‘NGCP deferred rate adjustment’
By Lenie Lectura – September 3, 2020
from Business Mirror
The National Grid Corporation of the Philippines (NGCP) said it has decided to defer the implementation of the approved 2020 interim maximum allowable revenue (iMAR) even before the Energy Regulatory Commission (ERC) released its decision suspending the iMAR.
NGCP Spokesperson Cynthia Alabanza said the company has unilaterally deferred the implementation of its ERC-approved iMAR. To date, it has not implemented the rate adjustment.
“NGCP is focusing its energies into finding ways to help the country battle this unprecedented global health crisis directly by deferring the implementation of the iMAR, and indirectly, by giving aid to local governments, medical institutions, and other entities in need,” she said.
“Without being prompted or ordered to do so, we are already thinking of ways to balance the needs of the country for a continually strengthened power grid, and the difficulties that beset many Filipinos.”
Alabanza issued the statement after the ERC promulgated an order suspending the implementation of the approved 2020 iMAR of the NGCP.
The MAR refers to the maximum revenue that the grid operator is allowed to earn from its transmission operations.
In a 5-page order promulgated last September 2, the ERC suspended its February 13 order granting NGCP an interim relief to implement an iMAR in the amount of P47,051,640,000.
The suspension is subject to a 2020 year-end review, taking into consideration all updated economic indicators.
“It is the Commission’s view that the supply and demand assumptions need to be re-assessed and analyzed as such no longer hold true in the light of economic disruptions brought about by the Covid-19 pandemic,” said the ERC.
April registered the steepest decline by 20 percent to 11,840MW from the same month a year ago at 14,965MW. June actual demand figure has increased to 14,593MW from actual demand figures of April and May’s 13,403MW this year.
The ERC said the actual power demand from January to June is crucial in determining the demand trend as it was within this period that various modes of community quarantine were enforced by the government.
“The onslaught of the Covid-19 pandemic, however, has brought about adverse fallouts that curtailed, if not totally shut down business operations. The resulting slowdown in business activities generated demand and supply shocks across various sectors, including the power industry,” said the ERC.
As such the Commission deems it necessary to suspend the implementation of the approved iMAR 2020, considering that the demand forecasts, which were used as basis for its determination, are no longer valid and would therefore need to be re-assessed.
With the suspension, NGCP will collect on the basis of the previous approved iMAR, which stood at P43.78 billion in 2016.
NGCP’s iMAR, which are used for transmission projects and other grid investments based on the Department of Energy’s Power Development Plan, are subject to ERC’s approval for every regulatory period. However, administrative concerns faced by the ERC in 2015 and 2016, which included constraints in the procurement of regulatory experts, resulted in the delay of the reset process for NGCP’s 4th Regulatory Period.
