THE Energy Regulatory Commission (ERC) said it suspended an order that had allowed the National Grid Corp. of the Philippines (NGCP) to pass on its franchise tax to consumers.

The ERC said once the suspension is formalized, the NGCP franchise tax can no longer be passed on to consumers in the next billing month, the ERC said in a statement on Thursday.

ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said the decision will result in a reduction of about one centavo per kilowatt-hour.

In July, the ERC said that it will review a 2011 order that had allowed the NGCP to pass on to consumers its 3% franchise tax.

“Based on the review of our Legal Services (office), the franchise tax is in the nature of a direct tax that, as early as 2002, the Supreme Court has ruled is the sole responsibility of the franchise-holder and cannot be passed on to consumers,” Ms. Dimalanta said in a Viber message. 

In 2011, the ERC issued an order approving the inclusion of 3% national franchise tax billed by NGCP as part of the monthly transmission cost.

The ERC said it will continue to review the rules and regulations to ensure that the mandate of the Electric Power Industry Reform Act of 2001 is “faithfully fulfilled.”

“With the consumers’ interests in mind, as well as upholding the rule of law, the Commission (voted unanimously) to suspend ERC Resolution No. 07, Series of 2011,” the ERC said in the statement.

Cynthia P. Alabanza, spokesperson for NGCP, said the company has yet to receive a copy of the resolution.

“We will address the matter once we receive the resolution in full,” Ms. Alabanza said in a Viber message. — Ashley Erika O. Jose