ERC admits absence of rules in NGCP’s regulatory reset

MANILA, Philippines — The Energy Regulatory Commission (ERC) admitted there is an absence of rules following its failure to approve the National Grid Corp. of the Philippines (NGCP)’s fourth regulatory reset application on time.

During the hearing of the House committee on legislative franchises, ERC chairperson Monalisa Dimalanta confirmed that “there were no rules after the third regulatory period had lapsed.”

Based on the original timeline, NGCP’s fourth and fifth regulatory reset applications should have covered the years 2016 to 2020 and 2021 to 2025, respectively. The ERC, however, modified the regulatory reset periods to 2016 to 2022 and 2023 to 2027.

“The regulatory reset rules apply for a particular regulatory period. After the said regulatory period, there is already a ‘vacuum’ in the law,” Dimalanta said.

While NGCP filed an issues paper to demonstrate its desire for a reset, Dimalanta stressed “it doesn’t cure the fact that there were no rules at that time.”

“In 2020, NGCP applied for an interim rate. It’s a recognition that there were no valid issued and approved rates from 2016 all the way to 2020, that’s why they’ve applied for an interim,” Dimalanta explained.

She added that when the ERC issued a decision on the interim maximum allowable revenue, its temporary nature was explicitly stated and a full regulatory reset remained necessary to establish the correct rates.

“The reason only the interim was submitted by the commission is because it’s all subject to a full reset,” she expounded.

When asked by panel chairman Parañaque 2nd District Rep. Gus Tambunting on what rules NGCP must follow, Dimalanta admitted that the ERC should have resolved the fourth regulatory reset instead of relying on interim arrangements.

“It’s clear that the ERC should have released it sooner. I think it was also recognized that the interim that they’ve applied for in 2020 was only an interim arrangement. It’s not the final rules. It’s all subject to the final action in a reset,” Dimalanta maintained.