Power distributors with unapproved PSAs barred from passing on costs, ERC says

By Sheldeen Joy Talavera – December 28, 2023 | 8:19 pm
from Business World

THE Energy Regulatory Commission (ERC) said it will not allow power distributors to recover costs from consumers if they have failed to file or win approval for their power supply agreements (PSAs).

The cost recovery rules are among the revised guidelines governing the conduct of competitive selection processes (CSP).

Maria Corazon C. Gines, ERC legal service director, said in a briefing Thursday that the commission has come across situations of distribution utilities (DU) and generation companies seeking to pass on costs even with unapproved PSAs.

“In order to dissuade this kind of practice, this is now policy… that if it has not been filed with the ERC, even though you have recovered, you do not have anything to pass through to the consumers,” she said.

Under Resolution No. 16, series of 2009, a some costs can be passed through to the consumers such as the National Power Corp.-Time-of-Use (NPC-ToU) rates.

“In the case of ineligible supply contracts, generation costs from such contracts shall include the kilowatt-hours pertaining to ineligible contracts pegged at the DU’s load weighted average NPC ToU rates or the actual rate as billed by the IPP (independent power producer), whichever is lower,” according to the resolution.

“We previously considered those contracts as ineligible, but then, we recognized that there is still cost and there should still be a certain recovery on the part of the generation companies,” Ms. Gines said.

The ERC issued the revised CSP on Oct. 6, outlining the rules governing the procurement, execution, and evaluation of PSAs entered into by DUs for the supply of electricity to their captive market.