ERC chief at the Times | The Manila Times Roundtable - video Dailymotion

The Manila Times

ERC chief at the Times | The Manila Times Roundtable   Lawyer Monalisa Dimalanta, chairman of the Energy Regulatory Commission (ERC), answers questions from The Manila Times (TMT) columnist Ben Kritz, during a roundtable at the TMT newsroom in Intramuros, Manila, on Wednesday, Feb. 28, 2024.  Subscribe to The Manila Times Channel - https://tmt.ph/YTSubscribe   Visit our website at https://www.manilatimes.net   Follow us:  Facebook - https://tmt.ph/facebook  Instagram - https://tmt.ph/instagram  Twitter - https://tmt.ph/twitter  DailyMotion - https://tmt.ph/dailymotion   Subscribe to our Digital Edition - https://tmt.ph/digital   Check out our Podcasts:  Spotify - https://tmt.ph/spotify  Apple Podcasts - https://tmt.ph/applepodcasts  Amazon Music - https://tmt.ph/amazonmusic  Deezer: https://tmt.ph/deezer  Stitcher: https://tmt.ph/stitcher Tune In: https://tmt.ph/tunein  #TheManilaTimes #TheManilaTimesRoundtable #Energy #Electricity #EnergyRegulatoryCommission  #Meralco

Transcript

00:00 Hello, I'm Ben Kritz and I'm here with attorney Mona Lisa DeMalanta, who is the chair of the

00:11 Energy Regulatory Commission, an agency that figures quite prominently in all our lives

00:18 as long as we have electricity in our homes.

00:21 And we were going to discuss a few current issues and hopefully a little bit of an outlook

00:29 for the year and the years ahead.

00:33 There have been a lot of good developments since attorney Mona took over the ERC and

00:40 of course there are a lot of challenges too.

00:43 So let's get into all that and thank you for coming out on a busy, busy day.

00:51 I know what your schedule is like.

00:55 Let's talk about some of the hot button issues that have come up lately.

01:02 Probably the biggest one or the top of mind for most people, at least in this part of

01:06 the country, is the recently completed CSPs of Meralko, wherein the per kilowatt hour

01:18 rate was around seven pesos, a little bit more than seven pesos for all of them.

01:28 However, there has also been, from several directions, it has been pointed out that that

01:36 is probably about two pesos higher than it really ought to be, given the way the market

01:44 works and everything.

01:46 Now the explanation that everybody has heard about that is that the slightly higher rate,

01:54 for one thing, it guarantees a supply of power for a long period of time and will help to

02:01 support investment in new generation, which is needed.

02:07 However, is the rate something that ERC needs to take another look at?

02:16 And if that is a valid explanation, how do we monitor and ensure that that little bit

02:24 extra premium that everybody is paying is actually being put towards capital expenditures

02:31 for new generation?

02:34 Thank you.

02:35 Thank you, Ben.

02:36 But first off, thank you for the invitation.

02:38 It's always good to have the opportunity to discuss what we are working on at the ERC.

02:46 And I always learn something from you anyway, so it's good to have this conversation.

02:52 So first, on that question with regard to the Meralko CSPs, you're right, ERC will need

03:00 to look into that, not only because of comments about whether the rate is high or whether

03:07 it's the right rate, but because it is our mandate to really look at those rates and

03:13 approve those rates.

03:14 So not whatever rates were awarded by Meralko Persuban to their CSPs are not actually final

03:21 yet until the commission gives an approval to the rate that should be passed on by Meralko

03:30 to its consumers.

03:33 You've touched on a couple of things that are going to be part of the consideration.

03:38 Meralko has, by the way, not yet formally applied for those PSAs.

03:44 I think there's only one that has been filed with us, which is a coal, among those awarded,

03:52 one is a coal contract, I think, and two natural gas, two or three natural gas PSAs.

03:58 So only the coal one has been applied with us yet.

04:03 But you've touched on a couple of considerations when we review this.

04:08 You mentioned the idea of promoting new investments.

04:12 And of course, we need to encourage investments in the power sector and having a bilateral

04:19 contract, as you know, is an attractive element as far as lenders are concerned.

04:26 So it will definitely attract investors.

04:30 But I think one of the things we will consider is the fact that are these really new plants?

04:38 Are they the plants that are still going to be built or not yet operating in the system

04:45 such that that objective is a fit with the justification for the rate?

04:51 So that's one.

04:52 Second is, I think, some concerns raised on the fuel.

04:59 I think, particularly for the most recent one that was awarded, which is a natural gas,

05:06 a PSA with a natural gas facility, the issue on the source of fuel is, I think, is a big

05:12 concern, especially now that we know that at least for the medium term, sourcing it

05:20 from a sourcing, sourcing significant volumes from Malampaya is not going to be a likely

05:28 scenario.

05:29 That's definitely got a shelf life.

05:32 Which means that the source will have to be imported energy.

05:38 So we'll need to factor that into our analysis as well.

05:43 So I think those two big issues would definitely be part of the evaluation of the commission

05:52 when these are submitted for approval.

05:56 The capacity fee or the fixed component of the rate.

06:02 And then the second would be on the fuel recovery.

06:07 So only one of them has been submitted so far.

06:10 Jeff, have they given you any indication of when they intend to submit the other ones?

06:16 Yes.

06:17 I think the other ones are undergoing what we call pre-filing.

06:20 They're completing the documentation so that when they submit the application with us,

06:27 all the supporting documents would already be completed because the clock starts.

06:32 As you know, we're now bound by a timeline under the EVOS.

06:37 And so before the clock starts, we need to make sure that all the supporting documents

06:43 are already in place.

06:45 And those have to be filed jointly?

06:49 Both the supplier and Meralco has to do the work together?

06:54 Correct.

06:55 Under the CSP guidelines, the distribution utility and the supplier have to jointly file

07:02 for approval of their PSA.

07:05 Okay.

07:06 Now, just out of curiosity, I think I know the answer to this, but for the benefit of

07:11 those who don't, to what degree can the ERC adjust the rate or suggest an adjustment to

07:23 two parties in the contract?

07:28 For example, they file for approval of a rate that's say 7.14.

07:34 I think that's what one of them is.

07:37 And can ERC then go, "Well, okay, everything is in order here, but your rate should be

07:43 six something or five something," whatever you calculate it to be.

07:52 Are they then bound by your decision or is that something that is a negotiation between

08:00 ERC and the parties?

08:02 Well, never a negotiation.

08:05 That's one.

08:06 It's never a negotiation.

08:07 As they say, you don't negotiate with the regulator, so it's never a negotiation.

08:13 But there is a two-part evaluation that we undertake.

08:18 First is a review of the process.

08:20 So making sure that the CSP or the competitive selection process is in compliance with the

08:25 guidelines that were issued by the commission, all the requirements are present, all the

08:34 parameters are observed.

08:37 So one is a process review.

08:39 If it fails the process review, we don't even talk about, we don't even consider the rates

08:46 because the process is already flawed.

08:48 And there's already a Supreme Court decision that said if the process is flawed, we have

08:54 no choice.

08:55 We have to invalidate the entire thing.

08:59 But if it passes the process review, then we go to the rate review, which allows us

09:05 then to review the components of the rate.

09:08 And most distribution utilities, Meralco is one of those who have a good rate structure

09:17 in their CSP.

09:18 So they really break down the components and we're able to see, we're able to determine

09:23 the, not just the reasonability, but the accuracy of certain rate components.

09:29 For example, I mentioned earlier, if there's already an existing plant that is awarded

09:34 a contract, then we do have data about that plant, whether it's the capacity fee of that

09:42 plant, its reliability, its efficiencies.

09:48 We have records of efficiencies of the plant.

09:50 So we can vet from our own records, whether the translation of those components to a peso

09:56 per kilowatt hour rate is an accurate translation.

10:01 And those are the parameters of the rate review.

10:05 And we make adjustments based on the results of the parameters of the rate review.

10:10 So it's not like the headline rate is 7.14 and we say, "It feels like it should just

10:17 be six," and we reduce it to six.

10:19 It's a detailed review that then results to an adjustment, if an adjustment is called

10:27 for.

10:28 Okay.

10:29 Okay.

10:30 Let's talk about another thing that is kind of faded from the public attention, but might

10:40 come up again.

10:42 The mess in Panay Island at the beginning of the year, last month, after the dust kind

10:53 of settled from that, you had announced that ERC was conducting a review.

10:59 Have you come to any conclusions yet as to what the cause or causes and who may be to

11:08 blame in that, if not, do you expect to soon?

11:14 And more importantly, I think for the people who live there, what recommendations may you

11:24 make to prevent that from happening again?

11:29 It's already happened twice, so I think they're probably tired of it.

11:33 Well, we cannot afford to get tired of it, right?

11:38 If we, because we need to make sure that, as you said, that it doesn't happen again,

11:43 or that if something like that happens again, that it will not create the, what you call

11:49 the mess that was, the mess that it had created.

11:52 So the dust may have settled as far as the public eye is concerned, but definitely it

11:58 has not settled yet as far as we are concerned.

12:02 The investigation by the Interim Grid Management Committee has already been completed.

12:09 They've submitted their report to us.

12:11 We've also made comments and requested for clarifications.

12:15 Then they submitted their clarifications.

12:18 And we do have currently, yesterday was the first day of the formal hearing, formal investigation

12:25 on this.

12:26 It was a public hearing that we needed to pursue following the report of IGMC, the Interim

12:33 Grid Management Committee, because based on the results of the review or the analysis

12:39 of the IGMC, there is no, it's, the findings are inconclusive.

12:46 They need more information.

12:48 They need more data, not just from NGCP, but from the generators that were involved.

12:53 So we decided, the commission has decided to formalize the investigation so that we

12:58 can also, one, compel the production of documents because the IGMC could not compel the production

13:05 of documents.

13:07 Second, so that we can also issue the proper order if certain actions need to be taken

13:14 that could be time-bound.

13:16 And there were recommendations from the IGMC report for certain actions to be taken within

13:22 a period of time.

13:23 So the commission decided to formalize the investigation.

13:26 So it's ongoing now.

13:28 Yesterday was the first hearing.

13:30 The NGCP presented again their sequence of events.

13:35 IGMC presented their findings as well as their recommendations.

13:39 We will have a continuance of the hearing so that each of the generation companies that

13:46 were involved will also share their version of the events and then our own market operation

13:53 service that did their own analysis from the generators' perspective are also going to

14:00 disclose their findings on the performance of the generators.

14:05 Because we reviewed, the IGMC reviewed the NGCP response.

14:10 Our MOS reviewed the generator response.

14:14 And then we're trying to, then we're putting together the full picture based on the findings.

14:20 And maybe once we get the additional information that we need.

14:25 Okay.

14:26 All right.

14:27 So that's something that's, it was a complex situation.

14:32 It was apparent that it was when it happened.

14:34 But maybe I can share something that, because we've been monitoring, of course, very closely

14:40 the situation in Panay.

14:43 And over the last 48 hours or maybe even more, there have been instances like in the, I think

14:50 yesterday, one of the units of PEDC went on unplanned outage.

14:59 But it was-

15:00 They seem to have problems with that.

15:03 Actually, it was again, a nervous situation, but I'm sure the people in Panay hardly felt

15:13 it because there was immediate response.

15:17 And now, because it's clear that the system operator can, if needed, conduct load dropping,

15:28 then they have been notifying the distribution utilities that this happened, there's an unplanned

15:35 outage.

15:36 If necessary, for system reliability, we will need to drop some loads.

15:42 So everyone is prepared, but so far, no load dropping has happened.

15:47 But the good thing is, it's now a better orchestrated, I think, response from all the stakeholders.

15:56 Okay.

15:57 So that's whatever else may be found in your inquiry, that perhaps is a positive thing

16:06 to say about NGCP because as you know, they do bear the brunt of a lot of criticism, sometimes

16:15 deserved and maybe sometimes not.

16:19 So that's good to know that they seem to have gotten a handle on that.

16:23 And you could feel at least-

16:24 That they can minimize problems when they happen.

16:27 Correct.

16:28 Because we're part of this messaging group where updates are given every 15 minutes and

16:35 you can tell that the SO is on top of the, at least this time around, the SO is on top

16:40 of the situation.

16:41 And that gives confidence for the stakeholders that the system operator who has the ability

16:48 to see the entire system is really on top of things.

16:52 Okay.

16:53 So that's good to know.

16:54 Speaking of NGCP, one of the things that you've been working on for quite some time is the

17:00 long overdue rate rebasing exercise.

17:05 How is that coming along?

17:08 Are you getting near the final stretch for that?

17:11 Yes, yes, yes.

17:12 We're on track.

17:13 We were targeting the first quarter to complete all the evaluation, all the reports from the

17:21 consultants are in.

17:24 Because as you know, we rely heavily on consultants for these type of work.

17:29 So there was some delay because of the Christmas break on the submission of reports of some

17:34 consultants, but now all the reports are in.

17:37 So the commission has started the evaluation for the 2021 to 2022 phase and we're putting

17:43 it together.

17:44 And our goal, our target is still to release the decision and have a new set of rates by

17:53 the end of the second quarter of this year.

17:57 Okay.

17:58 Well, that's good too.

17:59 And I think, Wendy, you've pointed this out in other venues that since you have taken

18:11 your position, you've had to do an awful lot of catch-up work in the ERC.

18:19 So I think it's good that you're actually making progress on some of these.

18:25 This is important things that should have been done much earlier and for various reasons

18:31 were not.

18:35 In everything that you have to juggle, it's good that there's some progress being made.

18:45 This one issue here caught my attention and I sent you my notes earlier, so you know what

18:53 my thoughts were.

18:54 But the San Fernando Electric Cooperative up in Pampanga, the Court of Appeals recently

19:08 struck down most of your refund order against them for overcharging customers.

19:22 Anytime the courts get involved in something, it seems a little tenuous, kind of breaking

19:31 the process.

19:32 But this one stood out to me because, and you're an attorney and I am not, so guide

19:39 me here, but it seemed to me, to my non-lawyer mind, that the Court of Appeals reasoning

19:45 was quite shaky in that the prescribed penalties for a finding on your part that the cooperative

19:56 had overcharged its customers did not specify that a refund be given.

20:04 Now as I understand it, the Court of Appeals didn't have any problems with your finding

20:11 because they upheld the $21.6 million fine that you had levied, but they said that there

20:20 was no basis for ordering a refund.

20:23 Now correct me if I'm wrong, but if the issue is an overcharging issue and the court decides

20:33 that, yes, you were correct in determining that there was an overcharging issue, wouldn't

20:39 that imply a refund to the customers who were overcharged?

20:45 Am I right or is there something big that I'm missing here?

20:50 That's also what we have put in our motion for reconsideration in that decision.

20:57 Our counsels, the Office of the Solicitor General, is the one that put together our

21:03 motion for reconsideration.

21:05 They're representing the ERC at the Court of Appeals.

21:11 In basic terms, that's the position, that's the argument.

21:16 Of course, we are grateful that the court upheld the penalty, our finding that there

21:24 was no basis for the…

21:26 Because it is quite a substantial amount of money due back to the customers.

21:31 Also because the situation persisted for a long time.

21:37 I think that accounts for the huge amounts of refund.

21:43 What the Court of Appeals said was that, yes, ERC, you are correct in imposing the fine

21:51 or the penalty, but it's premature in a way to require the refund because you did

22:00 not hear them out about the refund.

22:04 We're trying to convince the court that the refund follows.

22:10 The refund is a consequence.

22:13 You did hear them out whenever you were making your initial decision of whether or not they

22:20 overcharged their customers.

22:22 They did have a chance to present their case.

22:25 We're hoping that we would convince the court that the refund is a consequence.

22:32 It's not a separate…

22:33 Actually, maybe the misappreciation lies there, that it can stand separately from what was

22:42 imposed from the act for which the fine was imposed.

22:49 It just flows from the fact that there is a violation.

22:52 We imposed the fine, and since that violation included collection of amounts that shouldn't

22:58 have been collected, then what shouldn't have been collected should be given back.

23:03 That's how we interpreted it.

23:05 It's not a penalty in other words.

23:08 Yes, it's not a penalty.

23:09 It's not an additional penalty.

23:10 The penalty is really just a fine, which goes to the ERC.

23:14 The refund goes back to the consumers.

23:16 Well, it's a penalty for the consumers who are out… how much was it?

23:22 Two billion, I think.

23:24 It was a large amount of money.

23:28 I hope that your motion prospers because the logic just didn't seem to work there.

23:42 I cannot say more about that because it's pending in the court.

23:46 I certainly can.

23:51 It's such a tricky balancing act for you to regulate fairly all these sometimes competing

23:59 interests and then to have a court drop into that process.

24:08 The courts do serve a purpose, but it just makes everything so much harder.

24:14 I think what makes it harder, and I must point this out because one, we are a quasi-judicial

24:22 agency.

24:23 Our decisions are really subject to review by the court.

24:27 It's not like the courts are meddling into or unduly dragged into our issues.

24:34 That's really how our system works.

24:38 Our decisions can be reviewed by the courts, by the Court of Appeals or the Supreme Court.

24:46 That's one.

24:47 We're only a quasi-judicial agency.

24:50 Our rulings are really subject to their review.

24:53 The second thing that…

24:55 I think people wouldn't really mind.

24:57 The industry wouldn't be… should not be nervous about that because in fact, as a lawyer,

25:03 I welcome that.

25:05 We also want affirmation from the court that we're also doing the right thing or correction

25:12 if we're not doing the right thing.

25:14 That's one thing I appreciate.

25:15 I think what the danger or the increase in uncertainty happens because of delay.

25:25 Because if our decisions are questions, regulators' decisions, not just ours, but the decisions

25:31 of the regulator, of a technical body, are brought up for review and it takes, for example,

25:38 10 years before the decision is issued, then imagine that 10 years worth of uncertainty.

25:47 That has value.

25:50 This is one thing that in the commission, we also…

25:53 I must say we also need to realize sooner that even delays in our decisions have peso

26:01 equivalent, have dollar equivalent.

26:03 There is a price to uncertainty.

26:05 So I think if that delay is addressed, then we wouldn't fear so much that things are reviewed

26:16 by the courts or things are subject to review if decisions are made faster.

26:21 Same goes to… same lesson goes to us.

26:23 Yeah.

26:24 Well, I know you've been working on it.

26:28 Maybe they need an anti-red tape law to apply to the judicial system.

26:32 It's not subject to all that.

26:37 I know that's wishful thinking, but there should be some, if not hard and fast timelines,

26:45 there should be some standards of guidance like, "Look, if we need to review an ERC

26:52 decision, it needs to take place within six months or whatever is a reasonable amount

26:59 of time.

27:00 Otherwise, it will lapse into being official."

27:03 Correct.

27:04 I think to be fair to the Supreme Court, the Supreme Court oversees administratively all

27:10 the courts in the land.

27:13 There are some efforts to do that via appointing special courts, courts that would have the

27:18 expertise because sometimes what's taking it too long is you need to understand the

27:24 technical aspects of the industry.

27:26 And if you need to do it, if you have different courts where the expertise need to be studied,

27:33 need to be gained, then you really have delay.

27:37 So the appointment, I think, of special courts facilitate the process, but I don't know

27:43 if we have enough special courts around.

27:46 Yeah.

27:47 I mean, the idea of special courts is fine, but you do need the people who are both competent

27:54 technically and good judges to fill that.

27:59 That's a big ask, perhaps.

28:00 Another thing that happened recently that I think may have upset a few people is that

28:08 last month you reinstated the feed-in tariff.

28:14 And your explanation at the time was that the fund that the feed-in tariff goes into

28:20 was being depleted because it had been suspended for a length of time.

28:25 Well, that explanation makes perfect sense.

28:28 However, I don't think either the ERC prior to you, because of course the feed-in tariff

28:38 has been around for a long time, nor the Department of Energy has really explained to the unlearned

28:48 what exactly is done with that feed-in tariff money and how do you determine the rate.

28:58 Okay.

28:59 And that's, okay, that last is a bit of a trick question because I've had it suggested

29:05 to me by I won't say who that it tends to be perhaps a bit arbitrary, the rate, which

29:16 I'm not sure how that works either.

29:19 So in as simple terms as you can make it, why is it important that we all pay the feed-in

29:29 tariff?

29:30 All right.

29:31 Okay.

29:32 So maybe first a clarification on the terminology.

29:37 So the feed-in tariff is the rate that goes to, the feed-in tariff is the rate for the

29:46 different renewable energy plants that we have in the system.

29:50 There's a feed-in tariff for solar.

29:53 So there's a rate for solar plants.

29:55 There's a feed-in tariff or a rate for the wind plants.

30:00 There's a feed-in tariff rate for what we call the run-of-river hydro plants.

30:05 There's a feed-in tariff rate for the biomass plants.

30:08 So far they are what we call the FIT plants, the plants that are entitled to the feed-in

30:16 tariff.

30:17 They don't, they are all, as you know, we operate under a gross pool system.

30:23 So everyone, Luzon, Visayas, and Mindanao, now that Mindanao is also connected to the

30:29 entire system, everyone of all of our power plants in the country, all of the power plants

30:34 in the country offer their capacities to the WESEM and they're all dispatched by the WESEM.

30:42 Feed-in tariff plants enjoy what we call the priority dispatch.

30:47 Whenever the sun is up, it gives, and the solar plant is up, they need to be dispatched.

30:54 So they bump off everyone else because whenever they're ready, we need, the system is fed

31:00 by the solar plant, the wind plants, the run-of-river plants, and the, well, biomass is a bit tricky.

31:07 There's a certain distinction because it's not intermittent, but the intermittent plants,

31:11 whenever they're ready, they are, they take the first dibs in the system.

31:17 That means that whether we like it or not, we are served by the solar, wind, and run-of-river

31:25 hydro.

31:26 So we pay for, we pay for the generation of those plants via what we call the FIT allowance,

31:35 the feed-in tariff allowance.

31:37 That is the peso per kilowatt hour that's charged from us, from all the users of the

31:43 system, because we don't know, we don't know whenever we are sourced by the solar, hydro,

31:48 and wind.

31:49 So it's, it's collected from all, because the assumption is we're all served by them

31:55 as well.

31:56 So what we had, what we had suspended last time is the collection of the FIT all.

32:01 So the, that means, does that mean that the FIT plants were not paid?

32:05 No, they were still paid.

32:06 They were still paid one part from the WESEM, the, what is, whatever is the rate at the

32:12 WESEM at that point in time.

32:14 And the difference is sourced from the FIT all fund, the fund where our, all our contributions

32:21 via the FIT allowance is pooled, is pooled, and that's the fund that you were referring

32:26 to.

32:27 So for a long time, because WESEM was, because we, the FIT all amounts were being collected

32:33 from all of us, and it's less than four centavos from each one of the consumers being pooled

32:41 in this fund.

32:43 But the WESEM rate was quite high.

32:45 So there was no need to dip from the fund because the collection from the WESEM was

32:52 enough to pay out all the solar, wind, and hydro, and hydro plants and the biomass plants.

32:57 So the fund was very healthy.

33:00 So what we did in 20, in December, 2022 was to suspend the collection first of that four

33:07 centavos from all of us, because the fund had enough to pay out for a few months.

33:13 We thought it would last for just a few months until it lasted for a year that, you know,

33:19 the fund was healthy until the fund was not healthy anymore.

33:22 And then that's when we started saying, okay, we need to resume building up the, building

33:28 up the fund again and started collecting the, the less than four centavos from anyone, from

33:34 everyone.

33:35 So how do we, how do we land at that now four centavos?

33:39 It's actually, it's actually an application based on an application made by Transco.

33:44 Transco is the manager of the fund, the administrator of the fund.

33:48 So they compute all the feed-in tariff, the fit rate that is due from all the solar, hydro,

33:57 run-of-river, and biomass plants based on their estimated generation, meaning the kilowatt

34:05 hour that they will produce over a certain period.

34:08 They compute that versus some administrative fee, the chart that Transco also, also collects

34:17 versus their projection of the WESM rate.

34:20 Because again, the fund is supposed to make up only for the difference from what's collected

34:26 in the WESM and what's due the RE plants over the total demand, meaning what is, what we

34:35 will all consume.

34:36 And then they come out with, with a rate that they apply with the regulator.

34:42 And then we also vet that and we determine what is going to be the fit allowance rate

34:47 for this year that will be collected from, from all of us.

34:50 So there's a, there's, I wouldn't say complex.

34:54 It's not even complex process.

34:56 It's actually just math.

35:00 But math can be complex also, sorry.

35:03 So but it's, it's not a, it's not a very complicated compared to, for example, the reset, the reset

35:11 process.

35:12 Now that's complex, but the setting of the fit allowance is not a very complex process.

35:18 Okay.

35:19 We'll have time for just a couple more questions.

35:23 I think one interesting thing, and you know, it's just, it somewhat relates to NGCP because

35:30 of the, you know, all the arrows shot in their direction last month when the, the PNI issue.

35:37 But President Marcos recently floated the idea of what do you call a third party developer

35:45 to help speed up, you know, grid connections and grid expansion.

35:51 And I, I don't, I'm not sure what he meant by that.

35:54 I'm not sure he was sure what he meant by that because that just simply sounded like

35:58 to me, like allowing NGCP to outsource some, some work.

36:05 Or what did he mean, you know, have a another, you know, which would not be a third party,

36:11 it would only be a second party in this case, have another grid operator come in.

36:15 And so if it's what I think it is, it's just allowing NGCP to, you know, pull in some more

36:22 resources to get their work done.

36:25 You know, basically they're subcontracting it.

36:28 Is that something that ERC would even need to get involved in too much as far as approving

36:34 or overseeing it?

36:36 We don't, we don't approve the subcontracting arrangements of, of NGCP.

36:41 That's what I thought.

36:43 Although we issued recently the procurement guidelines for regulated entities, for example,

36:50 and it, it applies not just to NGCP, but all private distribution utilities as well, that

36:56 we required for them to make sure it's competitive and all these things.

37:01 But again, not on a per contract.

37:03 That's fairly general though, and more or less good practice kind of stuff.

37:08 We don't approve on a per contract basis.

37:10 But I think the, the driver there is really to make sure that the projects that are the

37:18 critical projects that are not yet commenced by NGCP, because we know that there are delays

37:25 in some very serious delays in some of the projects that there are, that if there will

37:31 be projects that need to be built and NGCP has not done it, that it's, is it possible

37:39 for another party to build it, to build those projects and then turn them over to NGCP?

37:45 I think that's the area where it's being studied, but there is, there is that exception under

37:51 the EPIRA for gen, it's happening now.

37:54 Generators are building, are building their lines.

37:58 And sometimes even the transmission portion is being built by the generator just to make

38:05 sure there is no delay when their plant is ready to start.

38:09 So there is, in a way there is already that third party in the form of the generators

38:16 that are building.

38:17 Well, that's, that would simply be something for NGCP to work out with the generator or

38:22 whoever else is doing the work.

38:24 Okay.

38:25 All right.

38:26 Well, one last question.

38:27 I'll ease up on you now.

38:29 What, what, what, you know, what are some, some positive things that, that, you know,

38:37 he or she is working on?

38:38 What do you, how do you see the outlook for, you know, for, for energy supply or expansion

38:44 of, you know, or generation capacity and whatnot for the rest of this year?

38:49 Are we in pretty good shape?

38:51 You know, we're facing maybe some challenges from El Nino and things like that.

38:57 Yeah.

38:58 And what, what's your agency working on?

39:01 What's the...

39:02 The, the lookout for making sure that we have new supply, new capacity coming in and whether

39:08 we have sufficient supply for El Nino is really with the Department of Energy, right?

39:13 But we do work closely with the DOE and to the extent that we can contribute to the programs

39:20 that will promote increased capacity, we do support aggressively those programs by the

39:29 DOE.

39:30 So from our end, what we're, what we're excited about for, for this year, one is really the

39:37 retail market.

39:40 We're rolling out the, because as you know, we, the threshold right now for the contestable

39:46 market is 500 kilowatt, 500 kilowatt hours.

39:50 And considering the operation already of WESEM in Mindanao and the physical integration of

39:57 Mindanao, ARCOA, Retail Competition and Open Access in Mindanao will also be, will also

40:03 commence soon.

40:05 That means all areas of the main grid will now be open for, for contestable market.

40:12 And that's why we're also coming out with what we call the Omnibus Rules for, it's no

40:17 longer just retail competition and open access, but what we call Omnibus Rules for Consumer

40:23 Choice Programs, because then we have ARCOA, we have the Green Energy Option Program, which

40:30 is the purely RE retail supply.

40:34 And we have aggregation programs that will fall into this, into this basket of programs

40:40 where consumers can choose directly their own suppliers.

40:44 We're very excited about that because we think while the issue of affordability is still

40:52 a challenge we need to face, if large consumers can already contract their own and negotiate

40:59 their own rates with, directly with suppliers and generators, that will ease the burden

41:07 on the part of distribution utilities as well, especially our electrical operatives who have

41:14 very difficult, who have extreme difficulty sometimes sourcing, sourcing more affordable

41:21 rates from suppliers because their, their loads are really small.

41:26 So they can't even have that negotiating leverage with, with generation companies.

41:32 So at least their large customers can just contract directly.

41:35 So it's one way of addressing the affordability issue by having large consumers.

41:43 So that's, that's one, ARCOA.

41:46 We're also pushing aggressively with our digitalization campaign in the ERC, within the, within the

41:54 institution.

41:55 That's something you've mentioned before.

41:57 Yes, because it's really, it's really one tool to promote more transparency and in that

42:04 way, more accountability on, on our end.

42:07 So we're, we're constantly thinking of ways of disseminating information and making it

42:15 accessible on our website, in other, in other, in the websites of other partner agencies.

42:21 And we've been partnering a lot with other agencies.

42:25 We've partnered with the Securities and Exchange Commission that just came out with their streamlined

42:30 rules for listing for generation companies.

42:34 I'm very excited about that as well.

42:36 We've partnered with the Philippine Competition Commission so that they can help us also augment

42:41 our, our skill set, our, our personnel in monitoring anti-competitive behavior and market

42:51 abuses in the, in the WESEM.

42:54 So all, and we have other partnerships in the works for data sharing with the DNR, the

43:01 DOE, and the NCIP, the National Commission on Indigenous Peoples, all leading towards

43:09 making it easier for us and faster for us to process permits, issue approvals for power

43:15 supply agreements, because we can now directly access all these, the information with the

43:21 other agencies.

43:22 So that's, that's just some of them.

43:24 We need to deal with our backlog.

43:27 We're hoping we will have significant dent this year by changing the way we do things

43:33 in our, in processing the applications in the office.

43:38 Okay.

43:39 Well, we'll leave it there.

43:41 Your website has gotten easier to use.

43:45 Your IT team is doing a good job.

43:48 We'll leave it there.

43:49 Of course, every time I, every time I meet with you, there's always, you know, a half

43:55 a day's worth of things we could talk about, but we'll have other opportunities.

43:59 I really appreciate you taking time out to come down and share with us and hopefully

44:05 we'll have a chance to speak with you again soon.

44:08 Sure.

44:09 Looking forward to that.

44:10 And thank you.

44:11 Thank you to everyone here and your staff here at Manila Times.

44:13 [Music]

44:29 [Music]

ERC chief at the Times | The Manila Times Roundtable

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