ERC approves higher NGCP revenue cap

MANILA, Philippines — The Energy Regulatory Commission (ERC) has raised by over P4 billion the maximum revenue the National Grid Corp. of the Philippines (NGCP) can collect from consumers from 2023 to 2027.

In an order promulgated on May 15, the ERC revised the NGCP’s maximum allowable revenue (MAR) for its fifth regulatory period (5RP) to P380.45 billion from the previously approved P376.41 billion.

The grid operator’s adjusted annual revenue requirement (ARR) likewise went up to P378.71 billion from P374.98 billion.

ARR represents the forecast amount the NGCP needs to recover its costs and earn a reasonable return, while MAR is the revenue ceiling it is allowed to collect from consumers.

The higher revenue cap follows the regulator’s partial approval of NGCP’s request for reconsideration, allowing adjustments to certain computations in the utility’s 5RP application.

As a highly regulated entity, the NGCP undergoes a regulatory rate reset process to determine how much it can charge consumers over a five-year period.

During the process, the ERC reviews NGCP’s costs, investments and performance. It then sets revenue limits to protect consumers from excessive charges.

Ideally, the rate reset process is forward-looking and should begin before each regulatory period starts. However, NGCP’s 5RP covering 2023 to 2027 has faced delays, with the decision only released this year.

For regulatory year 2023, the ERC has ordered NGCP to implement a MAR of around P63.66 billion, starting in its October 2026 billing.

“The commission remains committed to ensuring that transmission rates charged to consumers are just and reasonable, while at the same time allowing the transmission concessionaire to recover only efficient and necessary costs to maintain a reliable and secure power grid,” the ERC said.

As the country’s sole transmission operator, the NGCP is responsible for the operations, maintenance and development of the state-owned power grid.

Since 2009, the company has invested more than P300 billion for power transmission projects.