The delay forced the ERC to approve a catch-up mechanism, increasing consumer bills now to compensate NGCP for past unrecovered costs

Instead of relief from high energy bills, the adjustment in the computation formula of power transmission resulted in P28.29 billion in under-recoveries, leading to an increase in transmission charges by P0.1013 per kilowatt-hour (kWh).

The Energy Regulatory Commission (ERC) recently completed a rate reset. This is a regulatory process where the transmission concessionaire’s maximum allowable revenue (MAR) is reviewed every five years to ensure it reflects current costs and is fair to consumers.

The Fourth Regulatory Period covers 2016 to 2022, but the ERC only finalized the reset in March 2025, years after it was due.

The delay significantly contributed to NGCP’s need to recover costs.

If the rate reset had been completed on time, in 2016 or shortly after, NGCP could have charged rates earlier to match its costs, avoiding the large under-recovery.

A veteran in the industry said the delay meant NGCP operated with outdated rates, leading to a P28.29 billion gap.

The delay forced the ERC to approve a catch-up mechanism, increasing consumer bills now to compensate NGCP for past unrecovered costs.

During the delay, NGCP operated under an interim MAR (iMAR) based on the Third Regulatory Period covering 2011 to 2015, which didn’t fully compensate actual costs for the succeeding years.

A 2024 congressional inquiry criticized a former ERC head for failing to conduct the rate resets for utility firms.

Former ERC Commissioner Alfredo Non, who headed the agency from 2012 to 2018, was questioned during a House Committee on Good Government and Public Accountability since “not a single rate reset was conducted” during Non’s seven-year tenure, as members of the panel attributed the delay to ERC errors predating and continuing through his term.

Non then tossed the blame to his predecessors, saying the ERC failed to provide clear parameters for the Fourth Regulatory Period.

In 2022, NGCP filed an omnibus motion to delay the rate reset, claiming the ERC’s amended Rules for Setting Transmission Wheeling Rates (RTWR) were implemented without sufficient public consultation, violating due process.

The ERC denied this motion, stating that further delays would hit consumers and that NGCP’s interim revenues needed certainty.

The COVID-19 pandemic, from 2020 to 2022, further disrupted ERC operations, delaying reviews and consultations.

NGCP’s legal challenges, including a 2023 Supreme Court petition for a temporary restraining order (TRO) against the ERC’s rate review, may have prolonged the process, though the TRO’s outcome isn’t specified.

During the House panel hearing, Non tried to use smoke and mirrors to blame his predecessors, but legislators pointed to the seven long years he had been ERC head when the problem with the rate reset started and dragged on.

In his testimony, Non denied oversight powers, saying that it was a collegial decision that ERC made. He insisted errors were made even before his entry into the regulator, but the blame is still on him since he had been ERC chief for seven years.

The incumbent ERC officials thus needed to address the long delay, resulting in colossal reimbursement. The culprit escapes punishment and smugly blames others for the problems he caused.