ERC: New NGCP rates out within Q1 2024

The Energy Regulatory Commission (ERC) is targeting to complete its review of the National Grid Corporation of the Philippines’ (NGCP) performance to determine new power transmission rates within the first quarter of 2024.

“We are really targeting it to be out by the first quarter,” ERC chairperson Monalisa Dimalanta said at The Saturday News Forum in Quezon City.

“Actually, it’s not only the report that will be out. New rates should be already in place by the first quarter,” Dimalanta said.

The ERC chief made the statement after President Ferdinand Marcos Jr. ordered the power industry regulator “to complete the reset of NGCP's rates without further delay, to ensure its compliance with statutory and regulatory obligations.” 

The President’s call came following the widespread prolonged power outage in Panay Island, which both he and the Department of Energy said could have been prevented had the NGCP acted on a two-hour window to prevent a system collapse. 

The NGCP, in its defense, stood firm that the system prior to the multiple tripping of power plant units was normal and its actions taken were within protocols.

The ERC had said that unplanned outages of a Panay sub-grid on January 2 caused the power shortage.

Dimalanta said the ERC had already issued partial results of its ongoing review of the NGCP under the regulatory period 2016-2022.

The regulator disallowed the NGCP to recover from consumers more than half of what the company applied for under the ongoing review of power transmission rates.

The ERC determined the total allowable revenues for Phase 1 of the fourth regulatory period to be P183.491 billion, or an average of P36.7 billion annually.

The allowable revenues cover the years 2016-2020 or Phase 1 of the fourth regulatory period covering 2016-2022.

“This amount is significantly lower than NGCP’s claims of P387.803 billion for Phase 1, or an annual average of P77.56 billion – which was higher than the interim Maximum Annual Revenue (iMAR) of P51.47 billion for 2020 initially granted by ERC to NGCP in a previous March 2022 issuance.”

Maximum Allowable Revenue (MAR) refers to the maximum amount that NGCP is allowed to earn annually to recover its operational expenses like OPEX (operating expenditures) and CAPEX (capital expenditures), as approved by the ERC in accordance with the rules.

The determined allowable revenue for NGCP, however, is not yet final as it will still be subjected to public and stakeholder comments.

The NGCP has since defended the several expenses which were disallowed by the ERC as recoverable from consumers as legitimate business costs under the same rules applied to the National Transmission Corporation (TransCo).

Dimalanta said the fourth regulatory period review of the NGCP is unlike other periods as it covers historical data on the company’s expenditures and performance.

The regular rate-reset process is usually a forward-looking exercise that requires the regulated entity to submit forecasted expenditures and proposed projects over a five-year regulatory period.

“Considering, however, the non-occurrence of the rate-reset for NGCP since the lapse of the third regulatory period 2011-2015, the current ERC is constrained to evaluate for the fourth regulatory period whether the costs already incurred by NGCP for the previous years were prudent, reasonable, and economically efficient,” the ERC said earlier.

“Recognizing the urgent need to conduct the regulatory reset without further delay in order to revert to the forward-looking reset exercise for the fifth regulatory period 2023-2028, the ERC adopted a phased-in approach in its review of the fourth regulatory period: Phase 1 covering January 1, 2016 to December 31, 2020 based on NGCP’s Revenue Application, while Phase 2 will cover January 1, 2021 to December 31, 2022 based on additional documents obtained by ERC from NGCP,” it added. —VAL, GMA Integrated News