ERC rectifies SEIPI’s statement on Unbundling of Rates and Removal of Cross Subsidy
“The Energy Regulatory Commission (ERC) disagrees with Semiconductor and Electronics Industries in the Philippines, Inc.’s (SEIPI) statement that the prerequisites to retail competition and open access (specifically the unbundling of rates and cross subsidy removal) had not been put in place yet,” Chairman Rodolfo B. Albano, Jr. clarified.
The prerequisites include, among others, the unbundling of rates of the distribution utilities which, as of this date, is 98% (138 out of 141 filed application) complete and the initial implementation of the cross subsidy removal scheme which is already in place. In fact, the Inter-Regional Grid Cross Subsidy had been fully phased-out by ERC with the unbundling decision on National Power Corporation (NPC) last June 26, 2005; the Intra-Regional Cross Subsidy that had been removed in staggered basis was completely removed in October 2005; and the removal of Inter-Class Cross Subsidy is on going using various schemes (complete or staggered removal).
Section 31 of Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) states that retail competition and open access on distribution wires shall be implemented not later than three (3) years upon effectivity of the Act, subject to the following conditions:
(a)
Establishment of the wholesale electricity spot market;
(b) Approval of unbundled transmission and distribution wheeling charges;
(c) Initial implementation of the cross subsidy removal scheme;
(d) Privatization of at least seventy (70%) percent of the total capacity of
generating assets of National Power Corporation (NPC) in Luzon, and Visayas;
and
(e) Transfer of the management and control of at least seventy (70%) percent
of the total energy output of power plants under contract with NPC to the Independent
Power Producer (IPP) Administrators.
The items under letters (b) and (c) above, which pertain to unbundling of rates and cross subsidy removal, fall within the jurisdiction of the ERC. “The ERC strictly adheres to its mandates by painstakingly exerting its best effort. With the full support and cooperation of all the stakeholders in the power industry, the ERC is positive that the goals of EPIRA will be attained,” Chairman Albano asserted.
December 1 , 2005