By Louis ‘Barok‘ C. Biraogo

The controversy surrounding the National Grid Corporation of the Philippines (NGCP) and its management of the Wholesale Electricity Spot Market (WESM) is a tangled web of legal, ethical, and political issues. Recent revelations have put the Independent Electricity Market Operator of the Philippines Inc. (IEMOP) under intense scrutiny, raising questions about transparency, conflicts of interest, and the proper application of the Electric Power Industry Reform Act of 2001 (EPIRA).

Timeline of Events

2020: Initial Revelations

The crux of the matter came to light in 2020 when Rep. Jericho Nograles, then representing the Puwersa ng Bayaning Atleta (PBA) party list, raised concerns about IEMOP. Nograles highlighted the company’s minimal paid-up capital of PHP 7,000 and its “sweetheart deal” to manage WESM without a competitive selection process. His remarks sparked a series of investigations and public outcry.

2022: The Conclusion of Cusi’s Era

Alfonso Cusi concluded his term as Secretary of Energy in 2022. Throughout his tenure, he staunchly defended the handover of WESM management to IEMOP, citing adherence to EPIRA regulations and the purported expertise of IEMOP’s staff, many of whom migrated from the Philippine Electricity Market Corp. (PEMC).

2024: The Unyielding Controversy

Fast forward to 2024, and the controversy refuses to fade. Nograles has passed the baton to Margarita ‘Migs‘ Nograles as the PBA party list representative, yet the unresolved issues persist. Scrutiny on IEMOP has only deepened, with a crescendo of demands for transparency and answerability echoing louder than ever.

Current Status

The controversy has ignited a fierce outcry from lawmakers and the public, spearheaded by the relentless efforts of Rep. Jericho Nograles throughout the preceding administration of President Duterte. Nograles fearlessly brought to light a myriad of troubling issues: the glaring absence of a fair competitive selection process, the dubious credentials of IEMOP, and alarming potential conflicts of interest, notably revolving around Ma. Rene Ann Lourdes Garcia-Matibag. As an incorporator of IEMOP and the spouse of Melvin Matibag, the then-president of the National Transmission Corp., the web of connections raised serious ethical concerns that could not be ignored.

The Department of Energy (DOE) has defended IEMOP, citing the EPIRA law and an Independent Market Operator (IMO) transition plan. DOE insists that IEMOP’s takeover was legal and that its employees were experienced, having transitioned from the previous operator, Philippine Electricity Market Corp. (PEMC).

Ethical and Legal Issues

1. Conflict of Interest

One of the most glaring ethical issues is the potential conflict of interest involving Ma. Rene Ann Lourdes Garcia-Matibag. Her involvement in IEMOP while her husband was holding a significant position in the National Transmission Corp. raises serious questions about the impartiality of the selection process.

2. Lack of Competitive Selection

The absence of a competitive selection process contravenes the principles of transparency and fairness enshrined in EPIRA. Rule 9, Section 6(a) of EPIRA’s implementing rules and regulations (IRR) mandates that the independent operator must be “financially and technically capable, with proven experience and expertise of not less than two (2) years as a leading independent operator of a similar or larger size electricity market.” IEMOP’s minimal capitalization and lack of experience seem to violate these requirements.

3. Financial Impropriety

Nograles and others argue that IEMOP’s collection of fees from consumers without proper authorization from the Energy Regulatory Commission (ERC) constitutes financial impropriety. The computation of fees, even at the reduced rate claimed by DOE, suggests a substantial financial windfall for IEMOP.

Potential Breaches Identified for Investigation and Prosecution

Against IEMOP and DOE Officials:

• Violation of EPIRA: The lack of competitive selection and questionable qualifications of IEMOP may constitute a violation of EPIRA and its IRR.
• Conflict of Interest: The involvement of high-ranking officials’ relatives in IEMOP suggests potential breaches of anti-corruption laws, such as the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019).
• Unauthorized Collection of Fees: If proven, the unauthorized collection of fees could lead to charges of financial misconduct and breach of fiduciary duty.

Potential Rebuttals and Contrary Views

By IEMOP and DOE Officials:

• Legal Compliance: DOE officials may argue that the transition to IEMOP was in compliance with EPIRA and that no competitive bidding was necessary for local entities.
• Operational Expertise: IEMOP can claim that the experience of its employees, who transitioned from PEMC, meets the technical requirements set by EPIRA.
• Minimal Fees: DOE’s assertion that IEMOP collects only a minimal fee per kilowatt-hour could be used to argue that there is no substantial financial impropriety.

Potential Consequences and Judicial Measures

If investigations find sufficient evidence of wrongdoing, the following legal steps and potential punishments could ensue:

• Ombudsman Investigation: The Ombudsman could investigate the potential conflict of interest and financial improprieties.
• Anti-Graft Charges: Charges under the Anti-Graft and Corrupt Practices Act could lead to significant penalties, including imprisonment and fines.
• ERC Review: The ERC could impose sanctions on IEMOP for unauthorized fee collections and revoke its authorization to operate WESM.

Recommendations

To Investigators and Prosecutors:

• Conduct a thorough and impartial investigation into the conflict of interest and financial dealings of IEMOP and its incorporators.
• Ensure transparency in the investigation process to restore public trust in the management of the country’s electricity market.

To IEMOP and DOE Officials:

• Cooperate fully with the investigations to clarify the legal and ethical issues raised.
• Consider restructuring IEMOP to eliminate any potential conflicts of interest and ensure compliance with EPIRA’s requirements.

The fight for control over the NGCP and the management of WESM is far from over. As this controversy unfolds, it is crucial for all parties involved to adhere strictly to legal standards and ethical principles to safeguard the public interest and maintain the integrity of the Philippine electricity market.