By Myrna M. Velasco – April 8, 2019, 10:00 PM
from Manila Bulletin

Filipino consumers are warranted roughly P46.547 billion worth of refund in their electric bills once the Energy Regulatory Commission (ERC) finally renders decision on adjustments in the rate-setting methodology for power utilities in the country.

Senator Sherwin Gatchalian (Facebook / MANILA BULLETIN)

Senator Sherwin Gatchalian
(Facebook / MANILA BULLETIN)

That has been the calculation presented by Senate Committee on Energy Chairman Sherwin T. Gatchalian as to the extent of transmission charge component of the bill that must be paid back to consumers.

The last time the ERC updated the performance-based rate setting (PBR) for power utilities was in 2010 – and since then, the cost items in the building blocks already trended downwards, including interest rates.

Regulated utilities like the National Grid Corporation of the Philippines (NGCP) as well as distribution utilities like the Manila Electric Company (Meralco) are similarly situated in having rates that are no longer updated because of the delay in the regulatory decisions of the ERC.

And if the entire cost of delay in the rate approvals will be factored in, the numbers crunched by the Senate energy committee on the magnitude of refund to consumers will be a staggering P82.17 billion – which essentially may bring down electricity rates by as much as P0.78 per kilowatt hour.

Gatchalian thus made a stern call on the ERC to commit to a new timeline on its decision on the transmission rates’ updating in particular – so the consumers could benefit of the warranted payback in their electric bills.

“It’s disappointing that the regulator (ERC) who is tasked to protect public interest of the consumers, that is not happening. In fact, because of their inefficiency we are being charged with expensive electricity rates,” he stressed.

The lawmaker opined that the building blocks in the calculation of weighted average cost of capital (WACC) in the transmission tariffs already changed significantly since the last regulatory reset in 2015, but the ERC has not gotten headway yet into fortifying the regulation methodology on the rate-setting of power utilities.

“There’s huge mismatch – independently we’re looking at the individual building block, there are a lot which are no longer updated – one example is the T-Bills because that’s part of the WACC calculation. Supposedly, updating is part of the reason of the five-year rolling regulation so consumers won’t be overcharged,” the lawmaker indicated.

His mandate to the ERC then is to submit a definitive timeframe on when it can bring up to code the regulated rates of power utilities – and if warranted, order prudently incurred and justifiable refund to the Filipino consumers.

“The bottom line here is because of the delays, we are now being charged of additional cost of delay – we calculated that to be around P0.78 per kWh… we don’t want to use administrative sanctions as a mode to pressure them (ERC officials), we’re trying to be as harmonious as possible so we’re giving them a chance to stay true to their words,” Gatchalian averred.

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