NGCP likely to appeal ERC decision on revenue cap

MANILA, Philippines - The National Grid Corp. of the Philippines (NGCP) is likely to file a motion with the Energy Regulatory Commission (ERC) to reconsider its decision to lower the power firm’s maximum annual revenue (MAR) for the years 2011 to 2015, ERC executive director Francis Saturnino Juan said yesterday.

“That is a possibility. NGCP can file a motion if they want to,” Juan said.

Last Nov. 22, the commission approved the final determination of NGCP’s MAR for the third regulatory Period (3rd RP) covering the years 2011 up to 2015. But the amount approved by the ERC is P92, 269.63 million lower than that proposed by the NGCP.

NGCP applied for a revenue requirement of P291,078.70 million while the ERC only approved a MAR of P198,809.07 million.

The ERC observed that the monthly charge for transmission will have a continuing decrease from 2011 until 2015, thereby allowing the NGCP to operate efficiently even with a lower operating budget.

The NGCP experienced a demand growth that pushed the billing determinant to go up. From P372.38 per month average in 2010, the ERC computed the estimated monthly transmission charge to be P364.75 in year 2011; P362.43 in year 2012; P360.54 in year 2013; P359.37 in year 2014; and P358.39 in year 2015.

The approved revenue requirement is inclusive of the transmission charges carried over from the second regulatory period covering the years 2006 to 2010.

The ERC also approved the adoption of a performance incentive scheme (PIS) with the same performance measures as the second regulatory period.

However, more stringent targets were imposed to significantly improve the quality of transmission service.

“The ERC is happy to note that electricity consumers will be enjoying a reduction in transmission charges in the next five years beginning 2011,” ERC chairperson and CEO Zenaida G. Cruz-Ducut said.

Ducut said “the PBR scheme is proving to be a win-win proposition for both the electricity service provider and the electricity consumers. NGCP, as a regulated entity, is assured of rates that will allow for cost-efficient operations and savings. Electricity consumers, on the other hand, can expect a more reliable and efficient transmission system and improved delivery of electricity and possibly a share in the savings generated by NGCP.”