The Energy Regulatory Commission (ERC) has thumbed down the plea of the National Grid Corporation of the Philippines (NGCP) for amendments in the rules for transmission rate-setting.

The regulatory body has rendered that decision based on the petition of the transmission firm that was lodged in December last year.

According to the ERC, NGCP primarily prayed that the period covering its fourth regulatory reset be set within 2016 to 2020, instead of 2016 to 2022, but that was rebuffed in the company’s pleading.

Additionally, the transmission firm sought that “the occurrence of ‘grassfires’ be classified as a force majeure event; as well as “disallow the National Transmission Corporation (TRANSCO) as a necessary party to rate-setting applications of NGCP.”

The company further asked that re-opening of events in rate-setting be allowed; and the use of locked-in weighted average cost of capital (WACC) be applied, in lieu of the ‘classical WACC’ that had been traditionally upheld in its rate reset process.

In a statement to the media, the ERC qualified that it retained the fourth regulatory reset coverage period from 2016 to 2022, hence, “denying NGCP’s proposal to limit the period to only the years 2016 to 2020.”

The Commission argued that “(it) exercised its rule-making authority to promote the interest of the public,” as anchored on the prescriptions of the Electric Power Industry Reform Act (EPIRA) and the amended Public Service Act.

Within that precept, the regulatory noted that it is impelled “to cover the entire lapsed period under the fourth regulatory period.”

On the refusal to include ‘grassfires’ as a form of force majeure event, the Commission stipulated that “any grassfire incident – to be unforeseen and extenuating – must first satisfy the conditions of a force majeure event under the 2022 amended Rules for Setting Transmission Wheeling Rates.”

The industry regulator expounded that “such incident must not have been caused by or attributed to NGCP, willfully or through its neglect.”

Further, the ERC stated that TransCo’s inclusion in the rate-setting application of NGCP is highly necessary because the state-run firm “is still the owner of transmission assets and holds interest in the outcome of such rate-setting applications.”

On proposed re-opening of events on rate-setting, the ERC reckoned that the prevailing rate-setting rules “already includes sufficient mechanisms and safeguards governing rate adjustments for the regulated entity.”

NGCP’s bid for a locked-in WACC has also been junked, as the regulatory agency opined that such tenor of rate-setting “is contrary to the spirit of performance-based regulation and the consumers’ interests.”