Energy Regulatory Commission acts to make power distributors pro-consumers

MANILA, Philippines - The Energy Regulatory Commission (ERC) “has just created a structure in its regulatory supervision that now makes sure electricity firms would be pro-consumer,” said the chief advocate for the Center for Organizational Studies and Advocacy (COSA) Rafael de la Torre.

De la Torre said the electric power industry regulator “has rightly handed down a policy which places both the consumer and the industry player in a win-win situation.” He was referring to the Performance Based Regulation (PBR), a price-setting mechanism which companies in the transmission and distribution utilities are now in.

PBR was first implemented for transmission company Transco in 2006 and subsequently other distribution utilities entered the said regulatory regime.  De la Torre said ERC’s adoption of PBR “is simply following the trend around the world, since this regulation scheme is now widely practiced in the United States, United Kingdom, Australia, New Zealand and other progressive countries.

Under PBR, companies must pay a fine to customers when they do not meet their performance targets. “ERC made sure the customer receives greater value for his money,” De la Torre said, in the same way that ERC is assuring transmission and distribution utilities to remain viable with just enough return so they can continue to provide reliable and adequate electric service.

Dela Torre was referring to the schedule of fines and rewards contained in the guaranteed service levels (GSLs). The GSLs contemplate such performance indicators as the response time. Electricity is restored in a brownout situation, and the promptness of the crew in connecting a new line, etc.

“With the economic indicators showing an upturn we need electricity companies to ensure that their lines will continuously provide electricity efficiently and reliably all in the interest of the consumers and the country as a whole,” COSA’s chief advocate stressed.

Distribution utilities (DUs), which are at the downstream side of the power production - transmission - distribution chair, have direct contact with electricity consumers.

“All over the country, these DUs and electric cooperatives comprise the retail side of the chain, bringing them into direct interaction with customers,” De la Torre explained.