TransCo seek review of ERC’s revenue cap rule

The National Transmission Corp. (TransCo) will appeal to the Energy Regulatory Commission (ERC) to reconsider its decision on maximum allowable revenue (MAR) to ensure the continued expansion of the country’s transmission highway.

"We can appeal presumably after the first year (of MAR) so that once the concessionaire takes over, it will have a different revenue stream," TransCo president Alan T. Ortiz said in an interview.

Ortiz noted that from about P850 million in capital expenditure for the period 2006-2010, the budget requirement of TransCo for expansion projects was hiked to P190 billion in 2014.

According to Ortiz, the P190 billion budget over the next 10 years would double circuit kilometers from 21,000 to 42,000.

"We need a continued revenue stream to support this objective. We need the support from MAR, "he stressed.

One of the projects which is very crucial in the next 10 years, Ortiz said, is the Leyte-Mindanao Interconnection Project (LMIP) which will complete the country’s grid loop.

"By the end of President Arroyo‚s term, this is the last big project for us to have a truly national grid. It will allow us to have WESM (wholesale electricity spot market) in Mindanao," he said.

The TransCo chief said they have already secured approval from the company’s board to include the LMIP in the list of ongoing projects from the present status of being an indicative project.

He said they would tap various traditional financing sources like Japan Bank International Cooperation (JBIC), Export-Import Bank and Calyon Bank.

"We have board approval. And then we will go to the usual process of financing," he said.

The TransCo board has decided to bring down the cost of LMIP to $275 million just to get the project going. The LMIP was supposed to be included in the list of projects that the Asian Development Bank (ADB) will finance for 2003. But the multilateral financial institution cancelled the project from its list after the government raised its intention to defer it.

Since the privatization of TransCo is already in the offing, the government had opted to defer the LMIP to allow the winning concessionaire to carry out the project.

But TransCo board realized the need for the LMIP as this will serve as the final phase in the unification of Luzon, Visayas and Mindanao grids.

The interconnection project was originally designed for 250 kilovolt high-voltage density cable bipolar link with a total transfer capacity of 500 Megawatts.