ERC to issue resolution on distributor’s pass-through charges

MANILA, Philippines - The Energy Regulatory Commission (ERC) is set to come up with a resolution on minimizing the accumulation of distribution utilities’ pass-through charges reflected in the bills of electricity consumers.

In the resolution, the ERC would seek to address the so-called under-recoveries or over-recoveries incurred by distribution utilities.

Distributors incur under-recoveries when the costs billed by their suppliers are higher than the actual recoveries from customers.

There is over-recovery when the costs billed to customers are higher than what distributors should pay their suppliers. 

The mismatch arises because of delays in recovery as the bills to consumers for the current month are based on the previous months’ cost.

The ERC said it wants to avoid the buildup of over-  or under-recoveries in pass-through charges.

ERC executive director Saturnino Juan said that at present, determining over- or under-recoveries in distribution utilities’ pass-through charges is done every three years.

“With the proposed amendments, the distribution utilities will be authorized to include in their calculation any estimated over- or under-recoveries realized or incurred in the implementation of their pass through charges for the previous months,” Juan said.

“This way, any over recovery will immediately be refunded to the customers. On the other hand, there will no longer be a long delay for the collection of the under-recovery,” he added.

“It sees the need to minimize the accumulation of such over- or under-recoveries for the succeeding confirmation periods, which shall ultimately redound to the benefit of both the distribution utilities and their customers,” the ERC said in the draft resolution.