ERC sorts out issues with DUs
ERC sorts out issues with DUs
By Myrna M. Velasco – October 13, 2022, 3:14 PM
from Manila Bulletin
The Energy Regulatory Commission (ERC) has engaged the private distribution utilities (DUs) so they can sort out common ground on how delayed regulatory approvals for this core segment of the power industry could be addressed.
During a courtesy visit of the DUs that are affiliated with the Private Electric Power Operators Association (PEPOA), it was divulged by the ERC that their discussions centered on how to reinforce “cooperation” so that regulatory processes on their filings and applications could be resolved at a faster pace.
The ERC said one of the main concerns set on the table had been the delayed approvals of the capital expenditures (capex) of the DUs – as these are essential components of their operations and service improvements because they cover new as well as expansion projects that are up for implementation so the power utilities can serve their customers better.
As DUs are highly regulated entities, their capex projects cannot just move to implementation phases without first securing the approval of the industry regulator.
The ERC further noted that the tricky process of evaluation and approval of power supply agreements (PSAs) had likewise been tackled in the meeting with PEPOA because this delves on the determination of tariffs that are subsequently pass-on in the electric bills of consumers.
In the past, there were instances that DUs cannot immediately serve their customers because they still needed to wait for ERC approval on their PSA applications; hence, that had not only caused inconvenience to the consumers, but there were incidents wherein consumers were left with no choice but to suffer unwarranted brownouts.
“The ERC and PEPOA discussed points for cooperation in order to address the delays in the resolution of capex applications, PSA approvals, and other pending cases of private DUs,” the regulatory body has emphasized.
The ERC similarly qualified that “the exchange of ideas between the Commission and its stakeholders, included among others, the approach to ensure a timely rate reset process under the performance-based regulation (PBR).”
PBR is a forward-looking approach of setting the tariffs of regulated power utilities – and this also provides incentive mechanism to the DUs to improve their services to consumers down the line.
“This will provide regulatory certainty and create an environment conducive for investments in the power sector, with the goal of translating these into economic growth,” the ERC stressed.
Among the private DUs who joined the courtesy visit with the ERC had been: Angeles Electric Corp. (AEC); Clark Electric Distribution Corporation (CEDC); Dagupan Electric Corporation (DECORP); Ibaan Electric Corporation (IEC); Olongapo Electricity Distribution Corporation (OEDC); Subic EnerZone Corporation (SEC); and Tarlac Electric, Incorporated (TEI) – which all have their franchise areas in the Luzon grid.
The others from the Visayas and Mindanao grids have been: Visayan Electric Corporation (VECO); Cagayan Electric Power and Light Corporation (CEPALCO); Cotabato Light and Power Corporation (CLPC); Davao Light and Power Corporation (DLPC); and Iligan Light and Power Incorporated.
The DUs are the entities that have been front-lining when it comes to service provision to customers; hence, any inefficient or unreliable facet of their operations would reflect badly through the power industry’s supply chain.
