I have been pushing for a refund since the 18th Congress, when we discovered the National Grid Corp. of the Philippines’ (NGCP) unconscionable greed with its reward payouts, tax breaks, and high returns because of its high WACC, or Weighted Average Cost of Capital.
In this very profitable business, strong penalties are needed to send the message that those who abuse their power are subjected to strict disciplinary measures. Imposing penalties can be in the form of a refund or stocks that consumers own.
The planned review of the Concession Agreement and the pursuit of the non-renewal of the NGCP contract should lead to serious rethinking on what grid system the country should rebuild and sustain in consideration of the failed Electric Power Industry Reform Act and on the other side the revolutionary developments in smart grid and micro-grid systems powered by renewable energy resources. In the immediate, we have been calling for the transfer of system operations back to TransCo.
The Energy Regulatory Commission (ERC) can also prohibit NGCP from exercising prerogatives in classifying yearly net income as retained earnings under shareholder’s equity, therefore prioritizing dividend payouts over capital expenditures (capex) during the last 14 years.
Even in the absence of an ERC order, as a condition of their franchise, the NGCP must pass a resolution restricting the payout of any dividend where capex for transmission expansion remains unfulfilled during the five-year rate recalibration period that allows them to collect subject to an allowable WACC ceiling.
ERC must adhere to its mandate to penalize the abuse of market power in the electricity industry to protect the interest of Filipino consumers. Kailangan ng pangil ng ERC para disiplinahin ang NGCP. Kung hindi, paulit-ulit lang talaga ang problema sa kuryente dahil wala namang napaparusahan (The ERC needs to have teeth to discipline the NGCP; otherwise, the electricity problem will only repeat itself because no one is punished). If the ERC fails to punish NGCP, we’re letting down Filipino consumers too.