THE Energy Regulatory Commission (ERC) is prepared to justify to Congress its decision to provisionally cap at P47.05 billion the revenue of the National Grid Corp. of the Philippines (NGCP).
A resolution was filed in the House of Representatives in June seeking an investigation into “unexplainable” increase in power rates and claiming that the energy regulator failed to keep transmission charges down.
Legislators claim that the increase in NGCP’s interim maximum annual revenue (MAR) this year by P3.3 billion, from the previous P43.8 billion, will “further increase the burden of consumers” during the pandemic.
They also raised the issue of the regulator’s failure to conduct the private transmission firm’s fourth regulatory reset of transmission wheeling rates, for which the ERC sought an extension until next year.
ERC Spokesperson Floresinda B. Digal told BusinessWorld that its “decision has basis.”
“We are open to any inquiry; we will extend full cooperation to clarify and explain issues,” she said.
The maximum revenue cap is the amount that the system operator can collect from customers for transmission operations.
Increasing MAR is expected to raise transmission charges paid for by consumers. But the ERC finds otherwise. In April, it said the interim cap would cut transmission charges by P0.0413 to P0.4701 per kilowatt-hour (kWh) from P0.5114/kWh in 2019.
Last month, the NGCP reported that the share of transmission in electricity bills is 4% of the total.
The ERC raised the NGCP’s revenue cap due to unplanned capital expenditure and the potential inclusion of Energy Projects of National Significance (EPNS), as designated by the Department of Energy (DoE).
The provisional cap, it said, is P11.8 billion lower than the NGCP’s proposed P58.8 billion 2020 revenue cap.
Legislators said the ERC “failed” to consider the annual depreciation of assets and the level of weighted average cost of capital, among other factors.
They further stated that the NGCP’s capital cost since 2016 should have fallen to about 7% as the country’s risk-free rate went down to 4% in 2015 from 10% in 2010.
According to Ms. Digal, the ERC can still adjust NGCP’s MAR as it continues to hear its application. An upcoming hearing is set on July 15.
She added that the company’s provisional MAR is a process “outside” of the regulatory reset. The NGCP last adjusted its revenue cap in 2016.
The House resolution introduced by Representatives Dan S. Fernandez, Luis Raymund F. Villafuerte, Jr., Eric Go Yap, Abraham N. Tolentino, Claudine Diane D. Bautista, and Alyssa Sheena P. Tan. It was filed with the House committee on good government and public accountability. — Adam J. Ang
