Consumers to benefit from reduction of NGCP’s proposed annual revenue

Senator Sherwin Gatchalian said Thursday consumers would benefit from the Energy Regulatory Commission's (ERC) decision to reduce the National Grid Corp. of the Philippines' (NGCP) annual revenue to PHP36.7 billion from the PHP43.79 billion maximum allowable revenue (MAR) collected from consumers from 2016 to 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,' Gatchalian said in a news release. The PHP7.09 billion difference, equivalent to PHP35 billion for five years, between the ERC-determined annual revenue requirement (ARR) of NGCP of PHP36.7 billion and the annual MAR of PHP43.789 billion collected by NGCP from consumers through the transmission charge from 2016 to 2020, will most likely be refunded to consumers. Gatchalian said this would be reflected in lower transmission rates on power consumers' electricity bills. The ARR of PHP36.7 billion 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 to 2020. 'The potential refund is expected to come in the form of rate reduction that the NGCP is already collecting from consumers,' Gatchalian said. He added that the final reimbursement amount by NGCP to power consumers would be deducted from the existing rates that the NGCP is already passing on to consumers. The results of ERC's final review will be released by the end of the year. After 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 earlier urged the ERC to penalize the NGCP for delayed transmission projects that adversely impact the country's electricity supply. He said about 36 transmission projects are currently delayed. He emphasized that the 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. Source: Philippines News agency