ERC puts cap on NGCP revenues

Business Mirror

05 Jan 2014 

 

Written by Lenie Lectura

THE Energy Regulatory Commission (ERC) has put a cap on the revenues of National Grid Corp. of the Philippines (NGCP) this year at P42.5 billion.

In a 11-page order signed on December 9, 2013, but released only last week, the ERC said it “provisionally approves the application filed by NGCP for approval of its maximum allowable revenue (MAR) for calendar year 2014 in the amount of P42.506 billion, to be implemented effective its January 2014 billing.”

The approved MAR is lower than last year’s earnings cap of P44.567.18 billion, or by P2.060 billion.

At this level, the indicative average transmission rate should be P308.67 per kilowatt a month or P27.76 per kilowatt-hour.

The provisional authority allows NGCP to implement capital expenditure programs and cover operation and maintenance costs for 2014. “The timely implementation of the rate translation of the MAR will [also] reduce, if not eliminate, the risk of under recovery which is substantial to it.”

Specifically, the company aims to collect as much as P31.58 billion by servicing Luzon, P5.15 billion in the Visayas and P5.76 billion in Mindanao.

The NGCP also sought approval to collect P754.69 million under the Performance Incentive Scheme (PIS). However, the ERC “deems it appropriate not to include the PIS considering that NGCP has yet to substantiate the same.”

“The PIS rewards or penalizes the NGCP to the extent that the actual level of performance of the grid for the regulatory year exceeds or fails below the target level of performance as defined in the final determination. NGCP claims a net performance incentive reward of P754.69 million applicable for 2013,” added the ERC.

The NGCP is the corporate vehicle of the consortium which was awarded the concession to assume the power transmission functions of National Transmission Corp.

The NGCP’s transmission charges are geared for power delivery service, system operations and metering services. These charges recover the cost of conveying electricity to or from the grid, the cost of system operation services, and the cost metering facilities, respectively.

While it is that NGCP which bills and collects ancillary services charges from end-users—as provisionally approved by the ERC—it remits the collection for ancillary services directly and entirely to the generators, from which these ancillary services are taken.

Ancillary service charges are not included in NGCP’s approved transmission rate as it forms part of the revenues of the power-generation firms that provide such services.   source