NGCP gets nod to implement IMAR for 2020

The Energy Regulatory Commission (ERC) has allowed the National Grid Corporation of the Philippines (NGCP) to implement its Interim Maximum Allowable Revenue (IMAR) for 2020.

“Applicant NGCP is granted interim relief to implement an iMAR2020 in the amount of P51,471,130,000.00, effective on January 2020 until a  new transmission revenue has been determined,” the ERC said in its 18-page order.

The amount is lower than the P58.85 billion sought by NGCP.

At the same time, the grid operator was ordered to submit its proposed recovery scheme on its unbilled iMAR2020 for calendar years 2020, 2021, and first four months of 2022, within 60 days from receipt of the order dated March 23. The agency posted a copy of the order on Thursday.

The MAR refers to the maximum revenue that the grid operator is allowed to earn from its transmission operations.

It can be recalled that in September 2020, the ERC suspended its February 2020 order which granted NGCP an interim relief to implement an iMAR in the amount of P47,051,640,000.00.

This after the 2020 forecast demand of 194,746 megawatts (MW) used to determine the iMAR2020 in the February 2020 order was “not anymore reflective of the updated economic indicators.”

With the suspension, NGCP collected on the basis of the previous approved iMAR, which stood at P43.78 billion for 2016.

The ERC then re-computed the iMAR2020 after it was able to gather the actual demand for 2020. Hence, the re-computed iMAR2020 stood at P51.47 billion.

The increase in iMAR2020, noted the ERC, will result in a slight increase in transmission charge of P0.0398 per kilowatt hour (kWh) compared to the average transmission charge for 2021 equivalent to P0.5006 per kWh.

“With the increase in its iMAR, NGCP will be able to address its CAPEX [capital expenditure] requirements in terms of load growth, generation capacity additions and compliance to rules and regulations, resulting to a better performance in terms of system reliability, security, and integrity of the grid,” the ERC said.

Moreover, the ERC said a “fair and reasonable interim transmission rates will serve the public interest and signal the efficient utilization of transmission facilities that will ultimately redound to the best interest and benefit of the public.”

NGCP’s iMAR, which is used for transmission projects and other grid investments based on the Department of Energy’s Power Development Plan, is subject to ERC’s approval for every regulatory period. However, administrative concerns faced by the ERC in 2015 and 2016 which included constraints in the procurement of regulatory experts, resulted in the delay of the reset process for NGCP’s 4th Regulatory Period.