ERC study slashes NGCP’s maximum allowable revenues

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The Energy Regulatory Commission (ERC) said it determined a lower maximum allowable revenue (MAR) for the National Grid Corporation of the Philippines (NGCP) for the years 2016 to 2020.

The regulatory body said this may warrant a refund from NGCP.

ERC said  based on its initial studies, NGCP should only have a MAR of P183.49 billion which is 52.7 percent lower compared to the actual P387.8 billion revenue of the company for the period.

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MAR is the maximum amount that NGCP is allowed to earn to recover its operational expense and capital expenditures, as approved by the ERC.

“Once the Commission finalizes the determination, after NGCP and the public give comments on the findings, we will finalize the allowable revenues and revise the rates. If there are no revisions to the amounts under the initial determination, then refunds will be due. We are targeting to complete the process within the year,” said Monalisa Dimalanta, ERC chairperson, in a statement.

ERC said  the study is part of an order dated September 13 but was only released on Monday.

The regulatory body added this is a preliminary result of the ongoing review of the performance and operations of NGCP for the fourth regulatory period (4th RP) 2016 to 2022 with the initial results covering the years 2016 to 2020.

Historically, the conduct of rate reset for NGCP, including the setting of MAR, is a forward-looking exercise that requires the company to submit forecasted expenditures and proposed projects over a five-year regulatory period.

However, ERC said setting the MAR of NGCP for its 4th RP is “distinct and unique” because it covers a past period and requires a historical data evaluation of the company’s expenditures and performance.

ERC said it was forced to conduct such change as the previous leaderships of the regulatory body did not conduct a rate-reset for NGCP since the lapse of the third regulatory period covering years 2011 to 2015.

ERC added it will allow NGCP and stakeholders to submit comments on the partial initial determination for validation which will then be considered if meritorious, in the final determination for the 4th RP targeted for completion before the end of the year.

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