The Energy Regulatory Commission (ERC) has levied a hefty P15.8 million fine on the National Grid Corporation of the Philippines (NGCP) due to delays in completing 34 power transmission projects. This decision was announced by ERC Chair Monalisa Dimalanta during a House Committee on Legislative Franchises hearing on December 23, 2024. Out of the 37 capital expenditure projects under scrutiny, 34 were found to have unjustified delays, prompting the penalty.
Dimalanta explained that the fines varied from P100,000 for the first two violations to P500,000 for subsequent ones, adhering to regulatory limits. She noted that while the fines are capped, they may not fully compensate for the impact of the delays. NGCP has paid the penalties under protest and is considering legal action, citing misalignments in project timelines as a key issue.
The ERC is preparing to release its final determination for the fourth regulatory period (2016-2022) in January 2025. Dimalanta mentioned that the final determination might see an increase due to changes in regulatory approaches.
Santa Rosa City Representative Dan Fernandez criticized NGCP’s practice of passing on costs of incomplete projects to consumers, labeling it as ‘highly immoral.’ He argued against the ERC’s majority decision that allows NGCP to recover costs for projects even before they are operational. The minority view within the ERC, however, supports only including completed and commissioned projects in the Regulatory Asset Base (RAB).
Discrepancies in capital expenditure valuations were also highlighted by Dimalanta. Independent consultants initially recommended a capex of P24.9 billion, but the ERC’s draft final determination allowed P179.3 billion for the period 2016-2022. NGCP had applied to include P214.6 billion in its RAB. NGCP’s spokesperson, Cynthia Alabanza, defended their practices, noting that the ERC has historically allowed the ‘as spent’ method for large infrastructure projects.