THE Energy Regulatory Commission (ERC) has authorized the National Grid Corp. of the Philippines (NGCP) to gather a further P0.06 per kilowatt-hour (kWh) from consumers starting August as a part of the speed reset process.
This follows the ERC’s approval for NGCP to get better P63.45 billion in revenues for the 2023 period, in keeping with a choice promulgated Jan. 30.
The implementation covers the primary 12 months of NGCP’s fifth regulatory period (5RP), spanning 2023 to 2027. Overall, the ERC has set a maximum allowable revenue (MAR) for NGCP at P376.4 billion.
The ERC approved an annual revenue of P63.4 billion for 2023, P69.1 billion for 2024, P74.3 billion for 2025, P81 billion for 2026, and P88.5 billion for 2027.
It also approved an annual revenue requirement (ARR) of P374.98 billion, 15.28% lower than the P442.60 billion applied for by NGCP.
MAR refers back to the revenue ceiling the ERC allows the utility to gather, while ARR represents the quantity NGCP must get better to cover its costs and expenses.
The Electric Power Industry Reform Act tasks the ERC with setting transmission and distribution wheeling rates that allow utilities to get better “just and reasonable costs and an inexpensive return on rate base,” ensuring the entity can operate viably.
A part of that is the speed reset process, a periodic review through which the ERC examines a utility’s costs, investments, and performance, after which sets revenue limits to make sure reliable service while protecting consumers from excessive charges.
The Commission said the choice “strikes a balance between ensuring adequate funding for critical power infrastructure and safeguarding consumers from excessive transmission charges.”
“Only costs and investments that passed regulatory scrutiny were included within the approved revenue cap,” it added.
Last 12 months, the ERC accomplished NGCP’s fourth regulatory period (4RP), approving a MAR of P335.78 billion for the 4RP covering 2016 to 2022.
This allowed NGCP to gather P28.29 billion from consumers over seven years as a part of cost recovery, translating to a rise of P0.1013 per kWh in transmission charges. — Sheldeen Joy Talavera