COA to ERC: Unethical for companies to pay for inspectors’ travel, lodging

MANILA, Philippines – The Commission on Audit (COA) questioned the practice of the Energy Regulatory Commission (ERC) of charging power firms for travel and lodging costs of their personnel who inspect facilities, pointing out that the agency has funds for that.

In its audit report on the ERC released last May 24, COA said it is unethical for the ERC to require generation companies (GCs), qualified-end-users (QEs), and self-generation facilities (SGFs) to pay for the travel and lodging of agency inspectors.

The firms undergo ERC inspection to obtain their certificates of compliance (COCs).

“The independence and objectivity of the technical inspectors may be impaired considering that the issuance of COCs is partly dependent on the result of the inspections. The Commission should avoid putting any doubts… by not allowing the applicants any opportunity to influence the results of such inspections,” COA said.

In 2016, the ERC issued travel orders which were all paid for by the applicants of the COCs. COA noted that there was no liquidation after because the applicants were not required to provide a breakdown of the travel and lodging costs they paid.

COA also noted that the ERC gave its traveling inspectors per diems for the duration of their fieldwork.

“This practice is inconsistent with the State policy on full disclosure of government transactions since the amount spent for the said travels were not accounted for in the agency books of accounts,” COA said.

COA highlighted the impropriety of inspectors receiving money from COC applicants. But according to the ERC, its inspectors do not receive cash from applicants since the applicants arrange for inspectors’ transportation and lodging.

The ERC also claimed it does not have enough funds to shoulder the travel expenses of its personnel. COA, however, noted that the ERC has an item on its annual budget for foreign and domestic travels for its officials and employees.

In fact, COA said, a breakdown of the Maintenance and Other Operating Expenses (MOOE) of the ERC showed that the costs for Local and Foreign Travels ballooned to P16.724 million in 2016 from just P12.757 million in 2015.

The ERC, however, said: “The increase in traveling and training expenses account is due to the increased number of foreign technical trainings and travels and Gender and Development projects to enhance the personnel’s competence.”

In an exit conference last April 19, the ERC agreed to a compromise where it will first shoulder travel expenses of inspectors, but these should be reimbursed by the firms. This addresses to an extent COA’s concern of inspectors transacting directly with COC applicants because under the changed rules, applicants will now directly deal with the ERC office and not inspectors on the field.

The ERC added it will now require full liquidation.

COA also noted that a total of P8 million in the ERC’s confidential expenses had not been liquidated as of December 31, 2016. – Rappler.com