NGCP gains regulatory certainty in ERC fee deal

National Grid Corporation of the Philippines (NGCP) is putting years of courtroom battles over regulatory fees behind it, giving the country’s sole transmission network provider greater certainty over its obligations to the Energy Regulatory Commission (ERC).

NGCP and the ERC signed a Compromise Agreement on Thursday ending their long-running dispute over permit fees and annual supervision and regulation (S&R) fees, which the grid operator had consistently paid under protest while challenging their imposition before the Court of Appeals and Supreme Court.

Under the deal, NGCP recognizes the charges as regulatory fees imposed under the ERC’s statutory mandate and will no longer contest their characterization in the cases covered by the settlement.

Fees already remitted by NGCP, including those paid under protest, will be recognized as having satisfied its obligations in the covered cases.

For NGCP, the settlement removes a lingering legal and regulatory issue while avoiding further expenditure of resources on litigation. For the broader power sector, it draws a clearer line on the ERC’s authority to collect regulatory and administrative fees from the transmission concessionaire.

“Today’s signing reflects NGCP’s commitment to constructive engagement and cooperation with the Energy Regulatory Commission,” NGCP vice chairman Henry Sy Jr. said.

“Both parties have chosen a resolution through dialogue and agreement, allowing us to move forward with greater regulatory certainty and without the continued expenditure of public and private resources,” he added.

The dispute centered on NGCP’s argument that Section 9 of its legislative franchise exempts it from the fees and charges imposed by the ERC.

The ERC maintained that permit and S&R fees are regulatory and administrative in nature — not taxes — and therefore fall outside NGCP’s franchise tax exemption.

NGCP’s annual S&R fees have previously been assessed at P468 million, according to company disclosures, underscoring the financial stakes surrounding the dispute.

Sy said NGCP recognizes the ERC’s regulatory mandate.

“This agreement demonstrates that good faith, cooperation, and due regard for the responsibilities of both institutions ultimately best serve the interests of the consuming public,” he said.

“We look forward to continuing to work with the ERC in the same spirit of cooperation,” Sy added.

ERC chairperson and CEO Francis Saturnino C. Juan said the settlement finally resolves the question that had kept the two sides in litigation for years.

“For years, this dispute stood in the way of a clear and settled understanding between the ERC and NGCP on the nature of these fees. This Compromise Agreement finally puts that question to rest, in a manner that respects the ERC’s mandate, gives NGCP the certainty it has sought, and ensures that the public benefits through funds that will now flow to the National Treasury. It is the kind of harmony we want to see between regulator and regulated: one built on clarity, mutual respect, and a shared commitment to the public interest,” Juan said.

The agreement also clarifies the treatment of the collections going forward. Proceeds from past and future ERC permit and S&R fees will be remitted to the National Treasury to support government programs, including basic social services.