ERC approves Rules for the Recovery of Costs Associated with the Sale for Resale Agreements of DUs
The Energy Regulatory Commission (ERC) approved on 26 January 2009 the Rules for the Recovery of Costs Associated with the “Sale for Resale Agreements” By, Between, or Among Distribution Utilities (DUs) based on the results of public consultations conducted. The Sale for Resale Agreements (“Agreements”) are transactions entered into by, between or among DUs wherein a DU buys from another DU its supply of electric power intended for resale to its electricity customers. The Rules shall take effect fifteen (15) days from publication in a newspaper of general circulation.
The Agreements that had been considered by the ERC in its Decision on the DU’s unbundled rates shall be deemed approved. On the other hand, Agreements executed at the time of the unbundling of the DUs’ rates that were not approved by the ERC or its predecessor, the Energy Regulatory Board (ERB), will be treated as ineligible power supply contracts.
DUs who have existing unapproved “Agreements” and those who entered into such agreement after the effectivity of the Rules shall jointly file with the ERC, in accordance with the ERC Rules of Practice and Procedure, an application for the approval of the “Agreement”.
Under the Rules, DUs with “Agreements” approved by the ERC are entitled to recover in full the actual associated costs. Universal Charges and Lifeline Rates shall not be included in the selling rates to be imposed on the buying DUs since the buying DUs cannot be treated as end-users. On the other hand, the recovery of costs for the unapproved or ineligible “Agreements” will be consequently pegged on the National Power Corporation (NPC) rate or the actual cost, whichever is lower.
The selling rates that can be charged to the buying DUs shall be the sum of the generation, transmission and allowable system loss rates, the Wheeling Rate and other pass-through charges approved by the ERC.
The retail rates that the buying DU shall impose upon its customers in the area/s served or to be served under the “Agreement” shall consist of the costs for purchased power, allowable system loss, distribution, supply and metering for electric service and other pass-through charges approved by the ERC.
“The
ERC promulgated the Rules to ensure that only reasonable costs associated with
the “sale for resale agreements” entered into by the DUs are recovered
from their consumers from the rates they charge. The Rules will also guide the
DUs on the regulatory requirements in the recovery such costs,” ERC Chairperson
Zenaida G. Cruz-Ducut said. “Rest assured that the ERC will validate all
costs that have been and will be recovered by the selling DUs from these Agreements.”
she added.
February 6, 2009