Public or Private: Power Transmission Company
What is Power Transmission?
Power Transmission involves the bulk movement of electrical energy from generating plants to a network, usually a grid system, and then distributed to consumers.
The Company and Ownership
The Power Transmission Company has the important role of connecting the generating facilities with distribution utilities in delivering electricity where it is most needed. It also ensures that an adequate and reliable transmission system delivers quality electricity to consumers. It can be owned by a regulated private company or by a government-owned and controlled corporation
Most of its functions involve:
Operations and Maintenance — The company ensures that the government-owned transmission assets are in optimal condition by conducting regular inspections and repair of lines and substations, clearing of obstructions, and timely restoration during and after natural disasters.
Planning and Engineering — Expansion is equally necessary as power supplies increase. The company ensures that the transmission system is prepared when the demand for power increases. A Transmission Development Plan is being prepared for the approval of the Government.
System Operations — The company balances the supply and demand of power to maintain the quality of electricity that flows through the grid.
Market Competition and Revenue Regulation
Power Transmission Company is a monopoly in nature which is why it should be regulated in terms of Financial, such as the implementation of Maximum Allowable Revenue (MAR).
If it is a Government-Owned and Controlled Corporation, the Power Transmission Company will be non-profit and pass-on-based billing. Meaning, the expenses, and losses are equal to the total billings of all customers. While for a private company, the expenses, losses, and revenues are equal to the total billings of all customers.
The biggest advantage of Government-Owned and Control Corporation to take over a Power Transmission Company is the lower charges to consumers due to the removal of revenue.
The Philippines and the EPIRA Law
The Republic Act 9136 in 2001, Electric Power Industry Reform Act of 2001 or the EPIRA, restructured the electricity supply which called for the separation of the different components of the power sector: Generation, Transmission, Distribution, and Supply. The generation was privatized through the sale of generation assets, while the Transmission was spun off to government-owned and controlled corporation National Transmission Corporation (TransCo), in preparation for its eventual privatization via concession.
In 2007, the consortium of Monte Oro Grid Resources Corp., Calaca High Power Corporation, and the State Grid Corporation of China (as a technical partner), which is currently the National Grid Corporation of the Philippines (NGCP), won the 25-year concession to operate the country’s power transmission network. Unlike the outright sale, through TransCo, The Government retains the ownership of the assets. Only the obligation to operate, maintain, and expand the grid was given to the private investors.
The NGCP officially started operations as a power transmission service provider in 2009. NGCP has the right to operate and maintain the transmission system and related facilities, and the right of eminent domain necessary to construct, maintain and operate the transmission system.
Performance of a Private Power Transmission Company
The Philippines is divided into 3 Grids which also represent major islands of the country, the Luzon, Visayas, and Mindanao. The following are data visuals that may represent the technical performance of NGCP.
The trend of the transmission system loss from Luzon, Visayas, and Mindanao for the year 2013 to 2020 shows that NGCP is effective in minimizing the losses in the transmission system which is a good indication that the power transmission company is performing well.
The recorded transmission charges from one of the Distribution Utility, MERALCO, from its website, shown in the graph above indicate a trend of lower transmission charges which is beneficial for the consumers.
The graph shows the trends of Energy Delivery (Yellow) and Gross Energy Generation (Blue), which is somewhat alarming that past 2020, Energy Delivered is larger than the Gross Energy Generation.
As mentioned, the consortium of Monte Oro Grid Resources Corp., Calaca High Power Corporation, and the State Grid Corporation of China (as a technical partner) consists of NGCP.
Allegedly, 40 percent of NGCP ownership is the state-owned State Grid Corporation of China (SGCC) which supposedly only be a “technical partner”. One of the senators filed a resolution calling for a national security audit of the NGCP following the information that only Chinese Engineers are now able to operate and troubleshoot the transmission facilities and that China can remotely shut down the power grid from a monitoring system located in Nanjing.
According to the article published by the Department of Energy (DOE), Philippines, National Security concerns surrounding the NGCP have been brought forth by questions raised by some of the Senators during the agency’s budget plenary deliberations on 19 November 2019. DOE, together with TransCo and the National Security Council (NSC) is actively taking part in the Senate inquiries that will be scrutinizing the issue.
Should the Power Transmission be operated and maintained by a private entity? Please let me know your answer by leaving a note.