Press Release
August 3, 2012

Drilon lambasts NGCP impending purchase of power lines in Iloilo;
Buyout against EPIRA, he says

A plan by the state's lone transmission networks provider to buy out assets of a local power distributor in the Iloilo City runs afoul of the provisions of the Electric Power Industry Reform Act (EPIRA), stressed Senator Franklin M. Drilon today.

In a 27-page Opposition he filed with the Energy Regulatory Commission (ERC), Drilon opposed the National Grid Corporation of the Philippines (NGCP)'s impending purchase of transmission assets of the Panay Energy Development Corporation (PEDC) for the amount of P600 million.

PEDC operates the first 164-megawatt coal-fired power plant in La Paz, Iloilo which supplies electricity to Panay Electric Company Inc. (PECO) - the sole power distributor in the city - which is only one-kilometer away from PEDC, noted Drilon.

Drilon was alarmed over a possible substantial increase in electric power charges once the NGCP acquires assets of PEDC. At this time, since the transmission facilities are owned and operated by PEDC, it charges a minimal fee for the operation and maintenance of the said facilities. If the NGCP acquires the said assets, it is likely that it will impose substantial transmission wheeling charges, which will eventually be passed on to household consumers, pointed out Drilon.

"That is totally contrary to and violative of the spirit and intent of the policies and objectives of the EPIRA which was originally envisioned to improve and make efficient the operations of the power industry with the end in view of pulling down the price of electric power. Hence, I find the petition of NGCP uncalled for and not beneficial to the people for it will only add to the suffering of the residents of Iloilo City," said Drilon.

Earlier, Drilon expressed dismay over the ERC's decision allowing a series of increases for the electric consumption in the franchise area of PECO that covers 180 barangays of the city.

Drilon estimated that the planned buyout will increase the price of electric power in the PECO supplied areas by P1.00 per kilowatt hour which is obviously against the policies of the government.

Drilon also explained the PEDC properties that NGCP intends to purchase are not transmission assets, as alleged by the firm, for these are "point-to-point" assets that are directly connected to PECO and not to the Grid.

He stressed PEDC does not need to use transmission networks to supply electricity to its distributing lines including the PECO. PECO is connected directly to the PEDC generating facilities through the switchyard, thereby by-passing the transmission network. The purpose of the switchyard is to protect the generation units of the power plant facility and to serve as the first line of defense of a generation facility against damage arising from frequency excursions, power surges, voltage surges and system instability.

Drilon added this setup is more beneficial to household consumers since they don't pay transmission wheeling charges for using NGCP-owned transmission lines in distributing electricity to end users.

He also recalled this setup was presented by PEDC and PECO to bring significant decrease in power rates when the former applied for permits for the construction of its coal power plant and point-to-point assets.

"The belief of the NGCP that these PEDC assets should be transferred to them citing the power of eminent domain as a reason is unsubstantiated because in the first place, what they intend to buy is beyond the scope of their jurisdiction. I emphasize that PEDC assets are not transmission assets which are mandated to be owned and operated by NGCP only. They are point-to-point assets," stressed Drilon.

"Moreover, Section 9 of the EPIRA allows generating companies to develop and own or operate dedicated point-to-point limited transmission facilities that are used solely by the generating facility as long as it is consistent with the Transmission Development Plan," explained Drilon.

The Senator also dismissed the allegation made by the NGCP that PEDC lacks expertise, resources and capability to operate and maintain point-to-point assets.

"The fact that PEDC has been in the business of providing electricity for more than a decade somehow assures us that it has already attained some levels of expertise. That is entirely incredulous and clearly speculative," said Drilon.

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