ERC sets maximum allowable revenue for NGCP at P376.4B

THE ENERGY Regulatory Commission (ERC) has set the maximum allowable revenue (MAR) of the National Grid Corp. of the Philippines (NGCP) at P376.4 billion for the fifth regulatory period (5RP), covering 2023 to 2027.

In a decision promulgated on Jan. 30, the ERC completed the review of NGCP’s 5RP application, marking the regulatory reset for the period without further delay.

The approved MAR, however, is lower than the annual revenue requirement (ARR) proposed by NGCP, which was P442.6 billion.

MAR refers to the revenue ceiling that the ERC allows the utility to collect, while ARR represents the amount NGCP needs to recover its costs and expenses.

The ERC approved the following MAR for each year of the 5RP: 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.

For 2023, NGCP is directed to implement the MAR starting Aug. 1, 2026, until further notice.

In issuing the decision, the ERC said it considered NGCP’s submissions, inputs from intervenors and other stakeholders, recommendations from ERC technical consultants, and its own independent evaluation of the record.

The regulator said the decision follows “the principles of transparency, reasonableness, and prudence in cost recovery, and is consistent with the ERC’s statutory mandate to protect the public interest.”

Under the Electric Power Industry Reform Act, the ERC is tasked with setting transmission and distribution wheeling rates that allow utilities to recover “just and reasonable costs and a reasonable return on rate base,” ensuring the entity can operate viably.

The rate-reset process is a forward-looking exercise that requires the utility to submit projected expenditures and planned projects over a five-year regulatory period.

The ERC then assesses past performance and adjusts rates as needed. Since part of the 5RP has already lapsed, the commission used actual and historical data from NGCP, supplemented with forecast information.

Last year, the regulator completed NGCP’s 4RP, approving a MAR of P335.78 billion for the period covering 2016 to 2022.

This resulted in a cost recovery of P28.29 billion from consumers over a seven-year period, translating to an increase of P0.1013 per kilowatt-hour in transmission charges. — Sheldeen Joy Talavera