ERC Issues Final Decision on 4th RP Reset for NGCP With Increased Transmission Charges

The Energy Regulatory Commission (ERC) has approved the Fourth Regulatory Period (4th RP) Rate Reset for the National Grid Corporation of the Philippines (NGCP), covering the years 2016 to 2022. The decision is expected to lead to higher transmission charges for consumers over the next seven years.

In its 1125th Regular Commission Meeting held on March 26, 2025, a majority of ERC Commissioners—Alexis M. Lumbatan, Floresinda G. Baldo-Digal, and Marko Romeo L. Fuentes—resolved to adopt a Maximum Allowable Revenue (MAR) of PHP 335.78 billion for NGCP, using the “As Spent” approach and a Weighted Average Cost of Capital (WACC) of 11.33%.

Following this ruling, the Commission, during a Special Meeting on April 11, 2025, authorized NGCP to recover PHP 28.29 billion in under-recoveries. This will result in an increase of PHP 0.1013 per kilowatt-hour (kWh) in transmission charges, spread over an 84-month or 7-year recovery period. The hike includes PHP 0.0629/kWh from the basic transmission charge and PHP 0.0384/kWh for the under-recovered portion.

The regulatory reset follows ERC’s issuance of Resolution No. 08, Series of 2022, which outlined the Amended Rules for Setting of Transmission Wheeling Rates (RTWR). This resolution introduced the methodology for computing maximum transmission rates and set the framework for future regulatory periods.

To streamline the reset process, the ERC implemented a phased approach. Phase 1, covering January 2016 to December 2020, was released in a draft Partial Initial Determination (PID) in September 2023. After gathering comments from NGCP and energy stakeholders, the Commission released the draft Final Determination (FD) in November 2024, which included both Phase 1 and Phase 2.

Additionally, during the same March 26 meeting, the Commission made permanent NGCP’s MAR for 2015 amounting to PHP 43 million, and approved NGCP’s PHP 783.06 million claim under the 2014 Net Performance Incentive Scheme (PIS), under ERC Case No. 2014-155 RC.

However, ERC Chairperson and CEO Monalisa C. Dimalanta and Commissioner Catherine P. Maceda dissented from the majority decision. Their official dissenting opinions are expected to be released in the coming days.