ERC sets P41.65-billion revenue cap for NGCP

by Lenie Lectura – February 11, 2016

from Business Mirror

THE Energy Regulatory Com-mission (ERC) has allowed the National Grid Corp. of the Philippines (NGCP) to implement an interim Maximum Allowable Revenue (iMAR) of P41.65 billion this year.

The amount is lower than the P45.28 billion being sought by NGCP. In October 2015 the grid operator filed an application to implement an iMAR of P45.28 billion this year.

“The commission’s derived iMAR 2016 value of P41.653 billion is lower by P3.633 billion,” the ERC said in a nine-page order dated January 21, but was issued only on Thursday.

The iMAR, which limits the amount the grid operator can charge distribution facilities (DUs) and electric cooperatives (ECs), will be reflected in NGCP’s January 2016 billing.

The NGCP is responsible for dispatching electricity from the power plants via its transmission facilities all the way to the DUs and ECs.

Its approved MAR in 2015 stood at P43.07 billion. This translates to an indicative transmission charge of P0.6161 per kilowatt-hour (kW).

Separately, ERC Commissioner Jose Vicente Salazar said on Tuesday night that the approved iMAR this year translates to an indicative transmission charge of P.05686 per kWh, lower by P0.0483.

“Based on our assessment, P41.653 billion is the amount of iMAR that should be approved for NGCP,” Salazar said.

The 2016 iMAR approved rates are still subject to further adjustment by the commission.

“In light of pendency of the reset process for the fourth regulatory period, this iMAR 2016 value is merely an interim approach. Thus, it is still subject to adjustment once the commission issues the fourth Regulatory Period Final Determination for NGCP,” the ERC order read.

Also, the ERC did not decide on the NGCP’s proposed interim Net Performance Incentive (iNPI) for 2015 amounting to P1.02 billion.

“The commission deems it appropriate not to include the PIS, considering that the applicant has yet to substantiate the same,” the regulator said.

The MAR and iNPI form part of the annual verification and adjustment of tariffs allowed under Republic Act 9136, or the Electric Power Industry Reform Act.

According to the NGCP, the MAR and iNPI were designed and developed to determine fair and reasonable interim transmission rates that will serve the public interest and convenience, and signal the efficient utilization of transmission facilities that will ultimately redound to the best interest and benefit of the public.

The NGCP is the private firm that operates, maintains and develops the country’s transmission network.

Its transmission charges are for power delivery service, system operations and metering services. These charges recover the cost of conveying electricity to or from the grid, the cost of system operation services, and the cost metering facilities, respectively.