Senator Win Gatchalian expects power consumers to benefit from the Energy Regulatory Commission’s (ERC) decision to reduce the National Grid Corporation’s (NGCP) annual revenue to P36.7 billion, significantly lower than the maximum allowable revenue (MAR) of P43.789 billion collected from consumers from 2016 to 2020.
The difference of PHP 7.089 billion, equivalent to P35 billion for five years, between the ERC-determined annual revenue requirement (ARR) of NGCP of P36.7 billion and the annual MAR of P43.789 billion collected by NGCP from consumers through the transmission charge from 2016 to 2020, will most likely be refunded to consumers. This will be reflected in lower transmission rates on power consumers’ electricity bills, according to Gatchalian. The ARR of P36.7 billon is contained in the results released by the ERC as part of its partial initial determination for NGCP’s rate reset covering the years 2016-2020.
“There’s a high probability we will see a reduction in transmission rates starting next year, particularly in the second quarter. It’s welcome news for all of us,” said Gatchalian.
“The potential refund is expected to come in the form of rate reduction that the NGCP is already collecting from consumers,” Gatchalian said. He clarified that the final reimbursement amount by NGCP to power consumers will be deducted from the existing rates that the NGCP is already passing on to consumers.
“Inaasahan natin na mababawasan ang buwanang bayarin ng mga consumer sa kuryente sa pamamagitan ng mas mababang transmission charge kapag naipatupad na ito simula sa susunod na taon,” Gatchalian said.
The results of ERC’s final review will be released by the end of the year. Following the disallowance made by the ERC of certain items from being included in the computation of NGCP’s operating and maintenance expenses (OPEX), Gatchalian urged the ERC to disallow the inclusion of yet-to-be-completed transmission projects in the computation of NGCP’s ARR.
The ARR sets the proper amount that is determined as reasonably compensating NGCP for prudent, economically efficient, reasonable, and validated costs it incurred in expanding and operating the transmission system. The ARR is determined based on NGCP’s OPEX, other taxes, return on capital, and return of capital, among others.
Gatchalian has earlier urged ERC to penalize NGCP for delayed transmission projects that adversely impact the country’s electricity supply. According to the senator, about 36 transmission projects are currently delayed. He emphasized that NGCP should not be allowed to collect from consumers’ transmission charges for projects that are yet to be completed, particularly those that are without a definite timetable.