ERC consults public on proposed Rules for DAA recovery

The Energy Regulatory Commission (ERC) will consult the public on the proposed “Rules for the Recovery of Deferred Accounting Adjustment (DAA) for Fuel and Purchased Power Costs by the NPC (National Power Corporation) and NPC-SPUG (Small Power Utilities Group)”. The public consultation on the proposed Rules is scheduled on 13 June 2007, two o’clock in the afternoon (2:00 p.m.) at the ERC Hearing Room, 15th Floor, Pacific Center Building, San Miguel Avenue, Ortigas Center, Pasig City.

The proposed Rules will enable the NPC and NPC-SPUG to recover all allowable fuel and purchased power costs through a transparent and reasonable cost recovery mechanism. “The Rules will promote and protect the public interest as it will help maintain the security, reliability, and quality of the supply of electric power”, ERC Chairman and CEO Rodolfo B. Albano, Jr. said. “The DAA Rules are sensitive to timely and proper recoveries of costs as well as to the various forms of generation service purchases. Quarterly reports by the NPC and NPC-SPUG are mandatory”, Chairman Albano added.

Under the proposed Rules, allowable purchased power cost (APPC) refers to the absolute amount (in Pesos) of purchased power cost for eligible Independent Power Producer (IPP) Supply Contracts during the test period. For the grids where the WESM (Wholesale Electricity Spot Market) is operational, APPC excludes costs corresponding to output which is sold under Spot Sales, ODPS (One Day Power Sales), Ancillary Services and DWS (Default Wholesale Supply) arrangements, power supply contracts that have not been approved yet by the ERC and purchased power costs incurred that are eligible for stranded contract costs recovery.

The Rules contain the formulae to compute for the allowable deferred fuel and purchased power costs and the DAA to be billed by NPC/PSALM and NPC-SPUG.

“The Rules will supersede the Implementing Guidelines for the existing Generation Rate Adjustment Mechanism (GRAM). Thus, under the said Rules, the NPC and NPC-SPUG are directed to file their respective last and final applications under the old GRAM Guidelines containing all the previous adjustments allowed under said mechanism with a prayer for confirmation of all such adjustments within sixty (60) days from the effectivity of the said Rules”, Chairman Albano concluded.

June 13, 2007