Sunday, July 8, 2012

NGCP Recovering ‘Force Majeure’ Costs

Private concessionaire National Grid Corporation of the Philippines (NGCP) has filed an application for the recovery of 'force majeure' costs relative to the flooding incidents in Mindanao last year and the strike of several typhoons which damaged its facilities.

The cost recovery petitioned for by the company will amount to P0.0256 per kilowatt (kW) for Luzon and P0.2878/kW for Mindanao. The proposed pass-on to customers will be four years or from April 26, 2012 to December 25, 2015. Visayas will bear a very minimal cost pass-on of P0.0005/kW.

The force majeure events (FME) cited by the company in its filing include typhoons Bebeng and Juaning as well as the landslide and flooding incidents in Mindanao for a total cost recovery of P9.470 million.

The company noted that it be allowed to recoup these FME costs because it has not been covered by the industrial all-risk (IAR) reinsurance policy secured by the Power Sector Assets and Liabilities Management Corporation (PSALM) for the country's power assets.

NGCP has emphasized that "it needs to immediately recover the actual expenses incurred for the rehabilitation of the damaged transmission assets and other related facilities," hence, it is seeking the regulator's issuance of a provisional authority (PA) on its petition.

The company added that "the occurrence of the aforementioned FME requires capital infusion, the recovery of which should be allowed to avoid putting financial strain in the transmission provider, and to allow it to continuously provide the necessary transmission service to the grid customers."

It justified that the "timely implementation of the pass-through amount will allow the equal or even spread of the increases or decreases in tariffs from the initial implementation of the recovery of the cost."

The spread of cost recoveries for Luzon will be as follows: P0.0051/kW for 2012; P0.0069/kW in 2013; P0.0068/kW for 2014 and another P0.0068/kW in 2015.

Mindanao load customers will shoulder pass-on costs of P0.0962/kW for 2012; P0.0642/kW by 2013; P0.0639/kW for 2014; and P0.0635/kW in 2015.

NGCP similarly asked the ERC to "declare the flooding and landslide incidents in Mindanao area and tyhoons Bebeng and Juaning as force majeure events."