Senator Win Gatchalian is confident consumers will enjoy lower power transmission fees as the Energy Regulatory Commission (ERC) is set to complete a review of the National Grid Corporation of the Philippines’ (NGCP) performance and operation from 2016 to 2020.
Issuing results of the partial review, the ERC adopted a weighted average cost of capital (WACC) of 10.71%, significantly lower than the existing WACC of 15.04%. WACC is an input in the determination of NGCP’s transmission rates.
“The ERC’s adoption of a lower WACC is a welcome development. I am hopeful that this development would translate to lower transmission rates passed on to consumers,” Gatchalian said.
The ERC also capped the revenue that NGCP is allowed to generate at P36.7 billion a year, identifying certain disallowance in the determination of its operation expenses. Specifically, the ERC disallowed claims that were not properly supported by the audited financial statements (AFS) of the company.
These include certain employees’ benefits sought to be recovered by NGCP that were not appropriately itemized and supported in its AFS, as well as non-mandatory employee benefits that should be sourced from the company’s savings or profits instead of recovered from rates charged to consumers. Network and non-network related operations and maintenance costs, such as advertising expenses or COVID-19 donations, that were not proven to redound to the benefit of consumers were also disallowed.
The revenue cap covers the years 2016-2020 or Phase 1 of the Fourth Regulatory Period covering 2016-2022. Phase 2 will cover 2021 to 2022 based on additional documents obtained by ERC from NGCP.
Gatchalian emphasized that the most anticipated completion of review of transmission rates and the ensuing rate reset after more than 10 years of delay would hopefully provide some respite to consumers amid continuing high levels of fossil fuel prices in the global market.
“Matagal na nating hinihintay na matapos ang pagrereview ng ERC sa performance ng NGCP. Inaasahan nating magkakaroon ng refund at makikinabang ang mga consumer sa pagtatapos ng regulatory rate review,” he ended.