The Energy Regulatory Commission (ERC) has authorized a lower annual revenue requirement for the National Grid Corporation of the Philippines (NGCP), slashing the operator’s proposed budget for grid upgrades and system reinforcements through 2027.

In a statement on Tuesday, Feb. 10, the ERC announced that it approved total revenue of ₱374.98 billion for the fifth regulatory period, a 15.28 percent reduction from the ₱442.60 billion originally sought by NGCP.

The commission’s decision to scale back the revenue cap was driven primarily by cuts to proposed capital projects and the exclusion of real property taxes from the recovery mechanism.

The approval follows a regulatory reset, a periodic review in which the ERC evaluates a utility’s costs, investments, and performance. The commission then sets revenue limits to maintain service reliability while protecting consumers from excessive charges. This reset includes capital expenditure underrecoveries across both the fourth and fifth regulatory periods.

The ERC also reduced the proposed capital expenditure by 17 percent to exclude projects it determined had been sufficiently accounted for in previous regulatory cycles.

Despite the cuts, the regulator noted that the approved budget remains sufficient to fund essential grid upgrades and new transmission projects necessary to meet the Philippines’ rising power demand.

“The commission is working to ensure a reliable and secure power grid, and that transmission charges passed on to consumers are justified,” the ERC said.

The agency noted that the framework allows the grid operator to recover only necessary costs, prioritizing consumer protection.

Under the ruling, NGCP is also barred from recovering real property taxes on assets utilized for its franchise. The ERC noted that the grid operator is exempt from these payments, and therefore the costs cannot be passed through to electricity consumers.

NGCP is currently operating under a maximum allowable revenue (MAR) framework for the fourth regulatory period, which received approval in 2025. The MAR serves as the total revenue ceiling the corporation is permitted to earn annually, factoring in operating expenses, depreciation, taxes, and a regulated return on its rate base. The regulator reiterated that only investments and costs that have passed its stringent audit are included in the final approved revenue cap.