The Energy Regulatory Commission (ERC) is set to start hearings on the application of the maximum annual revenue (MAR) for the 5th regulatory period (RP) of the National Grid Corporation of the Philippines (NGCP).
The agency has set a pre-trial briefing this month while the presentation of evidence has been set for January next year, according to an order it issued.
The same order also allowed the petitions for intervention filed by the National Transmission Corp., Power Sector Assets and Liabilities Management Corp., Panay Power Corp., Manila Electric Co., Cotabato Light and Power Co., Davao Light and Power Co. Inc., Subic Enerzone Corp., Mactan Enerzone Corp., RE Resources Inc., National Association of Electricity Consumers for Reforms Inc., Visayan Electric Co. Inc., Alfredo Non, Cebu Chamber of Commerce and Industry Inc., Monte Solar Energy Inc., Northwind Power Development Corp., and jointly by Global Business Power Corp., Panay Energy Development Corp., PH Renewables Inc., and Powersource First Bulacan Solar Inc.
“Petitioners-Intervenors, therefore, have sufficiently demonstrated their direct and substantial interest in the instant application, either as consumers or as electric industry participants,” the ERC said in its order.
NGCP’s 5th RP application covers the period 2023-2027, noting, however, a pending rule-making petition filed by NGCP requesting for modification of the period to 2021-2025.
NGCP’s filing of the 5th RP application is governed by the regulatory process as provided for under the ERC’s Transmission Wheeling Rate Guidelines.
The ERC said it welcomes the filing of NGCP’s 5th RP application as it signals a positive development towards resolving the lag in the resetting of transmission rates. The commission also expects to continue soon the Regulatory Reset for the Private Distribution Utilities (PDUs), with the reset for the Second Entrant PDUs commencing before the year ends.
Last month, the ERC released the partial determination on an ongoing review of the performance and operations of NGCP for the regulatory period 2016-2022. The grid operator’s total allowable revenues for Phase 1, or from 2016-2020, of the fourth regulatory period (4th RP) should only be P183.491 billion, or an average of P36.7 billion annually.
This amount is significantly lower than NGCP’s claims of P387.803 billion for Phase 1, or an annual average of P77.56 billion – which was higher than the interim Maximum Annual Revenue (iMAR) of P51.47 billion for 2020 initially granted by ERC to NGCP in a previous March 2022 issuance.
MAR refers to the maximum amount that NGCP is allowed to earn annually to recover its operational expenses like operating expenditures and capital expenditures, as approved by the ERC in accordance with the rules.
The NGCP was given 15 days to file a comment. “We will take full advantage of that process. We will be commenting on these findings. A lot of these are speculative which is why the ERC gives us time to comment,” said NGCP Spokesperson Cynthia Alabanza.
The ERC’s pronouncement will have a long-term impact not only on NGCP but on the consumers and other businesses as well, Alabanza added.
“At the end of the day, what must be balanced here is the consumer’s concerns and his right to good and good service at the right price,” Alabanza said. “It is also necessary to weigh the concern of a businessman or investor to get proper returns on his investment.”