ERC okays P33.5-B maximum revenue cap for TransCo in 2007
Monday, January 15, 2007
By MYRNA M. VELASCO
The Energy Regulatory Commission (ERC) has approved P33.458 billion as operative maximum annual revenue (MAR) cap for National Transmission Corporation, of which per kilowatt hour (kWh) cost equivalent will be billed to consumers in next month’s billing cycle.
ERC Chairman Rodolfo Albano emphasized that the imposed revenue ceiling "does not breach the side constraints," and also allows recovery of rewards under the performance incentive scheme (PIS).
TransCo has been directed "to implement the change of rates under this operative MAR cap in its next billing cycle," the ERC ruling has stipulated.
Albano said the Commission likewise distinguished the operative MAR of the company from the smooth annual revenue cap of P37.928 billion, which excludes the underrecovery from the previous year and related business revenues (RBR), but includes the PIS.
If cost components like under-recovery from the previous year, RBR and PIS are factored in, the ERC estimates a projected MAR cap of P48.770 billion with implementation commencing on January 1, 2007.
The decision does not provide the per kilowatt hour calculation as this would be divided with the actual total power delivery service or sales of the company.
The approved revenue ceiling is lower than the P49.785 billion applied for by TransCo because of several disallowances considered by the regulator in calculating what it deems must be a reasonable MAR for the transmission firm.
As to the relatively high MAR calculated by TransCo, the ERC opined that the company "has double counted the inflation effect" in the under-recovery costs from 2006.
TransCo also applied for a PIS reward of P359 million, claiming that this is "for performance which is at the better end of the performance indices." This was allowed by the ERC for year 2007.
"This incentive is less than the maximum reward level set by the Commission at the Final Determination," the ERC emphasized, adding that the threshold it set for PIS is P978.5 million.
Assuming that there are no side constraints or the allowance to have swings in revenue recovery from customer segments, the transmission firm’s MAR for 2007 may have reached P44.77 billion.
But as verified by the regulatory body, there was a breach of the side constraint limits. As such, this violated Section 6.4.1 of the Transmission Wheeling Rates Guidelines.
"Given that TransCo did not apply for rate adjustments which did not breach the side constraints, the Commission accepts that TransCo must be ordered not to breach the side constraints," the regulator has emphasized.
The tariff-fixing policy set for TransCo is among the developments being watched closely by investors interested to corner the 25-year concession contract being offered for its privatization.
The Power Sector Assets and Liabilities Management Corporation (PSALM) scheduled January 22 this year as the revised date for TransCo’s bidding, but there are recent indications that the timeline may be deferred anew. (MMV)
posted by philpower @ 12:23 PM,
