ERC to hold public consultations on TransCo rates

The Energy Regulatory Commission (ERC) will hold a series of public consultations on the connection charging policy of the National Transmission Corp. (TransCo).

The policy on connection charges will lead TransCo into determining charges reflective of true costs in connecting its customers to the grid.

"A well-defined terms and conditions for charging connection assets will ensure transparency in the costs of transmitting power from sources to distribution/load side," ERC chairman Rodolfo B. Albano Jr. said.

Connection assets are those assets that are put in place for the primary purpose of connecting a customer to the grid.

These assets, however, have to be defined in order to avoid uncertainties as to which transmission connection assets are being utilized to connect customers to the grid.

The definition will also segregate TransCo’s connection assets that were included in its approved rate base to prevent double charges.

Under the present set-up, TransCo customers are charged with power delivery service (PDS) at fixed cost.

This means that generation companies and distribution utilities share the costs incurred by TransCo in connecting them to the grid or for using its transmission assets, irrespective of whether or not they benefit from such connection asset being installed for the sole use of a customer.

The implementation of this policy will result to a reduction in the cost of PDS since the connection charges on the connection assets are separate and chargeable only to a customer benefiting from such assets.

The PDS cost will be determined upon approval of TransCo’s application for maximum allowable revenue (MAR). The approval is for the second regulatory period covering the years 2006 to 2010 following the transmission wheeling rates guidelines (TWRG).

The draft terms and conditions of this policy were already subjected to a series of public consultations last year. Comments and suggestions of the stakeholders were already considered in the draft determination except for the issue on the definition of connection assets.