MANILA, Philippines — The Energy Regulatory Commission (ERC) has started the process of resetting transmission rates following previous delays.
In a statement, the ERC said it promulgated on Sept. 28 Resolution 08, Series of 2022, or the Amended Rules for the Setting Transmission Wheeling Rates (RTWR).
The ERC said the issuance of the rules triggers the rate reset process of the transmission system concessionaire, the National Grid Corp. of the Philippines (NGCP).
The last transmission reset completed by the ERC was for the five-year regulatory period covering 2010-2015.
ERC chairperson Monalisa Dimalanta said the amended RTWR seeks to restore balance in transmission regulation, adding that the long delay in the reset has not been fair in many respects.
“Consumers and grid users, on one hand, have become increasingly skeptical of the reasonableness of the rates that continue to be charged. Investments and new generation capacities have been stalled because, among others, of the uncertainty in funding for transmission projects,” Dimalanta said.
“Meanwhile, the grid operator has not been able to demonstrate efficiencies, if any, that it may have obtained in its operations for the past six to seven years that would entitle it to the grant of performance-based incentives,” she said.
According to the ERC, the amended RTWR sets the rules for the rate reset process for the fifth regulatory period that covers years 2023 to 2027, as well as the succeeding regulatory periods.
More importantly, it prescribes the process of review for the fourth regulatory period covering the years 2016 to 2022, the ERC said.
In the review process for the fourth regulatory period, Dimalanta said all determinations shall be based on actual expenditures and actual performance by NGCP during the said period.
She said the commission would also consider in its determination the expert studies procured by ERC on the components of the reset, including for the Weighted Average Cost of Capital (WACC) and the valuation of the Regulatory Asset Base (RAB).
The ERC said other salient features of the amended RTWR are the elimination of over recoveries and double compensations, as well as of the redundant inflationary considerations.
It also features enhanced criteria for the performance incentive scheme, including the ability of NGCP to comply with all the regulatory requirements and to ensure cyber and network security, and clarity on rules on reportorial requirements and penalties for noncompliance.
The RTWR is a set of rules that determines how much the national transmission utility, in this case, the NGCP, is allowed to charge for transmission rates to users of the high-voltage system.
The transmission wheeling rates, a line item which may be seen in the monthly electric billings of consumers, is a direct charge that electricity consumers pay for the use of transmission facilities necessary for the delivery of electricity to households, industries, and commercial establishments.