The Energy Regulatory Commission (ERC) and the National Grid Corporation of the Philippines (NGCP) signed a compromise agreement Oct. 1, putting to rest years of litigation over NGCP’s obligation to pay ERC-imposed permit fees and annual supervision and regulation (S&R) fees.
The signing, held at the ERC’s office in Ortigas Center, Pasig City, was led by ERC chairperson and CEO Francis Saturnino Juan and NGCP president and CEO Anthony Almeda, and coincided with a courtesy visit by NGCP’s leadership, headed by Henry Sy Jr.
Under the Electric Power Industry Reform Act (EPIRA, Republic Act 9136), the ERC regulates the electric power industry, including the review and approval of transmission projects undertaken by NGCP, the country’s sole transmission network provider under its legislative franchise, or RA 9511.
In connection with its regulatory functions, the ERC has, over the years, imposed permit fees on a per-project basis and annual supervision and regulation fees on NGCP, fees which NGCP has consistently paid under protest, while separately challenging their imposition before the Court of Appeals and the Supreme Court on the ground that its franchise exempts it from all fees and charges.
The dispute had spanned numerous cases before the appellate courts, with NGCP arguing exemption under Section 9 of its franchise law, and the ERC maintaining that its permit fees and supervision and regulation fees are regulatory and administrative in nature — not taxes — and therefore outside the scope of NGCP’s franchise tax exemption.
Under the compromise agreement, NGCP recognizes that the ERC’s permit fees and supervision and regulation fees are regulatory fees imposed pursuant to the Commission’s statutory mandate, and agrees that it will no longer contest their characterization, as such in the cases covered by the agreement.
Fees NGCP has already remitted, including those paid under protest, will be recognized as having satisfied its obligations for the cases covered by the settlement.
With the settlement, proceeds from the ERC’s permit fees and supervision and regulation fees, both past collections and future impositions, will be remitted to the National Treasury, providing additional resources to support the programs of the National Government, including delivery of basic social services.
“For years, this dispute stood in the way of a clear and settled understanding between the ERC and NGCP on the nature of these fees. This compromise agreement finally puts that question to rest, in a manner that respects the ERC’s mandate, gives NGCP the certainty it has sought, and ensures that the public benefits through funds that will now flow to the National Treasury. It is the kind of harmony we want to see between regulator and regulated: one built on clarity, mutual respect, and a shared commitment to the public interest,” Juan said in a statement.
The ERC and NGCP will submit the compromise agreement to the Supreme Court and the Court of Appeals for approval within 30 days from its execution, after which they shall await court action thereon. ||
