NGCP says ERC rule on expenses ‘unfair’ to firm
By Alena Mae S. Flores – November 10, 2023, 12:35 am
from manilastandard.net
Transmission operator National Grid Corp. of the Philippines (NGCP) said Thursday the Energy Regulatory Commission’s (ERC) decision to disallow some of its expenses, despite being legitimate business costs, is “unfair” to the company.
“I do not think it’s fair. It’s not fair on us, it’s not fair on our people because we have so many audits…and the regulatory reset process was admittedly rushed,” NCGP assistant vice president and spokesperson Cynthia Alabanza said in a briefing.
ERC announced Wednesday a lower allowable revenue for NGCP at P36.7 billion annually or a total of P183.491 billion for 2016 to 2020. It disallowed certain expenses such as employee benefits, uncompleted projects, and corporate social responsibility projects from being passed on to consumers.
“We work hard, we play by the rules, we try to be as transparent as we can, and it’s difficult also to explain to our employees why everything they are doing in earnest for doing their jobs, why it’s being cast in a very bad light,” Alabanza said.
NGCP said the ERC should instead be blamed for its failure to conduct the needed regulatory reset every five years.
The ERC-approved allowable revenue for NGCP is 52.7 percent lower than NGCP’s claims of P387.803 billion, or an annual average of P77.56 billion, for the regulatory period.
NGCP said it is a highly regulated entity where revenue is capped, margins are determined by regulators, expenses reviewed and rationalized, and recoveries regulated.
“Whatever we bill our customers is only what the regulator allows us to,” the company said in a separate statement.
NGCP underscored the legitimacy and need for these expenses, especially in consideration of communities affected by transmission projects.
“NGCP allocates a certain amount of allowed revenue to CSR (corporate social responsibility) projects. Transmission line projects, to some extent, become a burden to project-affected persons living in areas traversed by these lines,” it said.
“To alleviate these communities hosting our projects, NGCP implements CSR projects to help these communities thrive and develop. These expenses were found to be in order by the ERC after careful calibration and were duly approved. These are all legitimate business expenses to ensure reliable and efficient transmission services,” NGCP said.
Alabanza said the ERC had failed to address NGCP’s two requests for a regulatory reset, and applying the rules “retroactively” lacked fairness.
She also said the rules should be forward-looking to have a level playing field.
Alabanza said ERC’s pronouncement would have a long-term impact not only on NGCP but also on the consumers and other businesses.
She said there should be a balance between consumer interest and businesses that need a reasonable return on their investments. NGCP’s expenses mentioned by the ERC are legitimate business costs under the same rules applied to the National Transmission Corp. (TransCo), she added.
NGCP took over the operations and management of the national transmission system from TransCo in 2009 following the privatization of the power grid operations and maintenance.
