The Energy Regulatory Commission (ERC) has approved a rate hike that will allow the National Grid Corporation of the Philippines (NGCP) to collect an additional P28.29 billion from consumers over seven years.
The decision, made during the ERC’s 1125th Regular Commission Meeting last 26 March, covers NGCP’s Fourth Regulatory Period from 2016 to 2022.
The Commission said on Wednesday that it approved a Maximum Allowable Revenue (MAR) of P335.78 billion for that period, using the “as spent” approach and a Weighted Average Cost of Capital (WACC) of 11.33 percent.
The decision was approved by a majority of Commissioners Alexis Lumbatan, Floresinda Baldo-Digal and Marko Romeo Fuentes.
WACC is a determinant of the maximum annual revenue allowed on electricity utilities. The formula for this has not been updated for too long.
Industry estimates indicated NGCP’s WACC should have been adjusted in 2016 to about seven percent, which is the regional average, instead of 15 percent before the reset.
A WACC reduction to the regional average of 7 percent means P53.3 billion in excess NGCP charges since 2016 will be returned to electricity users.
ERC chairperson Monalisa Dimalanta and Commissioner Catherine Maceda dissented from the majority’s decision. Their official dissenting opinions will be released along with the entire decision.
In a special meeting on 11 April, the ERC also allowed NGCP under-recoveries amounting to P28.29 billion.
The decision will lead to an average increase in transmission charges of P0.1013 per kilowatt-hour (/kWh) over 84 months.
Of this, P0.0629/kWh is from the basic transmission charge and P0.0384/kWh is for the under-recovered portion of the MAR.
The ERC began reviewing NGCP’s rates in 2022 when it issued Resolution No. 08, Series of 2022, laying out the rules for setting transmission wheeling rates.
The reset started with the first phase, from January 2016 to December 2020, and was later expanded to include Phase 2.
Draft determinations were released in September and November 2024 for public and stakeholder feedback.
The ERC also made permanent NGCP’s MAR for 2015 at P43 million and approved NGCP’s P783.06 million Net Performance Incentive Scheme reward for 2014 under ERC Case 2014-155 RC.