ERC resolves 76% of unbundling rate cases by distribution utilities

The Energy Regulatory Commission (ERC) has resolved more than 76 percent of the total number of unbundling rate cases filed by distribution utilities as of June 8, the top ERC official said.

ERC chairman Rodolfo Albano said the Commission has also completed the evaluation of 89 percent of the unbundling rate cases.

"Unbundling is such an enormous responsibility that the ERC had to focus on given the very short deadline set by the Electric Power Industry Reform Act (EPIRA) and the Commission’s limited financial and human resources," Albano said.

"The Commission has rendered its decision on a large percentage of the total unbundling applications filed by the utilities and I am very pleased that we are almost done with this huge task," he added.

The ERC conducts comprehensive appraisal and assessment of the unbundling applications to verify whether the power utilities have complied with the prescribed requirements on imposing reasonable rates.

Public hearings are conducted on unbundling applications to enable concerned parties the opportunity to air their views and clarify issues on the unbundling petitions.

But the ERC chief lamented that there are still a number of matters that they need to attend to on top of the unbundling rate application of the power distribution utilities and electric cooperatives.

"As soon as we are done with all the unbundling applications, comparably significant tasks are lined up for the Commission to resolve and implement," he said.

As this developed, Albano said the ERC had received technical assistance from Asian Development Bank and the World Bank for the conduct of a national consultative workshop aimed at establishing caps on the recoverable rate of distribution system losses.

Aside from the multilateral institutions, Albano cited the invaluable contributions of the University of the Philippines’ National Engineering Center and other stakeholders who have collaborated in drawing the project’s guidelines and methodology.

He said Yongping Zhai, a senior energy specialist of the ADB’s Asia Infrastructure Division, has vowed to continue their partnership with the ERC in the fulfillment of its mandate in the restructured electric power industry.

ADB and World Bank’s technical assistance was done through the Public-Private Infrastructure Advisory Facility.

The EPIRA mandates the ERC to prescribe a distribution system loss (DSL) cap for each utility based on load density, sales mix, cost of service, delivery voltage, connected essential load, and other technical considerations that the ERC may promulgate. Distribution utility (DU) system losses shall be segregated into technical, non-technical, and administrative losses so that operational efficiency will be achieved. It shall be applied to all electric distribution utilities, including those facilities operating within the economic zones and other duly authorized entities engaged in the distribution of electricity.

Under the existing law, private distribution utilities are entitled to recover 9.5 percent of their system losses, while electric cooperatives are entitled to 14 percent or actual, whichever is lower.

"The segregation of system losses should not be taken as just a regulatory requirement but also a commitment to improve the distribution system, promote transparency and accountability, and thereby protect public interest," Albano said.