Customer refunds likely amid spiking NGCP profits

The National Grid Corporation of the Philippines or NGCP might have to refund billions of pesos to customers after initial findings of the Energy Regulatory Commission or ERC which uncover a significant difference between the transmission operator's allowable and actual revenues.

Citing a partial determination of an ongoing review of NGCP performance and operations for the regulatory period 2016-2022, the ERC stated that the total allowable revenues for Phase 1 of the fourth regulatory period could be just P183.491 billion, or an average of P36.7 billion yearly.

The allowable revenues cover the years 2016-2020 or Phase 1 of the fourth regulatory period covering 2016-2022.

According to the ERC, the NGCP's claims of P387.803 billion with an annual average of P77.56 billion was significantly higher than the interim Maximum Annual Revenue or iMAR of P51.47 billion for 2020 initially granted in March 2022.

The Maximum Allowable Revenue is the full amount that NGCP can earn every year to recover its operational expenses such as its operating expenditures and capital expenditures. It should be approved by the ERC.

Since the ERC study is still ongoing, the final determined allowable revenue for NGCP is still unidentified as it would still require public comments.

"Once the commission finalizes the determination after NGCP and the public give comments on the findings, we will finalize the allowable revenues and revise the rates," ERC chairman and CEO Monalisa Dimalanta said

"If there are no revisions to the amounts under the initial determination, then refunds will be due. We are targeting to complete the process within the year," Dimalanta added.

In determining the partial allowable revenues of NGCP, the ERC excluded employees' benefits that were sought to be recovered from consumers.

It also disallowed the recovery from consumers of advertising expenses or COVID-19 donations "that were not proven to redound to the benefit of consumers."

Despite the results of the study, the ERC assured that it would solicit NGCP and stakeholders' comments "in the observance of due process."

Transmission reset is regularly done to check whether the allowed revenues of NGCP approved seven years ago are still valid, reasonable, and reflective of the current costs for consumers.

The last transmission reset was done for regulatory periods covering 2011 to 2015.