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Consumers to benefit from ERC reset of power transmission rates

Senator Win Gatchalian said a reset of power transmission rates by the Energy Regulatory Commission (ERC), which has been delayed for 10 years, could provide some respite to consumers.


TAGUIG CITY – Senator Win Gatchalian has refiled a measure that seeks to establish a math and science high school in all provinces nationwide, a move that aligns with the administration’s directive to strengthen focus on Science, Technology, Engineering, and Mathematics (STEM) in basic education. 6 Sept. 2022 file. Photo by Mark Cayabyab/OS WIN GATCHALIAN

The ERC has begun a review of the National Grid Corporation of the Philippines (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. A new RTWR means, among others, that the current weighted average cost of capital (WACC) of the NGCP will be revised after more than 10 years.

According to Gatchalian, 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%, the study said that the WACC for NGCP should be at 6.4%. This means lower WACC should translate to lower transmission fees passed on to consumers.

The study showed that the average reduction would be Php 0.1141 to Php 0.2376 per kilowatt hour (kWh). This translates to a monthly savings of Php22.82 to Php47.52 for a household consuming 200 kWh a month.

“ERC’s review of transmission rates is long overdue. I have long been following up on this from the ERC. I’m confident that this would lower transmission rates and ultimately residential bills,” Gatchalian said.

In addition, he said that the ERC’s reset of transmission rates would also establish consumer trust that what they are paying for is an accurate amount.

“Kapag nagkaroon ng bagong rates, mawawala ang anumang agam-agam ng mga consumers na may nagsasamantala. Sa halip, magkakaroon sila ng kompiyansa na ang anumang bayarin sa kuryente ay tama at walang labis,” the senator stressed.

“This 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,” he added.