THE Energy Regulatory Commission (ERC) has authorized the National Grid Corp. of the Philippines (NGCP) to collect an additional P0.06 per kilowatt-hour (kWh) from consumers starting August as part of the rate reset process.
This follows the ERC’s approval for NGCP to recover P63.45 billion in revenues for the 2023 period, according to a decision promulgated Jan. 30.
The implementation covers the first year of NGCP’s fifth regulatory period (5RP), spanning 2023 to 2027. Overall, the ERC has set a maximum allowable revenue (MAR) for NGCP at P376.4 billion.
The ERC approved an annual revenue of P63.4 billion for 2023, P69.1 billion for 2024, P74.3 billion for 2025, P81 billion for 2026, and P88.5 billion for 2027.
It also approved an annual revenue requirement (ARR) of P374.98 billion, 15.28% lower than the P442.60 billion applied for by NGCP.
MAR refers to the revenue ceiling the ERC allows the utility to collect, while ARR represents the amount NGCP needs to recover to cover its costs and expenses.
The Electric Power Industry Reform Act tasks the ERC with setting transmission and distribution wheeling rates that allow utilities to recover “just and reasonable costs and a reasonable return on rate base,” ensuring the entity can operate viably.
Part of this is the rate reset process, a periodic review in which the ERC examines a utility’s costs, investments, and performance, and then sets revenue limits to ensure reliable service while protecting consumers from excessive charges.
The Commission said the decision “strikes a balance between ensuring adequate funding for critical power infrastructure and safeguarding consumers from excessive transmission charges.”
“Only costs and investments that passed regulatory scrutiny were included in the approved revenue cap,” it added.
Last year, the ERC completed NGCP’s fourth regulatory period (4RP), approving a MAR of P335.78 billion for the 4RP covering 2016 to 2022.
This allowed NGCP to collect P28.29 billion from consumers over seven years as part of cost recovery, translating to an increase of P0.1013 per kWh in transmission charges. — Sheldeen Joy Talavera