Power rate hike looms as ERC completes NGCP fourth rate reset

Electricity consumers across the country’s power grids should anticipate a hike in their bills after Energy Regulatory Commission (ERC) completed the fourth regulatory period (RP) rate reset for National Grid Corporation of the Philippines (NGCP), allowing the grid operator to recover nearly P30 billion in under-recoveries.

In a statement issued Wednesday, the ERC said it finished the deliberations on the NGCP’s 4th RP rate reset, covering the years 2016 to 2022.

Following its 112th regular Commission meeting last March 26, 2025, the ERC, in a decision led by commissioners Alexis Lumbatan, Floresinda Baldo-Digal, and Marko Romeo Fuentes, adopted the Maximum Allowable Revenue (MAR) of P335.78 billion for NGCP using the “As Spent” approach and adopting a Weighted Average Cost of Capital (WACC) of 11.33%.

MAR is the maximum amount that NGCP is allowed to earn annually to recover its operational expenses like OPEX (operating expenditures) and CAPEX (capital expenditures), as approved by the ERC in accordance with the rules.

WACC is the amount of return a company should get in order to ensure that its investments are viable or its operations are sustainable.

Meanwhile, the ERC’s conduct of rate reset process for electricity industry stakeholders is meant to ensure that rates charged to distribution utilities as well as end-consumers are fair.

The NGCP’s 4th RP rate reset process was earlier described by the ERC as "unlike other periods” as it covers historical data on the company’s expenditures and performance.

The regular rate-reset process is usually a forward-looking exercise that requires the regulated entity to submit forecast expenditures and proposed projects over a five-year regulatory period.

Following the adoption of MAR and WACC for the NGCP, the ERC held a 3rd Special commission meeting last April 11, 2025, during which the power industry regulator allowed the grid operator to recover an additional P28.29 Billion in under-recoveries, which would leading to an increase in its transmission charges.

The ERC decided to set a seven-year recovery period “which thus, on average, translates to an additional P0.1013 per kilowatt-hour (kWh) in transmission charges to be collected over the next 84 months from issuance of the decision.”

“This amount covers the PhP0.0629/kWh average increase in the basic transmission charge and additional PhP0.0384/kWh corresponding to the under-recovered portion of the increased MAR,” it said. — RSJ, GMA Integrated News