TransCo mulls rate hike to recover rehab costs

The National Transmission Corp. (TransCo) is considering filing for a possible rate increase at the Energy Regulatory Commission (ERC) to recover the cost of rehabilitation of its facilities destroyed by the recent typhoons, a ranking company official said.

TransCo president Arthur Aguilar, however, said the rate hike which is expected to be filed early next year, will be "negligible".

"It could be one centavo or a few centavos adjustment," he said.

TransCo has already sent its Notice of Force Majeure Event to the ERC.

The notice officially informs the ERC that TransCo will be filing within 12 months the approval of a pass-through amount to recover the increase in cost of damages brought about by typhoons Milenyo, Reming and Seniang.

TransCo has estimated its cost of rehabilitation for the areas damaged by typhoon Milenyo to reach P485 million and P900 million for Reming. The cost for damages brought by Seniang, he said, has yet to be calculated.

TransCo said that under the Transmission Wheeling Rate Guidelines (TWRG), TransCo may seek ERC approval of a force majeure (damage done by natural calamities or acts of God) pass through amount.

It is up to the ERC to decide the merits of the application, the eligible pass-through charge, and the period over which the pass-through charge is to be applied.

According to the TWRG, a force majeure event may be defined as a typhoon, storm, or tropical depression, flood, drought, or volcanic eruption, earthquake, tidal wave or landslide which results or is likely to result in an increase in the costs incurred by a regulated entity in relation to its service of transmitting electricity.

For its part, the ERC said it would entertain applications from TransCo for recovery from the electricity consumers of costs incurred to repair and restore power service in case of a force majeure event.

"TransCo reported its intention of recovering the cost of repairs and restoration works on its transmission infrastructure damaged by tropical storm Reming. Events such as typhoons, earthquakes and other natural calamities are acts of God that cannot be controlled by anyone. It is not possible for TransCo to predict such events and incorporate the costs associated with these events in its rate proposal, hence, the ERC may allow such amounts to be recovered on top of the approved MAR," ERC Chairman Rodolfo B. Albano Jr. said.

Albano said if TransCo will not be able to recover these costs, it might result to lack of capital thus will lead to blackout.

ERC has to conduct hearings and consultation before it could approve the rate increase. It is expected to come up with a decision within 90 days upon the filing of the application of rate adjustment by TransCo.

But the ERC chairman said should they deem it necessary to approve the application of TransCo, it may consider giving the transmission firm a provisional authority to increase its rate before the 90-day period expires.

If ERC fails to pass decision within the three-month period, the rate approved in the provisional authority will be adopted by TransCo.