Adherence to due process causes regulatory lags-ERC

“Regulatory lags are unavoidable if we are to discharge faithfully our duty to adhere to the requirements of due process,” the Energy Regulatory Commission (ERC) Chairman and CEO Rodolfo B. Albano, Jr. stressed. This statement intends to rectify reports that ERC’s delayed actions hinder the sale of the government’s stake in MERALCO (Manila Electric Company).

“The ERC greatly respects the due process requirement of the EPIRA (Electric Power Industry Reform Act) and other provisions of law. The ERC renders rulings and decisions within the legal timeframe and certain delays are due to technicalities that are greatly beyond its control,” Chairman Albano said.

With the JCPC’s (Joint Congressional Power Commission) guidance and DOE’s (Department of Energy) promulgation of certain amendments in the EPIRA IRR’s (Implementing Rules and Regulations) Section 4 (e) of Rule III, the ERC now foresees the timely recovery of generation and foreign exchange-related costs. The amendment also shields electricity consumers from paying additional cost due to interests on deferred charges while enabling the utilities’ financial viability. The DOE amendments to the EPIRA IRR took effect on 26 June 2007.

MERALCO has two (2) Generation Charge adjustments for resolution by the ERC covering April and May 2007 (ERC Case Nos. 2007-120 RC and 2007-123RC) that were filed in May and June 2007, respectively, while the twelve (12) other similar applications it earlier filed were all acted upon already by the ERC with the issuance of provisional orders thereon. MERALCO’s rate application (ERC Case No. 2005-028 RC) which is under the old rate design, i.e, Return on Rate Base (RORB) is still undergoing public hearings for the reception of evidence. MERALCO is expected to file for another rate application using the new rate methodology, i.e., Performance Based Regulation (PBR) in September 2007 after the ERC’s issuance of its resolution on MERALCO’s annual revenue requirement and performance incentive scheme (ERC Case No. 2006-045 RC), which has already been scheduled on 31 August 2007.

“The ERC understands the government’s thrust to generate the much needed revenues to move its plans and projects. It is not fair, however, to blame the ERC for it simply abides with the mandate of the law,” Chairman Albano concluded.

July 11, 2007