Press Release: ERC Approves Lower NGCP MAR for 2011 to 2015
The Energy Regulatory Commission (ERC) approved on 22 November 2010 the Final Determination of the Maximum Annual Revenue (MAR) of the National Grid Corporation of the Philippines (NGCP) for the Third Regulatory Period (3rd RP) covering the years 2011 up to 2015. The total revenue requirement approved by the ERC is PhP92,269.63 million lower than the amount proposed by the NGCP as bared in its application. NGCP applied for a revenue requirement of PhP291,078.70 million while the ERC only approved a MAR of PhP198,809.07 million.
The ERC observed that the monthly charge for transmission will have a continuing decrease from 2011 until 2015. The decrease in transmission charges is due to the lower revenue requirement determined by the ERC which noted that the NGCP can still operate efficiently even with a lower operating budget. The NGCP experienced a demand growth that pushed the billing determinant to go up. From PhP372.38 per month average rate in 2010, the ERC computed the estimated monthly transmission charge to be PhP364.75 in year 2011; PhP362.43 in year 2012; PhP360.54 in year 2013; PhP359.37 in year 2014; and PhP358.39 in year 2015.
The approved revenue requirement is inclusive of the transmission charges carried-over from the second regulatory period covering the years 2006 to 2010. The carry-over charge represents the transmission charges due to NGCP for the second regulatory period but were deferred to the next regulatory period through the imposition by the ERC of a side-constraint to prevent a rate shock among the different customer classes.
The ERC also approved in its Final Determination the adoption of the performance incentive scheme (PIS) having the same performance measures as the second regulatory period. However, more stringent targets were imposed to significantly improve the quality of transmission service. New performance indicators were also incorporated such as congestion availability indicator (ConA), ancillary services availability indicator and customer satisfaction indicator.
NGCP is the concessionaire that operates the sole power transmission system of the country. The transmission rates charged by NGCP are based on the internationally accepted rate-setting methodology called the Performance-Based Rate-Setting (PBR) scheme. The ERC promulgated the Rules for Setting the Transmission Wheeling Rates (RTWR) to guide implementation of PBR in the transmission sector.
“The ERC is happy to note that electricity consumers will be enjoying a reduction in transmission charges in the next five years beginning 2011. The PBR scheme is proving to be a win-win proposition for both the electricity service provider and the electricity consumers. NGCP, as a regulated entity, is assured of rates that will allow for cost-efficient operations and savings. Electricity consumers, on the other hand, can expect a more reliable and efficient transmission system and improved delivery of electricity and possibly a share in the savings generated by NGCP,” ERC chairperson and CEO Zenaida G. Cruz-Ducut said.
December 15, 2010