ERC releases amended RTWR
BY LENIE LECTURA – OCTOBER 3, 2022
from Business Mirror
The Energy Regulatory Commission (ERC) has released the amended Rules for the Setting Transmission Wheeling Rates (RTWR), a direct charge that electricity consumers pay for the use of transmission facilities.
ERC Chairperson Monalisa Dimalanta said on Sunday that the amended RTWR seeks to restore balance in transmission regulation.
“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,” she said.
The issuance of the rules triggers the rate reset process of the transmission system concessionaire, the National Grid Corporation of the Philippines (NGCP). The last transmission reset completed by the ERC was for the five-year regulatory period covering 2010-2015.
The amended RTWR 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. More importantly, the amended RTWR prescribes the process of review for the Fourth Regulatory Period covering the years 2016 to 2022.
“Investments and new generation capacities have been stalled because, among others, of the uncertainty in funding for transmission projects. Meanwhile, the grid operator has not been able to demonstrate efficiencies, if any, that it may have obtained in its operations for the past 6 to 7 years that would entitle it to the grant of performance-based incentives,” said Dimalanta.
In the interest of fairness in the review process for the Fourth Regulatory Period, the ERC said all determinations will be based on actual expenditures and actual performance by NGCP during the said period.
The commission will also consider in its determination the expert studies procured by ERC on the components of the reset, including for the Weighted Average Cost of Capital (WACC) and the valuation of the Regulatory Asset Base (RAB).
The other salient features of the amended RTWR include the elimination of over recoveries and double compensations; elimination of the redundant inflationary considerations; enhanced criteria for the performance incentive scheme (PIS), including the ability of NGCP to comply with all the regulatory requirements and to ensure cyber and network security; and clarity on rules on reportorial requirements and penalties for non-compliance.
The transmission wheeling rate is a line item which may be seen in the monthly electric billings of all consumers.
The RTWR is a set of rules that determines how much the national transmission utility, in this case, the NGCP, is allowed to charge for transmission rates to users of the high-voltage system.
