ERC allows TransCo to hike delivery rates

Customers of the National Transmission Corporation may have to shoulder the possible average increase of 5.5 to 10.9 percent in the power delivery service rate of TransCo this year, as the Energy Regulatory Commission has allowed the company to set its Maximum Allowable Revenue for the year 2006.

Due to increase of the MAR in 2006, ERC said that there is possible average increase this year. This is attributed to the catch up in the under recovery experienced by the transmission company in 2005.

ERC, however, said rate charges for system operator and supply and metering will remain the same for the initial period in year 2006 as the commission is still expected to make a final decision on the regulatory reset for TransCo for the second regulatory period which should occur by April 30 this year.

ERC said that the updated rate adjustment shall occur between the period from May 1 to July 31 this year.

"It is unclear whether TransCo will be able to recover its final approved cap for the year 2006. This is because it is yet unclear whether the MAR cap resulting from the current regulatory reset process will result in rise or fall in the level of the revenue cap imposed by this order," the commission elaborated.

On November 2, 2005, TransCo filed its application for the approval of its proposed MAR for the year 2006 in the amount of P30.673 billion inclusive of the recovery of P1,452.1 million revenue shortfall.

In its decision, ERC disallowed the proposed MAR cap of TransCo and ordered the latter to implement starting January 1, 2005 the MAR cap amounting to P30,672.2 million.

In implementing the MAR cap, the commission also ordered TransCo to make sure that it does not breach the side constraints imposed by the Transmission Wheeling Rates Guidelines and implement the change of rates under the MAR cap in its immediately succeeding billing cycle.

ERC's Transmission Wheeling Rates Guidelines requires a new methodology for setting the transmission wheeling rates of TransCo under the MAR cap, which needs the approval and annual verification of the commission. - Wenna A. Berondo