The Energy Regulatory Commission (ERC) promulgated last week the amended rules for the setting transmission wheeling rates (RTWR) of the National Grid Corporation of the Philippines (NGCP).
RTWR determines the amount NGCP is allowed to charge for transmission rates. It is a direct charge that all electricity consumers pay for the use of transmission facilities for the delivery of electricity to households, industries and commercial establishments.
The ERC said in a statement yesterday the amended rules can reduce power rates for customers and will provide certainty to the funding requirements of transmission projects.
The regulatory body said the issuance of the rules also triggers the rate reset process of NGCP as the last transmission reset completed by the ERC was for the five-year regulatory period covering 2010-2015.
“The long delay in the reset has not been fair in many respects… Consumers and grid users, on one hand, have become increasingly skeptical of the reasonableness of the rates that continue to be charged. Investments and new generation capacities have been stalled because, among others, of the uncertainty in funding for transmission projects,” said ERC chair Monalisa Dimalanta, in a statement.
“Meanwhile, the grid operator has not been able to demonstrate efficiencies, if any, that it may have obtained in its operations for the past six to seven years that would entitle it to the grant of performance-based incentives,” Dimalanta added.
The ERC also said the issuance sets the rules for the rate reset process for the fifth regulatory period which covers years 2023 to 2027, as well as the succeeding regulatory periods. It also prescribes the process of review for the fourth regulatory period covering the years 2016 to 2022.
Dimalanta said the review process for the fourth regulatory period will use determinations based on actual expenditures and actual performance by NGCP during the period.
The ERC will also consider in its determination expert studies procured by ERC on the components of the reset, including for the weighted average cost of capital and the valuation of the regulatory asset base.
