ERC suspends 3% franchise tax on transmission costs
By Alena Mae S. Flores – August 10, 2023, 9:20 pm
from manilastandard.net
The Energy Regulatory Commission said Thursday it suspended the effectivity of the Resolution No. 07, Series of 2011 including the 3 percent franchise tax of the National Grid Corporation of the Philippines on the monthly transmission costs billed to distribution utilities.
It said in a statement it would soon issue a resolution to formalize the new directive. Once effective, the NGCP franchise tax would no longer be passed on to consumers in the following billing month, the agency said.
ERC chairperson Monalisa Dimalanta said the move would help bring down power rates by P0.01 per kilowatt-hour. “All passed-on, so far, none shouldered by NGCP. Estimate impact P0.01 per kWh,” Dimalanta said.
The ERC unanimously made the decision in a special commission meeting on Aug. 8, 2023.
NGCP was granted a franchise through Republic Act No. 9511 to engage in the business of conveying or transmitting electricity through high voltage back-bone system of interconnected transmission lines, substations and related facilities.
Section 9 of RA 9511 requires NGCP to pay a franchise tax equivalent to 3 percent of all gross receipts derived by NGCP from its operation. Following RA 9511, the commission issued ERC Resolution No. 07, Series of 2011, allowing the inclusion of the 3-percent franchise tax in the monthly billing of DUs.
“The commission continuously examines its existing rules and regulations to determine whether the mandates under the Electric Power Industry Reform Act of 2001 are faithfully fulfilled. With the consumers’ interests in mind, as well as upholding the rule of law, the commission resolved to suspend ERC Resolution No. 07, Series of 2011, by unanimous vote,” the ERC said.
NGCP spokesperson Cynthia Alabanza said the company had yet to receive a copy of the resolution. “We will address the matter once we receive the resolution in full,” she said.
NGCP earlier addressed concerns of the Senate Committee on Energy on allegations “of an overly favorable franchise” and its concession.
“We would like to clarify, that NGCP merely stepped into the shoes of TransCo [National Transmission Corp]. The regulatory framework, the rate setting mechanism, the planning, implementation of projects, even the inclusion of income taxes/franchise tax in recoverable expenses, all these existed prior to our winning the concession in an open, public, fair bidding process initiated by government,” NGCP said.
