TWO senators on Wednesday urged the Energy Regulatory Commission (ERC) to give power consumers some reprieve from high-energy costs by pushing the reset of power transmission rates, including the refund from the so-called weighted average cost of capital (WACC) of the National Grid Corporation of the Philippines (NGCP).
Sen. Sherwin Gatchalian reminded that a reset of power transmission rates by the ERC, which has been delayed for 10 years, could provide some respite to consumers.
The ERC has begun a review of NGCP rates as it promulgated Resolution No. 08 amending the rules for setting transmission wheeling rates (RTWR), which triggers the process of resetting transmission rates of the transmission utility.
He noted that a new RTWR means, among others, that the current WACC of the NGCP will be revised after more than 10 years.
Gatchalian said he expects the review is likely to lead to lower transmission rates, citing a study in 2018 commissioned by the National Transmission Corporation (TransCo). While the current power transmission rates take into account a WACC for NGCP at 15.04 percent, the study said that the WACC for NGCP should be at 6.4 percent. He reminded this means lower WACC should translate to lower transmission fees passed on to consumers.
The senator noted the study showed that the average reduction would be P0.1141 to P0.2376 per kilowatt hour (kWh), which translates to a monthly savings of P22.82 to P47.52 for a household consuming 200 kWh a month.
“ERC’s review of transmission rates is long overdue,” Gatchalian said adding, “I have long been following up on this from the ERC. I’m confident that this would lower transmission rates and ultimately residential bills.”
In addition, Gatchalian said, “the ERC’s reset of transmission rates would also establish consumer trust that what they are paying for is an accurate amount.”
Once the new rates are in place, the senator said this would allay apprehensions of consumers someone is taking advantage.
This way, he added, consumers would regain trust that whatever amount is stated in their power bills are correct and not overcharged.
“Sa halip, magkakaroon sila ng kompiyansa na ang anumang bayarin sa kuryente ay tama at walang labis,” the senator stressed.
This, Gatchalian noted, is also crucial for new transmission lines and facilities. “This provides an incentive for the NGCP to invest in new infrastructure as it guarantees they will recover all investments in new facilities.”
Moreover, Senator Risa Hontiveros suggested that the ERC should give Filipinos “not one, but two” gifts this year by following up its decision to start resetting transmission wheeling rates by commencing refunds for “exorbitant” WACC rates that contribute to higher power costs for consumers.
In a separate statement, she welcomed “as a good start” the announcement by the ERC that it has begun the process of resetting the transmission wheeling rates to restore balance in transmission regulation.
Transmission wheeling rate is a charge directly paid by consumers for the use of transmission facilities in delivering electricity to households, and is reflected in monthly electricity bills.
“Magandang balita itong simula ng reset process para sa mas patas na transmission wheeling rates na parte ng ating buwanang bayarin sa kuryente. But why have one piece of good news, when we can have two? Let us also start the process of refunding consumers for the unreasonably high 15 percent weighted average cost of capital being unduly collected since 2015,” Hontiveros, who has been calling for a refund of consumers for high WACC rates since 2019 said.
She explained that the 15 percent WACC rate for NGCP is “outrageously excessive” compared to WACC rates allowed in neighboring countries like Indonesia (2.3 percent) and Thailand (7.2 percent). The WACC—which is the return a company expects on the capital it has invested in a business—contributes to the monthly costs of consumers.