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48 Luzon power distributors seek cost adjustments —ERC

Electricity consumers in Luzon should brace for possible higher power rates after the Energy Regulatory Commission (ERC) received applications for automatic cost adjustment and true-up mechanisms for the period 2020-2022 from 48 distribution utilities (DUs).

In a statement, the ERC said the 48 DUs filed their applications pursuant to Resolution No. 14, Series of 2022.

The said resolution contains the revised rules governing the automatic cost adjustment and true-up mechanisms for DUs which aim for more transparent collection of pass-through costs or charges starting 2023.

Pass-through costs are amounts collected by DUs for charges other than the Distribution Charge or the payment for use of the DUs facilities.

The DUs collect these amounts from electricity consumers and pay the generation companies or power suppliers for energy generated and the system operator for the use of transmission facilities.

Other pass-through charges include taxes, Feed-in Tariff Allowance (FIT-All), and Universal Charge (UC) which are all remitted by the DUs to the government.

By its nature, the principle of pass-through dictates that the DUs shall not gain or lose from these charges, according to the ERC.

“The applications will be evaluated by the ERC to validate the recovery of pass-through costs implemented by the DUs and confirm the true-up of other pass-through charges, if any,” the regulator said.

Meanwhile, 20 DUs have not submitted their applications.

Citing its advisory issued on May 10, 2023, the ERC said Luzon DUs’ failure to file their complete over and/or under-recovery application, along with the necessary supporting documents, within the designated non-extendable period of sixty 60 days, “may result in the imposition of administrative sanctions and penalties in accordance with relevant ERC rules and regulations.”

The ERC said that DUs’ failure to fulfill these requirements within the designated period may result in suspension of the DU’s authority to impose pass-through charges to consumers.

“This measure ensures accountability and serves as a safeguard against undue burdens on electricity consumers,” the regulator said.—LDF, GMA Integrated News