Reclassification of Salong-Calaca 230-kV transmission line OK’d

by Myrna Velasco – September 30, 2016

from Manila Bulletin

The bid of the National Grid Corporation of the Philippines (NGCP) to re-classify the Salong-Calaca 230 kiloVolt (kV) line connection facility and the New Salong substation into “transmission facilities” has secured the approval of the Energy Regulatory Commission (ERC).

The power industry regulator has qualified that since the assets no longer just serve one customer, their re-classification into “transmission assets” and transfer into the charge of NGCP have already been warranted.

“Based on the documents submitted, the Commission finds merit in the proposed reclassification of the Salong-Calaca 230kV line. Thus, the subject asset should be classified as transmission assets,” ERC has noted.

Further, the regulatory body has reckoned that “the New Salong 230kV switching station remains to be a transmission asset since it was designed and constructed to operate and function as a transmission asset from the start.”

The preliminary functional criteria set for the Salong-Calaca line had been as a connection asset to service the needs of Steel Asia Manufacturing Corporation (SAMC); while the New Salong switching station was intended for the load of the South Luzon Thermal Energy Corporation (SLTEC) coal plant.

In the ERC ruling, however, it prescribed that its go-signal is just limited to the re-classification of the assets and will not include yet the plea of the parties for drawing up the “fair market valuation” of the assets.

“It is premature to raise the issue on the fair market value considering that the petition on hand is for the reclassification of the subject assets,” ERC stressed.

The Commission raised that after the assets’ reclassification, “NGCP and SLTEC would negotiate for the fair market value of the subject assets and in the event that the parties disagree, NGCP and SLTEC would file with the Commission a dispute resolution.”

As to the cost recovery of the New Salong switching station project, it was directed that such shall be applied for as part of the maximum allowable revenue (MAR) that must be recouped by NGCP under its 3rd regulatory reset under performance-based regulation (PBR) scheme.

SLTEC earlier lodged its intervention on the case, primarily batting “for the reimbursement of NGCP within the 3rd regulatory period of its cost for developing and constructing the New Salong switching station, the cost of acquiring the Salong-Calaca 230kV line from SAMC; and the cost for the rehabilitation, modification, maintenance and reinforcement of the acquired SAMC transmission line.”