ERC cuts NGCP revenue cap, easing transmission costs
Text size
Electricity consumers may see relief from transmission charges after the Energy Regulatory Commission (ERC) approved a reduced revenue ceiling for the National Grid Corp. of the Philippines (NGCP).
The regulator said Tuesday that it set NGCP’s Annual Revenue Requirement (ARR) at P374.98 billion, down 15.28 percent from the company’s proposed P442.60 billion, covering the period 2023 to 2027 under the Commission’s Fifth Regulatory Period reset.
The decision, according to the ERC, limits the maximum amount NGCP can collect from consumers, even if its costs are higher.
“The Commission remains committed to ensuring that transmission rates charged to consumers are just and reasonable, while at the same time allowing the transmission concessionaire to recover only efficient and necessary costs to maintain a reliable and secure power grid,” the ERC said.
The ERC trimmed 17 percent from NGCP’s proposed capital expenditures, excluding projects already addressed in prior regulatory periods.
Approved spending will fund grid upgrades, system reinforcements, and new transmission projects to meet rising electricity demand and enhance nationwide power reliability.
The regulator also disallowed NGCP from passing real property taxes to consumers, citing legal exemptions for assets used in its franchise.
The ERC said the decision balances funding NGCP’s transmission network with protecting consumers, while underscoring its mandate to set rates, safeguard users, and ensure the system’s long-term operation.
The Maximum Annual Revenue sets the total amount NGCP can earn in a year, covering its operating costs, depreciation, taxes, and a regulated return as approved by the ERC.
Charges to grid users depend on their peak demand and connection points, so actual bills vary with usage.
Any shortfall or excess in revenue is adjusted in future rates through the ARR True-Up Mechanism, ensuring NGCP only collects the approved amount.
As of press time, NGCP has not responded to requests for comment on how the ERC’s decision will affect its services.
