ERC limits NGCP’s 2016 projects to ‘essentials’

by Lenie Lectura – February 24, 2016

from Business Mirror

The Energy Regulatory Commission (ERC) has slashed the planned capital expenditure (capex) of the National Grid Corp. of the Philippines (NGCP) for 2016, effectively limiting the number of projects that it can undertake this year.

ERC Commissioner Gloria Victoria Yap-Taruc said the commission has deliberated on NGCP’s application filed in December last year.

“NGCP has 38 projects, but only seven were approved. They should implement first the projects that are of priority,” Taruc said.

The grid operator sought the approval of 38 projects with a total amount of P8.05 billion. It asked the regulator to issue a provisional authority to implement the proposed capex program for 2016.

The new projects that the NGCP plans to undertake are the Tiwi Substation upgrading project, the Naga Substation upgrading project, the Clark-Mabiga 69-kiloVolt (kV) transmission-line project, the Bataan 230-kV grid reinforcement project and the Hermosa-San Jose 500-kV transmission-line project.

The proposed capex also includes the acquisition of the following transmission-line assets: CEDC-Veco’s Colon 138-kV line; Calung-Calung 138-kV line; New Salong 230-kV substation and Salong Calaca 230-kV line; Ingore CTS; Ingore-Sawang 138-kV submarine cable; Sawang CTS; Sawang Zaldivar substation; CIP II substation; Bacnotam-Mabanengneng lines 1 and 2; and Mabanengneng-Holcim 69-kV line.

However, the ERC only approved the implementation of seven projects amounting to P1.1 billon, according to ERC Chairman Jose Vicente Salazar.

“The commission, after its initial evaluation, decided to authorize the implementation of seven projects for a total amount of P1.1 billion. These projects were found to be necessary for NGCP to be compliant with existing rules and address issues on grid capacity, reliability, safety and protection,” Salazar said in a text message when sought for comment.

These projects, according to Salazar’s text message, include: the Tiwi and Naga Substation upgrading, the Clark-Mabiga 69-kv transmission line, the Bataan 230-kv grid reinforcement, the Hermosa-San Jose transmission line, revenue-metering expansion and security-infrastructure project.

NGCP is required to seek prior approval from the ERC for its expansion plans or improvement of facilities. Aside from its authority and responsibility for the planning, construction and centralized operation and maintenance of its high-voltage transmission facilities, it is indispensible for NGCP to ensure a reliable and high-performance operation of the transmission system.

“One of the core mandates of NGCP is to implement upgrading and expansion programs to ensure that the system adequately and reliably meets forecast demand, system reliability, demand market requirements and capacity of new generators,” NGCP said in its application.

Likewise, NGCP is also required to ensure a reliable and efficient operation of existing transmission lines and substation equipment; and to guarantee a safe and reliable energy supply to the distribution utility. To comply with this mandate, NGCP needs to implement, among others, rehabilitation, refurbishment, testing activities to the existing transmission line and substation assets.

“Thus, to avoid disruption of operation and noncompliance with its mandate under the Epira [Eletric Power Industry Reform Act]as the transmission operator, it is imperative that the implementation of the proposed capex projects be immediately approved,” NGCP said.