The Energy Regulatory Commission (ERC) has determined a much lower value in the maximum allowable revenue (MAR) permitted of the National Grid Corporation of the Philippines (NGCP) for the years 2016 through 2020.
The regulator said the higher-than-allowed MAR may warrant a refund of the charges the NGCP made during the period.
According to the ERC, initial studies show the NGCP should only have a MAR of only up to P183.49 billion or 52.7 percent lower than actual MAR totaling P387.8 billion for the period.
The MAR is the maximum amount the NGCP is permitted to earn to recover operational expense and capital expenditures as approved by the ERC.
“Once the commission finalizes the determination, after NGCP and the public comments on the findings, we will finalize the allowable revenue and revise the rates. If there are no revisions to the amounts under the initial determination, then refunds will be due,” said Monalisa Dimalanta, ERC chairperson, in a statement.
The regulator targets to complete the process within the year.
The ERC emphasized the preliminary nature of the findings of the ongoing performance and operations review of NGCP covering the fourth regulatory period from 2016 to 2022.
Historically, the conduct of a rate reset, including MAR setting, is a forward-looking exercise requiring the company to submit forecast expenditures and proposed projects over a five-year period.
But the ERC said setting the MAR under NGCP’s 4th regulatory period is “distinct and unique” because it covers a past period and requires a historical data evaluation of the company’s expenditures and performance.
The ERC said it was forced to conduct the review since its previous leaders did not conduct a rate-reset when the third regulatory period covering the years 2011 to 2015 lapsed.
The ERC said it will allow the NGCP and stakeholders to comment on the initial determination, which will be considered if meritorious.
The final determination of the 4th regulatory period is seen completed before the end of the year.
