MOVE YOUR ASS

“CoA has been engaged in the past to look into private entities with functions imbued with public interest, such as in the case of the Manila Electric Co.

“Computation of the profit ceiling of the private concessionaire has not been reduced to reflect the current situation, such as the onset of the pandemic that brought economic hardship.

For some time now, government agencies seeking to inquire into the operations of the National Grid Corporation of the Philippines (NGCP) and its compliance to its contract with government point to the Energy Regulatory Commission’s (ERC) foot dragging for the deplorable power supply situation and high electricity prices.

For instance, the computation of the profit ceiling of the private concessionaire has not been reduced to reflect the current situation, such as the onset of the pandemic that brought economic hardship.

The allowable net income rate of NGCP is based on Maximum Annual Revenue (MAR) in which the weighted average cost of capital (WACC) is a component.

The WACC rate for NGCP is somewhere around 15 percent, which is way above those of the country’s neighbors of between seven to 10 percent.

ERC should have undertaken periodic reviews on the profit determinant, but it sat on its mandate and instead allowed a so-called interim MAR that did not reflect available data.

During Daily Tribune’s Straight Talk episode last Tuesday, Energy Assistant Secretary Gerphy Erguiza said ERC has the authority to tap other government arms such as the Commission on Audit (CoA) for help.

Erguiza said CoA had been engaged in the past to look into private entities with functions imbued with public interest, such as in the case of the Manila Electric Co. (Meralco) on the pricing of electricity.

The ERC had said then it would tap CoA to verify whether refunds to Meralco customers have been given or credited to their accounts.

Also, the amount of bill and meter deposits for refund and income tax that was believed to have been passed on to consumers need reviewing.

ERC chairman and CEO Agnes VST Devanadera reasoned then the agency was short of auditors for asking CoA to lend it a hand.

Going through her line of reasoning, the ERC head can make use of the wealth of expertise from the Department of Energy or grid owner National Transmission Corporation in the system operation audit, which it did not do so.

Instead, ERC went along with the apparent NGCP scheme for an online audit.

Erguiza said a CoA review can establish the propriety or necessity of the P4 billion in representation expenses and advertisement placements of NGCP, which senators said swings higher during election campaign periods.

ERC has been exploiting its claimed lack of resources in delaying required actions on NGCP, which has been taking liberty on the lifetime contract it obtained from the government.

Omission has been an effective tool to coddle NGCP while ERC endlessly carp about a short budget.