ECs urged to follow ERC rules on capex approval
By Myrna M. Velasco – February 23, 2023, 5:47 PM
from Manila Bulletin
The National Electrification Administration (NEA) has urged the country’s electric cooperatives to adhere to the amended rules set forth by the Energy Regulatory Commission (ERC) on the approval of capital expenditures (capex) before key projects are implemented in their respective service domains.
To guarantee compliance, the government-run electrification agency issued this month NEA Memorandum No. 2023-09, to enjoin regional power utilities “to ensure the timely, appropriate, necessary, and cost-efficient capex projects.”
The implementation of capex projects is very essential in the expansion of load networks as well as service improvements of the ECs – that way, they can spare consumers from dreaded power service interruptions.
Nevertheless, these projects can only be implemented upon the approval of the ERC, hence, if there will be no delays in their filing of applications, they will not be in a catch-up mode also on reinforcing their services to consumers.
Capex projects form part of the major building blocks being assessed by the ERC in rendering approval on the rates to be passed on by the ECs, hence, their filings for these ventures will be highly necessary in the domain of performance-based rate setting being enforced in the restructured power sector.
As stipulated by NEA, the ERC Resolution No. 26, Series of 2009 on capex projects, “serves as a guide for the ECs’ expansion and improvement of distribution facilities.”
Through that dictum, the ECs are mandated to ensure “acquisition of assets necessary to respond to the needs of consumers and meet the safety, performance standards and regulatory requirements as well as their respective structural and/or institutional planning and development.”
NEA further advised the power utilities to strictly act in accordance with the decreed electronic filing of applications as well as “the initial review of applications for verification of compliance with the capex guidelines to avoid delays.”
The agency similarly reminded the ECs that their capital projects “must be consistent with those included in the biennial workplan submitted to NEA.”
The agency emphasized that the “ECs must submit the reportorial requirements prior to any adjustments on the Reinvestment Fund for Sustainable Capital Expenditure Projects (RFSC) as required by the ERC.”
Additionally, the state-run electrification body prodded the ECs “to file at the soonest possible time their applications for the renewal of their distribution franchise before the Committee on Legislative Franchises,” because that will be their ultimate license in continuously servicing their subscribers.
