THE Energy Regulatory Commission (ERC) is on track to complete next year its evaluation for the rate reset of the National Grid Corp. of the Philippines (NGCP) for the fifth regulatory period (5RP), spanning the years 2023-2027.
“If we are able to issue the decision on the 5RP by next year, there will be at least two years of the 5RP that are based on forecasted costs or expenses,” ERC Chairman and Chief Executive Officer Francis Saturnino C. Juan told reporters.
NGCP’s rate reset process faced years of delays, with the fourth regulatory period (4RP), covering the years 2016-2022, only finalized this year.
In April, the ERC rendered its decision on NGCP’s 4RP, allowing the grid operator to collect a total under-recovery of P28.3 billion from consumers.
“We actually now in the process of reviewing, evaluating the rate reset filing of the NGCP for the 5RP because we are targeting to make the reset as updated as possible,” he said.
The NGCP is the country’s sole grid operator, holding a 50-year franchise. The company has the right to operate and maintain the transmission system and related facilities.
Under the Electric Power Industry Reform Act, the ERC is responsible for establishing a method for setting transmission and distribution wheeling rates. The rates must be set in a way that allows the recovery of “just and reasonable costs and a reasonable return on rate base” to enable the entity to operate viably.
The rate reset process is usually a forward-looking exercise that requires the regulated entity to submit forecast expenditures and proposed projects.
The ERC has directed all private distribution utilities (PDUs) to file their respective actual weighted average tariff applications for the lapsed period or the years when the ERC was not able to conduct a rate reset on their rates.
The Commission resolved to adopt a confirmation and true-up process in determining the rate of the PDUs to address the lapsed period for the respective entry groups.
“The new ERC has cut the Gordian knot. After more than a decade of delays in reviewing the rates of privately-owned distribution utilities, ERC now have both a clear roadmap and the unwavering determination to see this through,” Mr. Juan said. — Sheldeen Joy Talavera