Republic of the Philippines


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ERC Orders Philippine Electricity Market Corporation (PEMC) to Defer Collection of NSS Adjustment

The Energy Regulatory Commission (ERC) ordered the Philippine Electricity Market Corporation (PEMC) to defer the collection from Distribution Utilities (DUs) and Electric Cooperatives (ECs) of the Net Settlement Surplus (NSS) adjustments in their final May billing. The said NSS adjustment would have resulted to an additional charge of around PhP0.20/kWh to Manila Electric Company (MERALCO) customers by July 2021. The ERC issued the deferment directive upon being informed and later on confirmed by the PEMC about the huge discrepancy in the WESM Preliminary Statement vis-à-vis the Final Statement for May 2021 supply month.  The said NSS adjustment is supposed to be reflected in the July 2021 electric bill as part of the Generation Charge.  

“We have ordered PEMC to defer the collection of the NSS adjustment until the investigation on the said incident has been completed. If PEMC’s collection is not suspended, concerned Distribution Utilities (DUs) and Electric Cooperatives (ECs) will have additional collections from their customers resulting from the May 2021 Net Settlement Surplus (NSS).

Further, the ERC directed the PEMC and the National Grid Corporation of the Philippines – System Operator (NGCP – SO) to explain in writing the reason for the NSS adjustment that caused the WESM bill adjustment for May 2021.  

The NSS adjustment is the surplus or deficit remaining after all market transactions have been accounted for.  This adjustment accounts for price differences occurring between generator and customer locations because of losses and congestion given the electricity market’s Locational Marginal Pricing Scheme.  The NSS is being distributed to trading participants that are entitled to receive a share of the surplus or deficit in accordance with the ERC-approved pricing mechanism.

“The Commission resolved to defer the collection of the Net Settlement Surplus, which will be an additional charge of around PhP0.20 per kWh to MERALCO customers, to prevent and shield the electricity consumers from a bill shock in their July 2021 electric bills.  Some of these consumers were also affected by the rotational brownouts which happened in May 2021, so it is quite unfair for them to be charged with an additional collection due to the NSS adjustment.  We will get to the bottom of this and make sure that any erring market participant will get penalized as soon as it is established”, ERC Chair Devanadera added.    


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