Connecting both producers and consumers, the country’s power transmission network serves as the backbone of the electric power industry. It is a complex network of transmission lines, substations, transformers, and related facilities that delivers electricity from the power generators to commercial, industrial, and residential consumers.
The Electric Power Industry Reform Act intended to make the industry’s power generation sector more competitive and open, while the transmission and distribution sectors remained regulated. As mandated in Section 8 of the EPIRA, the National Transmission Corp. was created to assume the electrical transmission function of the National Power Corp. TRANSCO commenced operation in March 2003, maintaining and managing the entire power transmission system that connects the different power plants to the electric distribution utilities across the country. Section 21 of the same law mandated the privatization of TRANSCO in an open competitive bidding either via an outright sale or a concession agreement.
In December 2007, a 50-year congressional franchise was awarded to the National Grid Corporation of the Philippines (NGCP) to manage, operate, and develop the Philippine transmission system through Republic Act 9511. Nevertheless, ownership of all transmission assets remains with TRANSCO. And 60 percent of the outstanding capital stock of the NGCP consortium is held by Monte Oro Grid Resources Corporation and Calaca High Power Corp., while 40 percent is held by the State Grid Corporation of China (SGCC). This NGCP consortium holds the 25-year concession contract to operate the country’s power transmission network.
The Philippine power grid is critical for properly carrying out the day-to-day functions of our economy. Without an efficient system of delivering electricity from the power generators to the distribution utilities and electric cooperatives, end-consumers of electricity will not be able to have high-quality, reliable, secure, and affordable supply of electric power, as purposefully envisioned in the EPIRA. NGCP’s franchise with the government is drawn along the same lines, with the intention of providing the opportunity of a safe, efficient, reliable, and affordable electricity supply.
However, over the years of its operation, NGCP has had its fair share of criticism. For instance, there were some concerns regarding the national security of the grid. From the 2020 hearings conducted by the Senate Committee on Energy led by Sen. Sherwin Gatchalian, it was disclosed that the transmission grid may be vulnerable to cyberattacks and physical intrusions, especially with the growing risk of cyber-terrorism on a global scale. Claims of China being able to remotely control the power grid likewise circulated. Perhaps, this was also fueled by reports of NGCP’s refusal to subject itself to a technical audit from TRANSCO.
NGCP, on the other hand, insists that the Supervisory Control and Data Acquisition (SCADA) system they use is a stand-alone system and not connected to the Internet or any virtual private network. What remains to be true is the fact that our power transmission system is, indeed, an infrastructure imbued with national security interest, and that it is important that we have control of this vital national facility.
Another issue has to do with ancillary services for energy security. This is the capacity required of the system to maintain the power quality, reliability, and security of the grid. The Department of Energy has advised NGCP to acquire this reserve capacity to supplement baseload power supply and prevent yellow and red grid alerts translating to power outages.
It can be recalled that certain areas in Luzon went through rotating brownouts in September 2022 when the electricity supply was not enough to meet the demand. Contributory to this was the unexpected or unplanned outages by some power generators including derated power plants operating below capacity. The concern is on the type of contracting for these ancillary services.
DOE advised for a firm contracting type of procurement for ancillary services, where NGCP commits to buy, and the power generators commit to supply a specific capacity at a certain price. NGCP, on the other hand, insists that doing so will simply lead to higher power prices. To this, the DOE calls for a competitive selection process in the procurement of such ancillary services.
But perhaps one of the most crucial concerns pertains to the delay in several of NGCP’s transmission projects. To date, there is still no unified national grid that connects the three main island groups in the country. Mindanao is yet to be looped into the Luzon-Visayas grid. This prevents any excess capacity in Mindanao from augmenting power requirements in Luzon or Visayas, and vice versa. The completion of this project will surely lead to a more optimal sharing of our indigenous energy sources and help create a more reliable, secure, and more resilient power grid.
Ms. Clarissa Ruth S. Racho-Sabugo is a graduate student at the Department of Economics of Ateneo de Manila University.