ERC approves P42.5-B revenue cap for NGCP

MANILA, Philippines - The Energy Regulatory Commission (ERC), the country’s power regulator, has given the green light to the National Grid Corp. of the Philippines (NGCP), to generate revenues of up to P42.5 billion this year.

Acting on an application filed by NGCP in October, the ERC approved last Dec. 9 a maximum allowable revenue (MAR) of P42.5 billion for NGCP this year.

The approved amount is lower than the P44.5 billion for 2013 and will translate to an average monthly transmission rate of P308.67 per kilowatt hour of P308.67. The previous year’s monthly transmission was P336.43 per kWh.

The MAR refers to the maximum revenue that NGCP is allowed to earn from its transmission operations, the process of transporting electricity from power generators to distributors such as Manila Electric Co. (Meralco) and electric cooperatives, which in turn distribute the electricity to end-users.

NGCP also sought the regulator’s authority to collect a performance incentive of P754.69 million in exchange for meeting the performance targets set by the regulator. However, the ERC did not approve this, saying that NGCP has yet to substantiate the claim.

The NGCP had sought for a provisional authority for the two components, saying that it would allow the company to proceed with its capital expenditure program for 2014.

NGCP said the timely implementation of the MAR “will reduce, if not eliminate the risk of under-recovery that is substantial to NGCP.”

NGCP is a privately owned corporation in charge of operating, maintaining and developing the country’s power transmission network, also known as the grid.

It is a joint venture between State Grid Corp. of China and Henry Sy, Jr., the eldest son of mall magnate Henry Sy, whose company operates the SM Mall chain.

The company won a 25-year concession to run the country’s transmission assets after it took over the management of the country’s national transmission network in 2008 from the state-owned National Transmission Co.