THE Energy Regulatory Commission (ERC) said it capped the revenue that the National Grid Corp. of the Philippines (NGCP) is allowed to generate at P36.7 billion a year.
“After thorough evaluation, the ERC has determined the total allowable revenue for Phase 1 of the 4th RP (regulatory period) to be P183.491 billion, or an average of P36.7 billion annually,” the ERC said in a statement on Wednesday.
The ERC said that the NGCP had applied to set the cap at P387.803 billion for Phase 1, or an annual average of P77.56 billion.
The ERC also noted that NGCP’s application exceeded the amount allowed by the Interim Maximum Annual Review (iMAR) of P51.47 billion, which was initially granted in a March 2022 issuance.
iMAR is the maximum amount that NGCP is allowed to take in annually to recover its operational expenses.
The evaluation forms part of the review of the 4th RP, which is divided into two phases. Phase 1 covering the period 2016 to 2020; while Phase 2 will cover 2021 to 2022.
During a regulatory reset, the ERC assesses the actual performance of the NGCP and adjusts rates if necessary.
According to the ERC, the 4th RP is “unique because it covers a past period, thus requiring evaluation of historical data on NGCP’s expenditures and performance.”
The first phase seeks to determine the proper annual revenue requirement (ARR) for the NGCP, while the second will be based on additional documents obtained by ERC from the NGCP. This phase is targeted for completion before the end of the year.
The ARR sets the amount determined to reasonably compensate NGCP “for prudent, economically efficient, reasonable, and validated costs it incurred in expanding and operating the transmission system.”
“Once the Commission finalizes the determination, after NGCP and the public give comments on the findings, we will finalize the allowable revenue and revise the rates,” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said in a Viber message.
“If there are no revisions to the amounts under the initial determination, then refunds will be due. We are targeting to complete the process within the year,” she added.
In computing the approved operating expenses (OPEX), the ERC has considered “payroll costs and non-network related operating and maintenance (O&M) costs.”
It added that an independent consultant also analyzed the actual expenditures of NGCP in comparison with the approved OPEX for the previous regulatory period.
“In determining the OPEX for Phase 1 of the 4th RP, the ERC disallowed claims that were not properly supported by the audited financial statements (AFS) of NGCP,” the regulator said.
On other taxes, the ERC said it considered applicable taxes other than income tax.
The ERC said it will allow the NGCP and stakeholders to comment on the draft Partial Initial Determination for validation. — Sheldeen Joy Talavera
