ERC nixes Transco rate application

The Energy Regulatory Commission (ERC) will not allow the National Transmission Corp. (Transco) to delay by one month its application for a new wheeling charge under the performance-based rate (PBR), ERC chairman Manuel Sanchez said.

Sanchez said they have already given Transco enough time to assess the assets that needs to be included in the tariff setting.

"I was told they were almost done. We will deny it because they had enough time to comply with the requirement. Imagine, they sought for an extension on the last day," Sanchez said.

Transco manager for business development and tariff Ed Orencia earlier said Transco was supposed to submit a new rate application for a new wheeling charge under the PBR by the end of October but had to extend it pending the release of the subtransmission assets (STAs) guidelines.

"We filed for an extension until end-November this year. We still need to assess the assets that will be included in the tariff setting," Orencia said.

Transco president Alan T. Ortiz, in a separate interview, said the company will still have to finalize the evaluation of the STAs to be sold.

"We are just waiting for the STAs guidelines to take effect. We actually have the final list of those assets that will be disposed of," Ortiz said.

The ERC approved the rules that will govern the sale of the STAs two weeks ago. It should be published in a leading newspaper 15 days before it can be enforced.

Ortiz said it does not necessarily mean that Transco will have to wait for the full disposal of the STAs before it could apply for a new rate.

"We already have an idea what items would be retained and what assets will be sold," the Transco head said.

Ortiz also pointed out that if Transco increase its wheeling charge under the PBR, "it will just flow back to the government and it will serve as an incentive to the prospective investors of Transco.

The ERC has promulgated the PBR last May. The PBR is a new rate-making methodology in determining the transmission charges of the power transmission sector.

The new regulatory framework replaces the traditional return-on-rate-base (RORB) methodology in setting charges.

Under the new rate setting scheme, the ERC will allow a maximum annual revenue cap pegged to changes in the consumer price index (CPI), but adjusted for productivity and efficiency factors. The proposed methodology will also include a provision for over/under recovery adjustments.