MANILA, Philippines – The Energy Regulatory Commission (ERC) recently amended the provisions in its Distribution Services and Open Access (DSOAR) rules relating to the cost of electrical extension lines and facilities, which the Chamber of Real Estate and Builders’ Associations (CREBA) contested as being onerous to housing developers and end-users of electricity.
CREBA board chairman Manuel Serrano commended the ERC “for placing public interest above all else by amending its rules in response to CREBA’s petition.”
Earlier, CREBA challenged before the Supreme Court the DSOAR provision requiring residential end-users to advance the cost of electric line extension.
CREBA said that these provisions were patently biased in favor of electric distributors which stood to benefit in terms of millions of pesos in revenues from the line installations, while leaving the end-user to shoulder the added costs.
However, the ERC promulgated the amended rules before the SC could rule on the matter.
CREBA said that under ERC Resolution no. 02 (2010), residential end-users are no longer required to advance the cost of installation of electrical extension lines and additional facilities if the same is part of the distribution utility’s forecasted capital expenditure.
If the end-users are beyond 30 meters from existing lines and installation of extension lines is not included in the distribution utility’s capex, the end-user may advance the cost of extension facilities, subject to refund from the utility at a rate of 75 percent (earlier pegged at only 25 percent within five years) of the gross distribution revenue derived from connections to the line extension until fully liquidated.
If the line extension was funded by the developer and the cost was not inputted into the selling price of the housing units, the developer is also entitled to cost recovery via the new refund mechanism.
For purposes of refund, the end-user or developer may either demand issuance by the distribution utility of mutually acceptable financial instruments, or purchase preferred shares of the said public utility.
The end-user and the power distributor may also agree to accelerate the refunds under mutually acceptable terms.