ERC allows reduction of transmission rates

MANILA, Philippines — The Energy Regulatory Commission (ERC) has decided to reduce transmission rates this year to lower electricity rates.

In an order, the ERC granted the National Grid Corp. of the Philippines (NGCP) an interim relief to implement an Interim Maximum Annual Revenue (iMAR) for this year amounting to P47.051 billion.

The iMAR refers to the maximum revenue that NGCP is allowed to earn from its transmission operations, or the process of transporting electricity from power generators to distributors.

ERC chairperson and CEO Agnes Devanadera said the interim relief reflected a lower iMAR for 2020, which caused the reduction in the transmission tariff.

This means the existing transmission charge will be reduced by P0.0413 per kilowatt-hour (kwh) from the P0.5114 per kWh in 2019 to P0.4701 per kWh in 2020.

Moreover, Devanadera said the approved iMAR of P47 billion is lower by P11.8 billion than the NGCP’s proposal of P58.8 billion.

“The lowering of the transmission rate is again one of the efforts of the commission to provide relief to all the electricity consumers, especially those that are economically disadvantaged who lost their jobs and earnings due to the implementation of the Enhanced Community Quarantine,” the ERC chief said.

The ERC, in its evaluation, said NGCP’s last adjustment of the iMAR was in 2016. It said the increase in revenues from the 2016 level to the 2020 level would allow NGCP to augment its capital expenditure (capex) requirements in order to address the forecasted increase in demand for this year.

Furthermore, there were variances in the computations of capex between the NGCP and the ERC that caused the lower iMAR.

The ERC, in particular, considered the following for purposes of computing NGCP’s iMAR: (1) Unplanned capex identified as 100 percent completed projects considering that these assets are already existing and in operation in the transmission system. And (2) Energy Project of National Significance (EPNS) considered as priority projects per the Department of Energy (DOE).

“This brings a favorable rate impact on the consumers as this will mean a lower transmission charge for this year. The lowered transmission charge will be effective upon NGCP’s receipt of the relevant ERC Order,” Devanadera said.