Power transmission rates cut

Amid ongoing controversy on the suspended power generation rate hike, the cost of power transmission – one of the line items in consumers’ electricity bills—is set to be cut as regulators approved a lower tariff for Sy-led National Grid Corp of the Philippines (NGCP).

The Energy Regulatory Commission (ERC), in a written order, provisionally approved a maximum allowable revenue (MAR) of P42.5 billion for NGCP and directed it to collect the average transmission rate of P0.6251 per kilowatt-hour. This is lower than the almost P44.6 billion MAR in 2013 and its corresponding average transmission rate of P0.6841/kWh.

“The indicative rate impact of the provisionally approved MAR 2014 translates to a rate reduction,” the ERC order said.

However, regulators left out the Performance Incentive Scheme (PIS) in its ruling, which effectively means NGCP cannot yet book a profit.

The commission said it did not include the PIS in its order because NGCP “has yet to substantiate the same.”

NGCP had claimed a net performance incentive reward of P754.69 million for 2013, higher than the P609.05 million granted in 2012.

NGCP spokesperson Cynthia P. Alabanza said the issuance of the provisional authority would allow the private transmission highway operator to implement its capital expenditure programs and cover its operation and maintenance costs for 2014.

“The design is really for transmission charges to decrease over time. The transmission charges actually cover only the cost of delivering the power and we have to meet certain performance requirements,” Alabanza said.

As to the ERC’s deferred decision on the PIS, Alabanza declined to comment except to say that every year, NGCP has passed its performance requirements “with flying colors.”

PIS is a scheme allowed under the performance based rate setting regulation (PBR), where regulated entities are rewarded or penalized with a corresponding monetary amount for surpassing or missing performance standards.