The Energy Regulatory Commission (ERC) announced that it has finished its evaluation of the National Grid Corporation of the Philippines’ (NGCP) fourth regulatory period (4RP) reset.
In a statement on Wednesday, April 16, the Energy Regulatory Commission (ERC) announced the completion of its deliberations on the National Grid Corporation of the Philippines' (NGCP) 4th Regulatory Period (RP) rate reset, covering the years 2016 to 2022.
During its meeting last March, the Commission approved a maximum allowable revenue (MAR) of ₱335.78 billion for NGCP for the period, using an 'As Spent' approach and applying a Weighted Average Cost of Capital (WACC) of 11.33 percent.
The rate reset puts a limit on how much revenue the NGCP can earn from operating the country’s power grid, as it would be passed onto transmission charges paid by consumers.
According to the ERC, the NGCP will also recover an additional ₱28.29 billion in under-recoveries, which are costs that weren’t included in previous years. For consumers, this may result in a slight increase in their electricity bills through higher transmission charges.
“The [regulators] further resolved to set a seven-year recovery period which thus, on average, translates to an additional ₱0.1013 per kilowatt-hour (kWh) in transmission charges to be collected over the next 84 months from issuance of the decision,” ERC elaborated.
“This amount covers the ₱0.0629/kWh average increase in the basic transmission charge and additional ₱0.0384/kWh corresponding to the under-recovered portion of the increased MAR,” it added.
To recall, the ERC released new rules on setting transmission wheeling rates last 2022, explaining how much the transmission sector may charge, and outlining the 4th Regulatory Period as well as the processes for future rate reviews.
To expedite the reset process, the regulators integrated a phased-in approach, beginning with phase 1 that covers January 2016 to December 2020, and was said to be included in the draft partial initial determination (PID) that was published in September 2023.
“After considering feedback from NGCP and intervenors, the ERC prepared the draft Final Determination (FD), which covered both Phase 1 and Phase 2 periods of the 4th RP,” it explained.
Moreover, the regulators have permanently set the NGCP’s 2015 MAR to ₱43 million, while the grid corp.’s claim for a net performance incentive scheme reward in 2014 had been approved to ₱783.06 million.