THE Energy Regulatory Commission (ERC) said the National Grid Corp. of the Philippines (NGCP) has been cleared to begin implementing the staggered cost recovery of at least P28.29 billion in the August billing month.
“I think the (increase) will take effect starting in the next billing period,” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said on the sidelines of an event in Pasig City on Monday.
While the decision was arrived at in April, Ms. Dimalanta said that it took some time for the Commission to write the decision.
“Understandably, something as thorough as a rate reset takes time to write. It took some time to write… the actual final determination,” she said.
In a statement in April, the ERC announced that it completed the NGCP’s fourth regulatory period rate reset covering 2016 to 2022.
In a decision by the majority composed of Commissioners Alexis M. Lumbatan, Floresinda G. Baldo-Digal, and Marko Romeo L. Fuentes, the ERC approved a maximum allowable revenue (MAR) of P335.78 billion for the NGCP for the period. MAR is the maximum amount the NGCP is allowed to take in annually to recover its operational expenses.
Ms. Dimalanta and Commissioner Catherine P. Maceda voted against the resolutions adopted by the majority.
Following the decision, the NGCP is entitled to recover an additional P28.29 billion in under-recoveries.
The majority set a seven-year recovery period for the grid operator, during which it is allowed to collect an additional P0.1013 per kilowatt-hour (kWh) in transmission charges over the next 84 months from the issuance of the decision.
The amount covers the P0.0629 per kWh average increase in the basic transmission charge and additional P0.0384 per kWh corresponding to the under-recovered portion of the increased MAR.
The ERC explained its decision in a 155-page document.
Under the Electric Power Industry Reform Act, the ERC is tasked with establishing the methodology for setting transmission and distribution wheeling rates. The rates must be set in a way that allows the recovery of “just and reasonable costs and a reasonable return on rate base” to enable the entity to operate viably.
The rate reset process is usually a “forward-looking” exercise that requires the regulated entity to submit forecast expenditures and proposed projects over a five-year regulatory period. The ERC assesses the actual performance of the entity and adjusts rates as needed.
The NGCP officially started operations as a power transmission service provider in 2009.
Under a congressionally granted 50-year franchise, the company has the right to operate and maintain the transmission system and related facilities, and to exercise the right of eminent domain as needed to construct, expand, maintain, and operate the transmission system. — Sheldeen Joy Talavera
