ERC moves to reduce electricity transmission charge to consumers

In Photo: An overhead power line used for electricity transmission and distribution across large distances is seen in Bulacan.

Transmission charges will be reduced to P0.4701 per kilowatt-hour (kWh) this year after the Energy Regulatory Commission (ERC) ordered the National Grid Corp. of the Philippines (NGCP) to implement a lower Interim Maximum Annual Revenue (iMAR) for the year.

The iMAR refers to the maximum revenue that NGCP is allowed to earn from its transmission operations.

“This brings a favorable rate impact on the consumers as this will mean a lower transmission charge for this year. The lowered transmission charge will be effective upon NGCP’s receipt of the relevant ERC order,” said ERC Chairman and Chief Executive Officer Agnes VST Devanadera.

NGCP earlier asked the commission to grant it an iMAR of P58.8 billion but the ERC only approved P47,051,640,000.00, or P11.8 billion less than what the grid operator applied for.

Effectively, the approved iMAR reduces the existing transmission charge by P0.0413/kWh from the P0.5114/kWh in 2019 to P0.4701/kWh for 2020.

“The interim relief granted by the commission to NGCP reflected a lower Interim Maximum Annual Revenue for 2020 which caused the reduction in the transmission tariff. The approved iMAR amounted to P47 billion, which is lower than the NGCP’s proposal of P58.8 billion.

The lowering of the transmission rate is again one of the more successful efforts of the commission to provide relief to all the electricity consumers, especially those that are economically disadvantaged, those who lost their jobs and earnings due to the implementation of the enhanced community quarantine,” Devanadera explained.

The ERC noted that NGCP’s last adjustment of the Maximum Annual Revenue (MAR) was in 2016. NGCP is presently collecting revenue based on the 2016 iMAR of P43.78 billion.
The increase in revenues from the 2016 level to the 2020 level would allow NGCP to augment its capital expenditures (capex) requirements in order to address the forecasted increase in demand for 2020.

Furthermore, there were variances in the computations of capex between the NGCP and the ERC that caused the lower iMAR.

Among others, the ERC considered the following in computing NGCP’s iMAR:  “Unplanned capex identified as 100 percent completed projects considering that these assets are already existing and in operation in the transmission system and Energy Project of National Significance [EPNS] considered as priority projects per the Department of Energy [DOE].”

Image Credits: Nonie Reyes