ERC revises rules on pass-through costs charged to power consumers

The Energy Regulatory Commission (ERC) has revised the rules on the automatic charging of “pass through” costs to customers of power distributors as part of its efforts to ensure that electricity rates are “fair and reasonable.”

In a statement, the ERC said it promulgated Resolution No. 14, Series of 2022, titled “A Resolution Adopting the Revised Rules Governing the Automatic Cost Adjustment and True-Up Mechanisms and Corresponding Confirmation Process for Distribution Utilities” to push for a more transparent collection of pass-through charges.

As explained by the ERC, pass-through charges refer to the amount collected from electricity end-users other than the distribution charge, which is the fee for using the facilities that deliver electricity to consumers, whether households or commercial enterprises.

These pass-through charges include generation charge (payment for the supply of electricity), transmission charge (payment for the use of high voltage transmission grid) and other subsidies and mandatory payments, such as lifeline and senior citizen subsidies and systems loss (cost-recovery of power lost during the delivery of electricity).

The revised rules will help ensure that power distributors will not gain from these rates, the ERC added.

“The intention is to verify more frequently if the pass-through charges are correct, and in case of over-recovery, immediately refund amounts,” ERC chair Monalisa Dimalanta said.

“This is among the mitigation measures during period of high prices, but more importantly, more visibility in pricing components and dynamics so we can ensure prices are fair and reasonable,” added Dimalanta.

The amended rules, the ERC said, aim to promote transparency in prescribing detailed calculation of different components of the power bill, set a limit that prompts an adjustment to correct over- or under recovery and streamline and reduce regulatory lag for a more efficient rate review.

“We are looking forward to 2023 as the beginning of an era of greater transparency in electricity pricing. The new URR (uniform reportorial requirement) form will allow more information to be available and accessible,” said Dimalanta in a statement.

“This is the first step to the digital transformation we are undertaking in the Commission to speed up our processes and allow more predictability in regulation,” she added. INQ