Electricity rates tipped to decline

Local consumers may pay less for electricity after energy superhighway National Grid Corp. of the Philippines (NGCP) announced lower transmission rates.

Ryan Datinggaling, head of NGCP’s revenue management department, said the transmission charge declined by 2.4 percent to P1.19 per kilowatt-hour (kWh) in September from P1.22 per kWh recorded in August.

NGCP noted that the transmission wheeling rate, or what it charges for delivering power, rose by 3.68 percent to P0.4936 per kWh in September from P0.4761 per kWh in August. However, its ancillary service (AS) rate for the same billing period dropped by 7.3 percent to P0.5680 per kWh.

The transmission rate is one of the components of an electricity end-user’s monthly bill, along with the generation charge (the cost of securing electricity from suppliers), system loss charge, distribution charge (the cost of delivering power from transmission lines to customers) and other taxes.

On the other hand, the AS is the cost of securing power reserves from the reserve market via bilateral contracts with various suppliers. It ensures the uninterrupted transmission of electricity from power plants to electricity consumers.

Pass-through cost

NGCP explained that AS charges, which account for more than half of the overall transmission charge, are remitted directly to power generators that provide power reserves to the grid.

“NGCP does not earn from AS and did not benefit from the increase in prices. The AS cost is a pass-through cost, and generating companies benefitted from this increase,” it said.

Meanwhile, NGCP spokesperson Cynthia Alabanza said they are waiting for the completion of the rate reset process being conducted by the Energy Regulatory Commission (ERC) this month.

“As we’ve been saying, NGCP is more than capable of pursuing all its transmission projects. But we do need to have our reset issued and our applications acted on,” said Alabanza.

“It’s very critical for us to have a fair recovery mechanism and rate reset process to be completed to determine the capex (capital expenditures) we can spend on,” she added.

ERC Commissioner Catherine Maceda told a Senate hearing on Wednesday that the regulatory agency was finalizing the rate reset process of NGCP and hoped to release the final draft determination for NGCP’s fourth regulatory period within this month.

It covered the years 2016 to 2022, including the lapsed period of two years under this exercise.