ERC sets P30.6-B cap on TransCo revenues
Monday, March 13, 2006
By MYRNA M. VELASCO
Pending final ruling on application for its Second Regulatory Reset, the Energy Regulatory Commission (ERC) has provisionally approved P30.6722-billion maximum allowable revenue (MAR) cap for the National Transmission Corporation (TransCo) primarily to cover first half of 2006.
The prescribed revenue ceiling has factored in the recovery of P1.452 billion revenue shortfall which TransCo has estimated in its year 2005 MAR, originally set at P27.085 billion.
It was specified in the ERC Order dated March 3, 2006 that the spinoff transmission firm shall adopt such revenue cap (on a pro rata basis) for the period from January 1, 2006 to the time where TransCo rates are further adjusted under the new MAR revenue cap."
By the regulatory body’s assessment, it would be able to hand down a final verdict around April 30, 2006 on TransCo’s bid for second regulatory reset covering the regulatory period 2006 to 2010; but the pro-rata period for the interim revenue cap of P30.67 billion shall likely be in place until July 31 this year.
The initially adjusted revenue cap for TransCo is prescribed for implementation in its next billing cycle.
The need to fix MAR for TransCo is in keeping with the Transmission Wheeling Rates Guidelines (TWRG) which prescribes a new methodology for establishing the transmission wheeling rates of the company under the genre of the performance-based ratesetting (PBR) methodology.
Article VI of the TWRG requires TransCo to file with the ERC and seek approval on annual verification of its charges to its customers.
For the interim revenue cap, the ERC has not included in its computation the costs accounting for power factor adjustment, interruption billing adjustments and prompt payment discounts.
In its Order, the regulatory body correspondingly indicated that it is unclear whether TransCo will be able to recover its final approved 2006 revenue cap.
The Commission has particularly taken note of the actual power delivery service (PDS) made by the transmission firm being usually lower as compared to forecasts; noting of the possibility of breaches on side constraints.
As could be gleaned from the documents, the forecasted amount to be billed for power delivery in Luzon and Visayas grids was placed at P25.535 billion; but the actual PDS was just at P22.20 billion; while in Mindanao, forecast was at P4.077 billion but the actual was at P3.56 billion.
The final ruling on the company’s second regulatory reset is keenly being awaited by the entire power industry as this is seen providing a signal to investors on the manner by how efficiently the company will be run based on its prescribed revenue streams.
The Power Sector Assets and Liabilities Management Corporation (PSALM) made previous announcements that once ERC renders ruling on its revenue cap for the next five years, renewed drive for the privatization of TransCo should finally be pursued.
posted by philpower @ 11:16 AM,
