The Energy Regulatory Commission said Friday it denied the omnibus motion filed by the National Grid Corp. of the Philippines to hold the rate reset until further public consultations were conducted.
“The rate reset is expected to result in a reduction of transmission charges by NGCP. We want the consumers to enjoy this benefit without further delay considering the improved investment environment since 2010 when the last reset was conducted,” ERC chairperson Monalisa Dimalanta said.
The reset is a regulatory exercise to check whether the allowed revenues of NGCP, which were approved seven years ago, are still valid and reflective of the current costs.
NGCP wanted to hold the reset process until it clarified specific provisions of the amended RTWR.
“We received the ERC’s latest order. Offhand, there seem to be a few points of disagreement which will have a substantive impact on proceedings. We are still exploring our options. We are optimistic that the ERC will be fair in its treatment of all energy industry players,” NGCP spokesperson Cynthia Perez-Alabanza said.
NGCP filed the omnibus motion on Oct. 27, 2022, which claimed that the amended RTWR for the Fourth Regulatory Period were included in haste and without public consultation, thus violating due process requirements.
The ERC said it would review the expenditure items of NGCP and other parameters to ensure that only eligible and reasonable costs were being passed on to consumers. It said it could no longer afford to delay the rate reset process.
“For NGCP, we also would want to give certainty to their allowable revenues since they have just been given only interim or provisional revenues because of the absence of the reset,” Dimalanta said.
The regulator promulgated Resolution No. 08, Series of 2022, or the Amended Rules for Setting Transmission Wheeling Rates on Sept. 28, 2022, which triggered the rate reset process of the transmission system concessionaire.
The amended RTWR is a set of rules that determines how much the national transmission utility, in this case, the NGCP, is allowed to charge for transmission rates to users of the high-voltage system.
It defined the transmission wheeling rate as a direct charge electricity consumers pay for using transmission facilities necessary for delivering electricity to households, industries, and commercial establishments.
The transmission wheeling rate is a line item that may be seen in the monthly electric billings of all consumers.
The ERC said the process for the 4th RP commenced in 2014 upon the initiative of NGCP with corresponding public consultations that resumed in 2018, all with NGCP’s active participation.
It said the evaluation of NGCP’s actual expenditure for the 4th RP is necessary and an integral part of the rolled-forward approach.
“Simply put, there is nothing to roll forward from one regulatory period into the next regulatory period if no such evaluation of actual expenditures were to be undertaken for the 4th RP,” the ERC said.
The ERC said it had made clear that the reset for the 4th regulatory period, having lapsed, would be treated differently as the costs to be applied for were no longer based on forecasts but rather on actual expenditures.
It said NGCP is not precluded from preparing and filing its application before the commission on the basis of its understanding of the amended RTWR, despite the denial of the omnibus motion.
The ERC said the application would be subjected to another ventilation round and due process once the commission held public hearings.
It gave NGCP a non-extendable period of 15 days from receipt of the order to file its reset application covering the 4th RP.
