ERC sets hearings on NGCP’s P1.1B cost recovery; Typhoon Yolanda damages

by Myrna Velasco, 22 March 2015
from Manila Bulletin

More than a year after the onslaught of super Typhoon Yolanda, the Energy Regulatory Commission has finally scheduled the public hearings for the proposed recovery of transmission firm National Grid Corporation of the Philippines (NGCP) on damages the company incurred during the typhoon.

The public hearings are scheduled in Cebu on April 22; and the final stretch will be in Manila on May 13-14.

NGCP has batted to recover P1.114 billion in force majeure (FM) event cost, which is considerably lower than its estimated damages of P2.569 billion.

Once approved, the company will recover the cost by charging it to its customers. NGCP has already estimated its pass-on cost to customers in the Visayas grid at P0.1874 per kilowatt hour (kWh) if the application gets provisional approval this year.

Onward for years 2016-2020, the cost pass-on cost would be on a dwindling trend from P0.0257 to P0.0201 per kWh.

NGCP has noted that if a provisional authority will be issued, it plans “to implement and bill the FM pass-through amounts to Visayas customers starting January 2015 billing month to December 2020 billing month or until such time that the amount incurred is fully recovered.”

The company has also been seeking the regulatory body’s approval for it “to approve the capex (capital expenditure) it incurred for the repair, restoration and rehabilitation of the damaged transmission assets and other related facilities due to the FME typhoon Yolanda.”

It has been emphasized though that “due to the extent of damage to its transmission assets and other related facilities which require massive repair and restoration activities in the Visayas,” the initially claimed FM costs have been seen breaching the force majeure threshold amount (FMTA) of P0.0336 per kWh.

NGCP further asserted that it needs “to immediately recover the actual expenses incurred for the repair, restoration and rehabilitation of the damaged transmission assets and other related facilities.”

The company stressed that the occurrence of FM event as extreme as super typhoon Yolanda in 2013, “required massive capital infusion, thus, the recovery of which should be allowed immediately in order to avoid any financial strain in its operation and to allow the continuous provision of transmission service to the grid customers.”

It added that “the timely implementation of the FM pass-through amount will allow the equal or even spread of the increases or decreases in tariffs from the initial implementation of the recovery of the cost.”