ERC set to tweak transmission rates in Q3

MANILA  -The Energy Regulatory Commission (ERC) promised to complete in the third quarter of the year an assessment of the “fairness of transmission and distribution rates” passed on to consumers.

ERC Chair Monalisa Dimalanta said during the Joint Congressional Energy Commission last Thursday they were in the thick of assessing the rates that National Grid Corp. of the Philippines (NGCP), the operator of the country’s transmission assets, could recover for the years 2016 to 2022, or the fourth rate rebasing period.

“As you all know, there has been no reset over the last couple of years, so we’re trying to catch up on the timeline for NGCP because these rate resets should be forecasted, instead of doing an actual review of their costs,” she said.

Based on the performance-based rate setting method, the NGCP provides regulators with a forecast of expenditures, capital and other costs at the start of a five-year period. This becomes the basis of transmission rates passed on to consumers.

During a regulatory reset, which is supposed to be implemented yearly, the commission assesses the actual performance of NGCP and tweaks the rates if necessary.

The ERC did not implement any reviews during the five-year period starting 2016, thus the formula for recovery of transmission rates was extended up to 2022.

NGCP filed last year a motion to defer the periodic reassessment of its performance, saying that further public consultations had to be conducted. The petition was denied, however.

According to Dimalanta, the ERC is also now “completing” the review of the fifth regulatory period covering 2023 to 2027. NGCP filed an application for the rates in March.

NGCP is under scrutiny after households experienced widespread power interruptions in May. It faced criticisms from Congress, the ERC and the Department of Energy (DOE) over at least 37 delayed projects that they said could have prevented the brownouts.

NGCP was made to explain the delays, some extending to two years beyond their scheduled completion dates, in a show cause order.

Dimalanta said the ERC was “happy” so far with the explanation that NGCP provided, describing it as “very detailed.”

“We are happy with their explanation in terms of substance of information and we are continuing to evaluate the justifications that they have submitted,” she said.

The ERC also recently completed its audit of NGCP’s performance since it won the competitive bidding in 2009 to manage and operate the country’s power highway.

The commission has yet to make its report public. INQ