Independent review of NGCP’s system operations pushed

by Myrna Velasco, January 25, 2015
from Manila Bulletin

With the aid of external auditors, the operator of the Wholesale Electricity Spot Market (WESM) is pushing for a third party review of the performance of the National Grid Corporation of the Philippines (NGCP) as the country’s electricity service system operator.

This move of the Philippine Electricity Market Corporation-Audit Committee (PEM Audit Committee) has already secured the approval of the Energy Regulatory Commission (ERC) in a resolution it recently circulated to industry stakeholders.

The independent review of NGCP’s system operations function, according to the ERC, shall be based on the terms of reference approved by the regulators.

The WESM operator has stipulated that an independent review of NGCP’s operations is crucial because it “balances the supply and demand of electricity to efficiently serve all of its customers” – including power generators, private distribution utilities, electric cooperatives, government-owned utilities, ecozones, industries as well as directly-connected customers.

The recommended audit of NGCP’s performance as SO, according to PEMC, is in accordance with Clause 1.5 of the WESM Rules.

The electricity spot market operator has noted that the PEM Audit Committee, “through independent external auditors has already conducted four independent operational audit of the system and procedures on market operations (MO) since 2009 up to 2013.”

“The MO audit covered the WESM bid-to-bill operations,” PEMC added. Nevertheless, it emphasized that “the operations of the SO were not included in the audit scope.”

Given that, it was stated that “the independent external auditors of the annual MO audits have consistently and strongly recommended the conduct of an SO review considering the significance of its operations, processes and input data to the overall efficiency and effectiveness of the WESM.”

The resolution of the ERC, has similarly laid down that while NGCP had consistently provided data and information which should have been the basis of its actions as SO, it was averred that the lack of an independent audit rendered such to have not been validated.

 

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