Manila: The Energy Regulatory Commission (ERC) has approved a lower annual revenue requirement (ARR) of PHP374.98 billion for the National Grid Corporation of the Philippines (NGCP) for the period of 2023-2027 under its fifth regulatory reset (5RP). This figure represents a significant reduction from the NGCP's proposed PHP442.6 billion for capital expenditures and other investments.

According to Philippines News Agency, the ERC announced in a news release on Tuesday that the reduced maximum allowable revenue (MAR) reflects the ongoing implementation of rates from the fourth regulatory period. The commission concluded the rate reset for the fourth regulatory period in 2025, which covered the years from 2016 to 2022.

The ARR is the amount NGCP needs to recuperate to cover its operating costs, maintenance expenses, and approved investments. Meanwhile, the MAR is the maximum amount the ERC permits the company to collect from consumers, despite higher requested costs. The ERC also reduced NGCP's capital expenditure by 17 percent, highlighting that some projects were removed as they had been sufficiently considered in the prior regulatory reset.

The ERC stated that the approved capital expenditure will support grid upgrades, system reinforcements, and new transmission projects essential for meeting growing electricity demand and enhancing the reliability of the power supply nationwide. Additionally, the ERC disapproved NGCP's proposal to recover real property taxes from consumers, citing existing legal rulings that exempt the company from paying taxes on assets used for its franchise.

The commission reiterated its commitment to ensuring that transmission rates charged to consumers are just and reasonable, while also allowing the transmission concessionaire to recover only efficient and necessary costs to maintain a reliable and secure power grid.