The National Grid Corporation of the Philippines, a monopoly in the transmission industry, is a bottleneck in the growth of green energy.
Imagine the power grid as a road system. Transmission lines are like expressways that carry electric energy for long distances across the country. Electricity then gets passed onto the distribution system, similar to roads and streets leading to homes and businesses.
Frustrations with the NGCP go beyond the study backlog. For years, the company was under stern scrutiny due to the delay in its interconnection projects. The pandemic has affected many, if not all, government projects, but the holdup with the NGCP has been incredibly long even prior to COVID-19. The project is critical to ensuring sufficient and cheaper energy supply not just in the Visayas, but in the whole country too, as it will connect the Mindanao grid to the Visayas grid with a high-voltage direct current system. This can initially allow as much as 450 megawatts of energy to transmit from Mindanao, which as of the end of 2021, sources a third of its power from renewable energy sources.
The ERC approved the construction of MVIP in 2017 with the NGCP initially targeting completion by December 2020. In previous interviews, NGCP reasoned that the pandemic delayed the completion of the project. PCIJ has tried to get an interview with NGCP since January 2023, but has not received a response as of writing. Questions were sent via email as well.The NGCP is benefitting from hefty profits at its current operational capacity, said Albert Dalusung III, adviser for the local think-tank Institute for Climate and Sustainable Cities.
Meanwhile, Calaca High Power Corp. lists Prudential Insurance owner Robert Coyiuto Jr. as chairman. Coyiuto is also a director of Petrogen Insurance Corp., the insurance arm of oil refining firm Petron Corp. A 2021 report by Financial Futures Center, an NGO focused on renewable energy development in developing countries, found that by the fourth year of NGCP’s operations, it had managed to recoup its initial payment of $987.5 million.
In 2020, the company recorded its highest “investment in capital expenditure” at P41.1 billion. The company’s financial statements showed that the amount covered “costs of assets under construction” and other items. At that time, Senator Risa Hontiveros called for a probe into the company’s operations due to national security concerns., which have monopolized their respective areas. The company’s net income meanwhile grew steadily from P15 billion in 2009 to P23 billion in 2021.
“While NGCP is not at fault for the decrease in the countryʼs total RE generation, the grid operator has the power to make it easier for renewable energy technologies to infiltrate the grid,” read the Financial Futures Center report. The NGCP is already under audit by the ERC following a Senate hearing on cybersecurity concerns in 2020. The 18th Congress funded the ERC to allow it to conduct five audits on the NGCP in the following areas: assets, performance, compliance with Philippine laws, cybersecurity, and the weighted average cost of capital , or the return that the company gets for the capital it had invested on the grid.
“The building blocks of every regulatory period are a reflection of the economic conditions at the time of the reset, and for 2016 to 2022, we had better economic conditions [compared with the previous regulatory period],” she said in the interview with PCIJ in December.
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