ERC okays lower MAR for NGCP

MANILA, Philippines - The Energy Regulatory Commission (ERC) has approved a lower maximum allowable revenue (MAR) for transmission service provider National Grid Corp. of the Philippines (NGCP).

In a decision dated Nov. 9, the power rector regulator said “the commission computed an effective 2012 MAR of P42.903 billion, which is lower than the NGCP’s proposal of P47.775 billion.”

ERC said the difference was mainly due to the computation of the MAR for this year.

On top of the 2012 MAR, the ERC also approved a performance incentive scheme (PIS) allowing NGCP to earn P503.12 million.

NGCP earlier filed a provisional authority to implement and start the billing and collection of 2012 MAR. It wanted maximum revenues of P47.775 billion and a PIS of P503.12 million.

The provisional authority, which was approved by the ERC, allowed NGCP to implement its capital expenditure programs and cover its operation and maintenance costs.

Under existing rules, NGCP must submit its proposal on or before end-October for the maximum transmission and wheeling rates that may be charged during the application year.

In 2010, the ERC approved the NGCP’s five-year MAR of P198.81 billion for the regulatory periods 2011 to 2015.

NGCP has also applied for P44.977 billion in MAR for next year.

Specifically, the company aims to collect as much as P33.625 billion by servicing Luzon, P5.348 billion in Visayas and P6 billion in Mindanao. NGCP is also seeking approval to collect P642.08 million under the PIS.

The NGCP recovers its investments through fixed rates added to consumers’ electricity bills.

Meanwhile, the system operator said it has not benefited from higher ancillary costs that increased transmission charge by nine centavos per kilowatt-hour last month.

Ancillary service charges, meanwhile, are pass-through charges that are not part of NGCP’s revenues, said spokesperson Cynthia Perez-Alabanza.

NGCP’s transmission charges are for power delivery service, system operations and metering services. These charges recover the cost of conveying electricity to or from the grid, the cost of system operation services, and the cost metering facilities, respectively.

“While it is NGCP who bills and collects ancillary services charges from end-users, as provisionally approved by the ERC, it remits the collection for ancillary services directly and entirely to the generators, from which these ancillary services are taken,” Alabanza said.

The 39-percent increase in ancillary service rates in Luzon last month was due to the increase in the market clearing prices for this type of service, NGCP said.

Ancillary services support the transmission of capacity and energy while maintaining reliable operation of the transmission system.

Meanwhile, NGCP said it increased the reliability of the entire Mindanao grid with the upgrade of the control system for theBalo-i substation in Lanao del Norte.

NGCP installed a new computer technology replacing the old manual substation operations in Balo-i with computerized operations.

“The upgrade is expected to result to a lower number of undesired line trippings in the area,” NGCP said, adding that it aims to enhance system reliability and efficiency in NGCP substations.

The microprocessor-based substation control (MBSC) works in tandem with protection relay, supervisory control and data acquisition, and anti-fire systems.