ERC denies NGCP plea to defer rate reset

MANILA, Philippines — The Energy Regulatory Commission (ERC) has rejected the request of the National Grid Corp. of the Philippines (NGCP) to defer the reset of its rates.

In a statement, the ERC said it denied the omnibus motion filed by the NGCP asking the commission to hold in abeyance the rate reset.

NGCP had asked to defer the rate reset until further public consultations have been conducted and it clarifies certain provisions of the Amended Rules for Setting Transmission Wheeling Rates (RTWR), according to the ERC.

The Amended 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 rate, a line item which may be seen in the monthly electric billings of all 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.

The ERC promulgated the amended RTWR on Sept. 28, triggering the rate reset process of NGCP, the country’s transmission system concessionaire.

The amended RTWR covers the rate reset for the fourth and fifth regulatory periods, covering the years 2016 to 2022, and 2023 to 2027, respectively.

The ERC’s last completed transmission reset was for the regulatory period covering the years 2011 to 2015.

The reset, the ERC said, is a regulatory exercise to check whether the allowed revenues of the NGCP, which were approved seven years ago based on what the NGCP has been charging customers, are still valid and reflective of the current costs.

During the reset, the electric power industry regulator will scrutinize the expenditure items of the NGCP and other parameters to make sure that only eligible and reasonable costs are being pass on to the consumers.

“As such, ERC can no longer afford to delay this process,” it said.

The ERC said it had earlier directed the NGCP to file its application for the reset not later than Oct. 28.

However, the ERC said the NGCP filed an omnibus motion on Oct. 28, claiming that the provisions of the amended RTWR for the fourth regulatory period were included in haste and without public consultation, thus, violating due process requirements.

In denying NGCP’s motion, the ERC pointed out that the process for the fourth regulatory period had commenced in 2014 upon initiative of the NGCP with corresponding public consultations that resumed in 2018, all with the transmission system concessionaire’s active participation.

The ERC said the reset for the fourth regulatory period, having been lapsed, will be treated differently as the costs to be applied for are no longer based on forecasts, but rather on actual expenditures.

“Simply put, there is nothing to roll forward from one regulatory period into the next regulatory period if no such evaluation of actual expenditures were to be undertaken for the 4th RP,” it said.

NGCP yesterday said it has received the ERC order and is still exploring its options.

“Offhand, there seems to be a few points of disagreement which will have a substantive impact on proceedings,” NGCP spokesperson Cynthia Alabanza said.

“We are optimistic that the ERC will be fair in its treatment of all energy industry players,” she said.

Meanwhile, the ERC said that despite denying the Omnibus Motion, the NGCP is not precluded from preparing and filing its application before the commission on the basis of its understanding of the amended RTWR.

ERC said such application shall then be subjected to another round of ventilation and due process once the commission holds public hearings thereon.

It has given NGCP a non-extendable period of 15 calendar days from receipt of the order to file its reset application covering the fourth regulatory period.