Press Release
October 5, 2022

PAMASKONG REFUND: Hontiveros calls for refund of WACC collections to lower power costs

Senator Risa Hontiveros on Wednesday said that the Energy Regulatory Commission (ERC) should give Filipinos "not one, but two" gifts this year by following up its decision to start resetting transmission wheeling rates by commencing refunds for "exorbitant" weighted average cost of capital (WACC) rates that contribute to higher power costs for consumers.

Hontiveros welcomed "as a good start" the announcement by the ERC that it has begun the process of resetting the transmission wheeling rates to restore balance in transmission regulation. Transmission wheeling rate is a charge directly paid by consumers for the use of transmission facilities in delivering electricity to households, and is reflected in monthly electricity bills.

"Magandang balita itong simula ng reset process para sa mas patas na transmission wheeling rates na parte ng ating buwanang bayarin sa kuryente. But why have one piece of good news, when we can have two? Let us also start the process of refunding consumers for the unreasonably high 15% weighted average cost of capital (WACC) being unduly collected since 2015," Hontiveros said.

Hontiveros, who has been calling for a refund of consumers for high WACC rates since 2019, explained that the 15 percent WACC rate for transmission operator National Grid Corporation of the Philippines (NGCP) is "outrageously excessive" compared to WACC rates allowed in neighboring countries like Indonesia (2.3 percent) and Thailand (7.2 percent). The WACC - which is the return a company expects on the capital it has invested in a business - contributes to the monthly costs of consumers.

"Pitong taon nang pinapasan ng mga kababayan natin ang hindi makatarungang WACC rate na ito. Consumers deserve not only a reset of WACC rates, but also a refund for the immense burden we have endured over the years. Dapat mabigyan ng hustisya ang mga kababayan nating napilitang indahin itong mataas na WACC rates kahit may pandemya at lugmok ang ekonomiya," she stressed.

Hontiveros said that she is hoping that the ERC will soon move towards setting more conscionable WACC rates for NGCP and other entities, especially since previous Senate investigations revealed that the transmission operator has been incurring questionable expenses, like P369 million for "entertainment" and P672 million for "public relations" in the years 2017 and 2018.

"Previous flawed policies have allowed the NGCP to fork over billions to their shareholders at the expense of power consumers. Panahon na para ang konsyumer naman ang makinabang sa mga bagong desisyon ng ERC," Hontiveros concluded.

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