Decision, ERC Case No. 2009-024RCERC adopts new rates & lifeline discount scheme for VECO customers
The Energy Regulatory Commission (ERC) issued its Decision dated 07 August 2009 on the application of the Visayan Electric Company (VECO) in ERC Case No. 2009 – 024 RC for a rate adjustment amounting to an average of PhP0.2267 per kilowatt-hour (kWh). VECO originally applied for an adjustment of PhP0.3514/kWh. However, the ERC reduced the rate originally applied by PhP0.1247 by disallowing some of the costs included. VECO filed for an adjustment to cover payroll; operating & maintenance expenses, taxes other than income tax, depreciation and amortization based on audited financial statements for 2008 using the rate of return base (RORB) methodology under the uniform filing requirements (UFR). Its last rate adjustment was granted in August 30, 2004 under ERC Case Nos. 2001-891 & 2002-06 and its approved rates then were based on calendar test year 2000.
In its Decision, the ERC approved also a new scheme in granting discounts to lifeline electricity consumers. The new scheme has 8 discount levels compared to 6 levels presently being implemented under the approved unbundled rates. Those consuming 20 kWh or less per month do not have to pay any distribution, supply and metering charges, except the minimal monthly charge of PhP5.00. Other consumers considered to be within the lifeline level as defined in the new scheme will accordingly be entitled to the following discount rates on the same charges:
kWh Consumption |
Discount |
0-20 |
100% |
21-25 |
50% |
26-30 |
40% |
31-35 |
35% |
36-40 |
30% |
41-45 |
25% |
46-50 |
20% |
51-55 |
15% |
The new lifeline discount scheme reduced the subsidy charge to non-lifeline consumers from PhP0.0909/kWh to PhP0.0746/kWh.
VECO’s rate application was intended to be its last to be filed under the RORB and was sought primarily to update its charges prior to its entry into the internationally-accepted rate-setting scheme known as the performance-based rate-setting (PBR) methodology in July 2010. The PBR provides incentives to DUs to achieving certain levels of efficiency and penalizes them for not meeting their guaranteed service level commitments. The new scheme aims to puts VECO and its customers in a win-win situation. Investors can have better returns on their capital as a result of more cost-effective operations and optimized use of its resources while keeping a satisfied customer base that will be entitled to compensation from the DU if it fails to deliver electricity service within agreed quality standards and time.
Decision, ERC Case No. 2009-024RC
August 27, 2009