ERC clarifies news reports on AGRA suspension
The Energy Regulatory Commission (ERC) clarified that it is only the confirmation process of the Automatic Adjustment of Generation Rates and System Loss Rates by Distribution Utilities (AGRA) that is suspended in its February 8, 2006 Order. The clarification was made after news reports on the February 17, 2006 issue of some major dailies misinterpreted the Order.
The AGRA is a pure recovery mechanism designed to allow Distribution Utilities (DUs) to recover adjustments in generation and system loss rates. It supersedes the Generation Rate Adjustment Mechanism (GRAM), also a cost recovery mechanism earlier formulated by the ERC. On February 2, 2006, the Supreme Court nullified the petition of Meralco to recover its generation costs through the GRAM.
One of the news items reported that it was the implementation of the AGRA that was suspended. “On the contrary, it is only the confirmation process and not the implementation of AGRA that is suspended. The ERC deems it appropriate to suspend this procedure until such time that the ERC has adopted a new process subject to the final resolution of the case now pending before the Supreme Court (NASECORE vs. ERC, G.R. No. 163935), Commissioner and concurrent ERC Officer-in-Charge Alejandro Z. Barin clarified.
Another news article stated that the ERC must act on AGRA applications within 6 months; otherwise, cost adjustments take effect by default. “This provision will not apply since an Order was already issued by the ERC suspending the confirmation process,” Commissioner Barin added.
“The
ERC would like to assure all its stakeholders that the ERC is doing its best
to promote the best interest of power investors and consumers alike. The ERC
appeals to media to be more careful in issuing reports so as not create anxiety
among the people,” Commissioner concluded.
February 17, 2006