Notice In the Matter of Undertaking a Revenue Reset for the TRANSCO and any Future Concessionaire thereof for the Period 2006-2010 in Accordance with the Alternative Form of Rate Setting Methodology under TWRG

On September 22, 2005, applicants National Transmission Corporation (TRANSCO) and Power Sector Assets and Liabilities Management (PSALM) Corporation filed an application for approval of a revenue reset for TRANSCO and any future concessionaire thereof for the period 2006 to 2010 under the Transmission Wheeling Rate Guidelines (TWRG).

In the said application, TRANSCO and PSALM prayed for the approval of, among others, its proposed: a) Regulatory Asset Base (RAB); b) Capital Expenditure (CAPEX); c) Operating Expenditure (OPEX); and d) Weighted Average Cost of Capital (WACC). A determination of said proposals leading to a revenue reset would pave the way for revised/adjusted rates to be authorized TRANSCO to charge its customers.

Finding said application sufficient in form and substance, the ERC set the same for public hearings (expository and evidentiary) on the following dates and venues: a) October 17, November 8, 24 & 25, 2005 at Davao City; b) October 18, November 11 and December 5, 2005 at the ERC Main Office in Pasig City; and c) October 20, November 10, 21 and 22, 2005 at Cebu City. Said public hearings were so scheduled with the end in view of reaching out to as many stakeholders including consumers, as would be affected by the resolution of the application. During the public hearings, TRANSCO and PSALM presented their witnesses in support of their application. On the other hand, parties of record representing various groups of other stakeholders (distribution utilities, commercial, industrial and residential consumers) were given opportunity to cross-examine applicants’ witnesses.

While the hearings for the said application will continue until February 2006, the TWRG and the Issues Paper, as amended, require the ERC to issue a Draft Determination not later than December 16, 2005. Said Draft Determination will embody the ERC’s position on the price control arrangements that are to apply to the Second Regulatory Period. It shall likewise describe the ERC’s initial evaluation of TRANSCO’s proposals in the instant application, as well as the evidence presented in support thereof during the public hearings to the date of this issuance.

It is important to note that this is just a Draft Determination and not a final decision. This will provide an opportunity for stakeholders to comment and discuss ERC’s views during the public consultations to be held for that purpose and before the final determination is made. Moreover, the Draft Determination will have no effect insofar as the final rates to be charged by TRANSCO is concerned. On the other hand, the final determination will be issued by the ERC after the termination of the presentation of evidence by all the parties (both documentary and testimonial) during the public hearings and only after it has conducted a complete evaluation thereof.

The Draft Determination may be downloaded from the ERC’s website at www.erc.gov.ph or may be photocopied at cost during the usual office hours from the ERC Docket Section at the 15th Floor, Pacific Center Bldg., San Miguel Avenue, Ortigas Complex, Pasig City. Relative thereto, the Draft Determination is hereby set for public consultation on the following dates and venues:

i.) January 30 & 31, 2006 (9:30 A.M. – 12:00 PM & 2:00 – 5:00 P.M.) at the Department of Trade and Industry (DTI) Conference Room, 2nd Floor, Mintrade Bldg., Monteverde corner Sales Sts., Davao City;
ii.) February 6 & 7, 2006 (9:30 A.M. – 12:00 PM & 2:00 – 5:00 P.M.) at the ERC Visayas Field Office, Ground Floor, Machay Bldg., Gorordo Avenue, Cebu City;
iii.) February 9 & 10, 2006 (9:30 A.M. – 12:00 PM & 2:00 – 5:00 P.M.) at the ERC Hearing Room, 15th Floor, Pacific Center Bldg., San Miguel Avenue, Ortigas Complex, Pasig City.

Interested parties are hereby given until January 20, 2006 to submit their written comments on the Draft Determination (both hard and soft copies) to the aforementioned address (soft copies may be sent to info@erc.gov.ph). The Commission would appreciate receiving said comments in its preferred format hereto attached as Annex “A”. On the other hand, TRANSCO and PSALM are hereby directed to:
1.) post a copy of this notice and the Draft Determination in: a) its Main Office; b) Branch Office/s; and c) at least three (3) conspicuous places within TRANSCO’s franchise area;

2.) publish this notice and the Draft Determination in at least one (1) newspaper of nationwide circulation in the country, immediately upon receipt of this notice; and

3.) undertake other possible means of disseminating information to the public relative to the above Draft Determination.

Draft Determination 1 of 2
Draft Determination 2 of 2
Draft Determination _Annex A
Draft Determination_Appendix E
Draft Determination_Comments

December 22, 2005

BACK TO NEWS ARCHIVE