NGCP defers IMAR increase

MANILA, Philippines — The Energy Regulatory Commission (ERC) said the National Grid Corp. of the Philippines (NGCP) would not implement the approved increase in its interim maximum allowable revenue (IMAR) this year.

The implementation of the IMAR of grid operator NGCP has been unilaterally deferred, ERC chairperson Agnes Devanadera confirmed during a Senate hearing Monday.

This followed the pronouncement of enhanced community quarantine across the country in March due to the coronavirus disease (COVID-19) pandemic, she said.

“NGCP, on its own, informed us that they are not implementing,” the ERC chief said.

Last Feb. 13, the ERC commission en banc allowed NGCP to implement an IMAR of P47.051 billion this year.  Last year, NGCP’s IMAR was P43 billion.

“If you read the decision, it was approved by the ERC because it will help lower rates,” Devanadera said.

The approved IMAR of P47 billion is P11.8 billion lower  than  NGCP’s proposal of P58.8 billion, which  was filed before the commission last October 2019.

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.

In the June 3 House Committee on Good Governance hearing, ERC spokesperson Floresinda Digal said the approved IMAR was not supposed to reflect an increase in the transmission charge.

In fact, the existing transmission charge would have been reduced by P0.0413 per kilowatt-hour (kwh) to P0.4701 per kWh.

“Per our evaluation at that time, considering the data and information that we have, the approved IMAR is supposed to have lower transmission rates by four centavos coming from 51 centavos [per kwh] of 2019. With the interim relief granted in February 2020, we have simulated 47-centavo [per kwh] transmission charge, so it should have been four centavos [per kwh] lower,” she said.

In approving the latest IMAR, the NGCP’s last adjustment of 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 expenditures  requirements in order to address the forecasted increase in demand for 2020.

When asked by Sen. Risa Hontiveros on whether this deferment would be observed until the end of the year, Devanadera said it was NGCP who stated they would defer.

NGCP’s IMAR, which is  used for transmission projects and other grid investments based on the Department of Energy (DOE)’s Power Development Plan, is subject to ERC’s approval for every regulatory period.

However, administrative concerns faced by the ERC in 2015 and 2016 which included constraints in the procurement of regulatory experts, resulted in the delay of the reset process for NGCP’s 4th Regulatory Period.