Resolution No. 16, series of 2009 ERC updates rules on Automatic Cost Adjustments and True-up Mechanisms for Distribution Utilities
The Energy Regulatory Commission (ERC) issued on 12 August 2009 Resolution No. 16, series of 2009 adopting the Rules Governing the Automatic Cost Adjustment and True-up Mechanisms and Corresponding Confirmation Process for Distribution Utilities. The ERC has previously adopted several and separate automatic cost adjustment mechanisms and these Rules will consolidate, update and rationalize the requirements covered by those separate issuances.
The automatic and true-up mechanisms covered are: 1) Automatic Generation Rate and System Loss Adjustment Mechanism or the AGRA; 2) Transmission Rate Adjustment Mechanism or the TRAM; 3) Lifeline Rate Recovery Mechanism; 4) Local Franchise Tax Recovery Mechanism; and 5) Local Business Tax Recovery Mechanism. The ERC has found it necessary to establish a systematized process that conforms to the due process requirement of the law for confirmation of the charges implemented by the DU pursuant to these automatic cost adjustment and true-up mechanisms. With such process in place, the DUs and all other interested parties are appropriately guided as to how the ERC shall determine any over and under recovery of these charges and the consumers are allowed to take part in the verification process.
The new Rules also introduce uniform reportorial requirements (URR) that streamlined the present set of documentary and reportorial requirements to avoid duplication of submissions under the different mechanisms. The URR will help realize the intent of the ERC to establish a systematic confirmation process applicable to the automatic cost adjustment and true-up mechanisms. The new procedure will help eliminate back logs and will determine in a more timely fashion the over or under recoveries in the implementation of the automatic adjustment mechanisms.
In order to manage the influx of these confirmation filings, the ERC ordered the DUs to file individual consolidated applications with supporting documents following this schedule:
Distribution Utilities |
Period of Filing |
Covered adjustments |
Luzon DUs |
October 30, 2009 |
Adjustments implemented until the billing month of December 2008 |
Visayas DUs |
October 30, 2010 |
Adjustments implemented until the billing month of December 2009 |
Mindanao DUs |
October 30, 2011 |
Adjustments implemented until the billing month of December 20010 |
Thereafter: |
||
Luzon DUs |
October 30, 2012 |
Adjustments implemented in billing months of January 2009 to December 2011. |
Visayas DUs |
October 30, 2013 |
Adjustments implemented in billing months of January 2010 to December 2012. |
Mindanao DUs |
October 30, 2014 |
Adjustments implemented in billing months of January 2011 to December 2013. |
Subsequent filings shall be every three (3) years following the sequence of above-prescribed filings. To facilitate the work process, the ERC, at its discretion may refer the application to an accredited external auditor for audit at the DUs’ cost.
These Rules underwent extensive public consultations. They will take effect fifteen (15) days after its publication in a newspaper of general circulation.
Resolution No. 16, series of 2009
August 28, 2009