Salceda: There should be a refund mechanism for NGCP’s excess revenues

Albay Rep. Joey Salceda —Inquirer photo/Niño Jesus Orbeta

MANILA, Philippines — A lawmaker is pushing for a refund mechanism of the P204.3 billion excess revenues to power consumers, citing the alleged regulatory lapses and tax exemptions of the National Grid Corporation of the Philippines (NGCP).

During the House committee on ways and means briefing on Tuesday, its chair and Albay Rep. Joey Salceda likewise noted the need for legislative reforms to address the issue and protect Filipino consumers from excessive costs.

READ: House eyes review of NGCP franchise over project delays

He added that the Energy Regulatory Commission (ERC)-approved revenues were P183.5 billion, while the NGCP revenues amounted to P387.8 billion from 2010 to 2016.

“There is a 204.3 billion that has been computed by the ERC as being in excess of each WACC (Weighted Average Cost of Capital). And, there is no provision in law. That’s the problem,” Salceda said.

“Ever since I became a congressman, almost every law I put that pertains to regulated industries, I always make sure that anything above WACC belongs to the people or belongs to the state. If it’s PPP, it belongs to the state, because they’re actors on behalf of the state,” he explained.

“If it’s a franchise that deals with the consumers, then the excess revenues belong to the consumers. And, there should be a process of disgorgement, of repayment,” he further said.

According to the lawmaker, NGCP does not pay corporate income tax (CIT), value-added tax (VAT), and real property tax (RPT), adding that it “operates under a 3 percent franchise tax, the lowest among utilities with legislatively imposed rates.”

He explained that ERC regulates its revenues under the Electric Power Industry Reform Act.

“Can Congress still amend the NGCP franchise to make its tax and profit structure fair? Yes. Section 2, terms and conditions. This franchise shall be for a term of 50 years from date of effectivity. It is by granted and unconditionally shall be subject to amendment, alteration or repeal by Congress when the common good so requires,” said Salceda.

He also asked ERC chairperson Monalisa Dimalanta if the refund on the franchise tax should be retroactive.

“We did discuss that Mr. Chair, but since there was an ERC resolution that allowed it in 2011 we were unanimous in the fact of suspending it moving forward,” she answered.

Salceda also pointed out that Congress “has the authority to amend NGCP’s franchise to make its tax and profit structures fairer.”