ERC vows independence on its policies and decisions

The Energy Regulatory Commission (ERC) assures the electric power stakeholders and the general public that it has remained independent in formulating its policies and decisions. “Nothing and no one can destroy the independence of the ERC and its utmost respect for the rule of law,” ERC Chairman and CEO Rodolfo B. Albano, Jr. said.

The statement was a reaction to claims that the ERC has become the rubber stamp of MERALCO (Manila Electric Company). “The ERC has always thoroughly scrutinized the rate applications of all electric utilities, including MERALCO, and it has decided them based on the evidence presented and in accordance with its duty to protect the public interest,” Chairman Albano added. A major business daily raised several major questions regarding the rates charged by the dominant distribution utility of Luzon.

The ERC, in its Decision on the MERALCO Unbundling of Rates Application (ERC Case No. 2001-900), had set the maximum allowable system loss cap at 9.5% pursuant to Rule IX, Section 1 of the Implementing Rules and Regulations (IRR) of R.A. 7832 (Anti-Electricity Pilferage Act of 1994). Therefore, any excess beyond said cap is to be absorbed by the distribution utility (DU), and not to be recovered from or charged to its customers.

In the same Decision (ERC Case No. 2001-900), the ERC had resolved that fixed monthly charges on metering charge may significantly increase the bills of low consumption customers, particularly within the residential and small commercial rate classes. Thus, it would be prudent to introduce fixed monthly charges for large industrial and large commercial customers while keeping the fixed monthly and peso per kilowatthour charges to minimum levels for residential and small commercial customers in order to mitigate the adverse impact on their power bills.

With respect to the matter of the automatic adjustment of rates pertaining to purchased power or fuel adjustments, it must be noted that it was the Supreme Court (SC) that suggested that Section 4 (e) of the Electric Power Industry Reform Act (EPIRA) Implementing Rules and Regulations (IRR) has to be amended first before any automatic adjustment mechanism can be implemented. The Department of Energy (DOE) and the Joint Congressional Power Commission (JCPC), after the conduct of public hearings, thus amended the said provision effective June 26, 2007.

The intent behind the amendment was a balancing of interests. It allows the timely recovery of generation and foreign exchange costs to shield the consumers from the burden of additional cost due to interest on deferred charges. It must be noted that these charges are mere pass-throughs wherein MERALCO acts only as a mere collection agent of generation companies wherein no centavo should be left in its pockets. For the protection of the consumers, the amendment also tasks the ERC to confirm the correctness of the adjustments.

“The ERC has painstakingly earned its integrity over the years and will not foolishly engage in any collusion or unlawful act that will destroy the good work that has accomplished,” Chairman Albano concluded.

July 25, 2007