ERC denies NGCP’s plea for delay in rate reset

Published December 9, 2022, 3:57 PM

by Myrna M. Velasco

The Energy Regulatory Commission (ERC) has denied the plea of National Grid Corporation of the Philippines (NGCP), which operates the country’s transmission grid, to delay the process of resetting the transmission system rate.

The ERC promulgated the denial of NGCP’s motion on Wednesday, Dec. 7, which it subsequently issued to the transmission company the following day, Thursday, Dec. 8.

The NGCP had sought for deferment of the rate reset process due to the ongoing public consultations being conducted by the ERC and until such time that it could be clarified on certain provisions of the amended Rules for the Setting Transmission Wheeling Rates (RTWR).

The regulatory body explained that the amended RTWR “covers the rate reset for the fourth (covering the years 2016 to 2022) and fifth regulatory periods (covering the years 2023 to 2027).”

With the anticipated adjustment in NGCP tariffs, the ERC is expecting that the consumers would be able to enjoy lower electricity rates – primarily the transmission cost component – starting January next year.

“The last transmission reset completed by the ERC was for the regulatory period covering the years 2011-2015,” the regulatory agency noted.

In a statement to the media, NGCP Spokesperson Cynthia Alabanza indicated that their company already “received the ERCs latest order.”

She, however, asserted that “offhand, there seems to be a few points of disagreement which will have a substantive impact on proceedings. We are still exploring our options.”

She thus stressed “we are optimistic that the ERC will be fair in its treatment of all energy industry players.”

In view of the denial of its motion, the ERC has directed NGCP “to file its application for the reset not later than October 28, 2022,” but since that period already lapsed because of its filing for omnibus motion, it was decreed that the company will file its application following the issuance of the latest ERC order.

The ERC indicated that NGCP filed in October this year “the subject omnibus motion which claims that the provisions of the amended RTWR for the fourth regulatory period (4th RP) were included in haste and without public consultation, thus, violating due process requirements.”

The industry regulator, nevertheless, stipulated that “the process for the 4th RP had in fact commenced in 2014 upon initiative of NGCP with corresponding public consultations that resumed in 2018, all with NGCP’s active participation.”

The ERC added that “the evaluation of NGCP’s actual expenditure for the 4th RP – as provided in Article IV – is necessary and an integral part of the rolled-forward approach as extensively discussed in the draft resolution on the Issues Paper.”

On account of that, the regulatory body qualified that “there is nothing to roll forward from one regulatory period into the next regulatory period if no such evaluation of actual expenditures were to be undertaken for the 4th RP.”

The ERC similarly emphasized that in the course of its consultations, it made clear that “the reset for the 4th regulatory period, having been lapsed, will be treated differently as the costs to be applied for are no longer based on forecasts, but rather on actual expenditures.”

Despite denial of its motion, the ERC reckoned that NGCP “is not precluded from preparing and filing its application before the Commission on the basis of its understanding of the amended RTWR.”

Owing to that, it noted that such application of NGCP “shall then be subjected to another round of ventilation and due process once the Commission holds public hearings.”

At this point, the ERC had given the transmission company “a non-extendable period of 15 calendar days from receipt of the said ERC’s order to file its reset application covering the 4th RP.”

The ERC underscored that the reset process “is a regulatory exercise to check whether the allowed revenues of NGCP, which were approved seven years ago based on which NGCP has been charging to the customers, are still valid and reflective of the current costs.”

It further conveyed that “during the reset, the ERC will be scrutinizing the expenditure items of NGCP and other parameters to make sure that only eligible and reasonable costs are being pass on to the consumers,” stressing that the “ERC can no longer afford to delay this process.”