The National Power Corporation (NPC) was created under Commonwealth Act No. 120 on November 3, 1936 as a non-stock government corporation. In 1960, NPC was converted into a stock corporation wholly owned by the government under Republic Act 2641. In 1971, its charter was revised by virtue of Republic Act 6395, as amended. NPC was granted an authorized capital stock of P 50 billion corresponding to 500 million shares of stock at P100 par value, of which 270,488,708 shares were issued equivalent to P 27.049 billion.
From its creation up to the late 1980’s, the generation of power and its transmission through the nationwide transmission grid (the Grid) in the country was vertically integrated, centrally controlled and managed, and wholly-owned by the NPC.
In June 2001, Republic Act 9136, otherwise known as the “Electric Power Industry Reform Act of 2001”, the EPIRA was enacted to institute reforms in the industry. The major aspects of the reforms include the (1) restructuring of the entire power industry to introduce competition in the generation sector, (2) change from government to private ownership, and (3) introduction of a stable regulatory framework for the electricity sector.
The EPIRA organized the industry into four (4) sectors, generation, transmission, distribution and supply. The structural reforms resulted among others in the creation of two (2) government-owned and controlled corporations (GOCCs), the Power Sector Assets and Liabilities Management Corporation (PSALM) and the National Transmission Corporation (TRANSCO).
PSALM was created to take ownership of all existing generation assets, independent power producers (IPP) contracts, real estate and all other disposable assets, and to assume all liabilities and obligations of NPC. The principal purpose of PSALM is to manage the orderly sales, disposition and privatization of NPC’s assets with the objective of liquidating in an optimal manner all the NPC’s financial obligations and stranded contract costs. On the other hand, TransCo was created to take over the electric transmission function of NPC and the responsibility for planning construction and centralized operation and maintenance of high voltage transmission facilities including grid interconnections and ancillary services. NPC was retained as a GOCC (a) to perform the missionary electrification functions, i.e. provision of power generation and its associated power delivery systems in areas that are not connected to the transmission system, through its Small Power Utilities Group (SPUG) (b) to manage the watersheds and (c) to operate and maintain the generation assets transferred to PSALM pending their disposal.