New round of transmission-charge hike to be enforced in June–ERC

by Lenie Lectura – April 20, 2016

from Business Mirror

THE collection of a 6.5-centavo-per-kilowatt-hour (kWh) hike in transmission charge would be enforced in June, according to the Energy Regulatory Commission (ERC).

“The order will just be released before the end of the month. Given this, the NGCP [National Grid Corp. of the Philippines] will not be able to incorporate it in their April bill to their customers, the DUs [distribution utilities]. As such, the DUs also cannot still incorporate it in their May bill to consumers,” ERC Spokesman Rexie Digal  said in a text message on Wednesday.

The rate hike was supposed to be enforced in the May billing of consumers, after the ERC announced in March that “the case had been deliberated and the order is forthcoming.”

The impending rate hike, which will be reflected in the transmission component of an electric bill, was a result of a petition filed by the Power Sector Assets and Liabilities Management Corp. (PSALM) to recover P6.9 billion, including taxes, in differential ancillary service charges from NGCP for the period March 2008 to October 2009.

However, the ERC did not include the taxes in its computation. “The commission has approved the recovery scheme for P5.2 billion, exclusive of VAT [value-added tax],” ERC Chairman Jose Vicente Salazar said in a text message.

Of the P5.2 billion worth of differential ancillary charges that the commission approved, P1.5 billion must be recovered from the Luzon grid in six months and P1.9 billion in the Visayas in 36 months.

This is lower than what PSALM asked for. The approved recovery period is also longer than what the state firm stated in its petition.

“Interest was disallowed. Also, a longer recovery period will apply,” Digal said.

The estimated rate impact of the approved absolute amount for recovery of P5.2 billion is 6.5 centavos per kWh to the customers, said Digal, who added this would be collected from consumers until the absolute differential amount per grid is completely collected.

When sought to comment on how this new rate adjustment will affect the 5.8 million customers of the Manila Electric Co. (Meralco), Lawrence Fernandez, the utility firm’s head for utility economics, said: “That would be equivalent to around P13 in the bill each month. If the collection will be spread over six months, then the total amount to be collected would be P78 for a typical household consuming 200 kWh.”

Once the order is out, NGCP will have to bill the DUs nationwide, including Meralco. Then, the rate impact would be reflected after one month in the bills of end-users. The impact would mainly be felt as part of the transmission charge.