into the nationality of those with beneficial ownership and control within NGCP’s corporate structure, suggesting that violations of the Anti-Dummy Law could result in the forfeiture of NGCP’s franchise. This law prohibits foreigners from managing or controlling entities involved in nationalized activities, and Salceda warned that such violations could pose risks to national security and energy stability.