ERC rejects NGCP plea to amend rules on rates

MANILA, Philippines — The Energy Regulatory Commission (ERC) has denied the petition filed by the National Grid Corp. of the Philippines (NGCP) to amend the rules on setting transmission rates.

In a petition to revise the 2022 amended rules for setting transmission wheeling rates (2022 Amended RTWR) filed by the company in December last year, NGCP sought to limit the fourth regulatory period to the years 2016 to 2020, instead of 2016 to 2022, as well as include the occurrence of “grassfires” among force majeure events, and allow reopening events in rate-setting.

NGCP likewise sought to disallow the National Transmission Corp. (TransCo) as a necessary party to rate-setting applications of the company, and the use of locked-in weighted average cost of capital instead of the classical WACC in NGCP rate-setting exercises.

The ERC, in its order, retained the fourth regulatory period from 2016 to 2022, denying NGCP’s proposal.

“The ERC exercised its rule-making authority to promote the interest of the public, as mandated by the Electric Power Industry Reform Act of 2001 (EPIRA) and the Public Service Act, as amended, to cover the entire lapsed period under the fourth regulatory period,” the commission said.

The ERC likewise denied NGCP’s proposal to include grassfires as a force majeure event, saying that any grassfire incident – to be unforeseen and extenuating – must first satisfy the conditions of a force majeure event under the 2022 Amended RTWR.

“More importantly, such incident must not have been caused by or attributed to NGCP, willfully or through its neglect,” the ERC said.

In rejecting NGCP’s proposal to remove the provision allowing TransCo to participate in rate-setting applications, the ERC clarified that TransCo’s participation is necessary for complete relief for any rate-setting application, considering that the latter is still the owner of transmission assets and holds interest in the outcome of such rate-setting applications.

As for NGCP’s proposal to include explicit provisions on reopening of events, the ERC reiterated that the 2022 Amended RTWR already includes sufficient mechanisms and safeguards governing rate adjustments for the regulated entity.

The ERC further denied NGCP’s proposal to allow locked-in WACC for being “contrary to the spirit of performance-based regulation and the consumers’ interests.”

The ERC said it reminded NGCP that the 2022 Amended RTWR, which already details the procedure for the setting of the WACC, among others, was subjected to public consultation in which NGCP itself participated.