Question & AnswerQ&A (ERC)
The objectives are to ensure quality, reliability, security, and affordability of electric power; transparent and reasonable prices in a competitive regime; full recovery of allowable generation costs in an efficient and timely manner; and to protect the public interest concerning rates and services of Distribution Utilities.
These Guidelines apply to all Distribution Utilities, including electric cooperatives, private corporations, government-owned utilities, or existing local government units with exclusive franchise to operate a distribution system.
Generation Cost refers to costs associated with the acquisition of purchased power, including only those costs that are reasonable, prudently incurred, and are eligible for recovery according to ERC practices.
The Generation Rate is calculated as GR = AGC + OGA, where AGC is the Adjusted Generation Cost computed from generation costs minus half the prompt payment discount, and OGA are other generation rate adjustments such as under(over)-recoveries and recoveries from violations.
Ineligible Supply Contracts are power supply agreements entered by Distribution Utilities with Independent Power Producers not approved by the Energy Regulatory Board or ERC; generation costs from these contracts are not recoverable and any recovery must be refunded.
Distribution Utilities must bill their customers the calculated Generation Rates and System Loss Rates on the tenth (10th) day of each month.
SLR = (GR * U) + (ATR * U), where GR is the Generation Rate, ATR is the Average Transmission Rate, and U is the Gross Up Factor representing the system loss percentage over one minus the system loss percentage.
Distribution Utilities must submit all calculations for generation and system loss rates along with supporting documents such as power supplier invoices, sample bills, official receipts of payments, ERC Forms M-001 & M-002, and other relevant documents by the 20th day of each month.
If the ERC fails to verify within six months from submission, the rates shall be deemed final and confirmed.
Violations are subject to fines and penalties in accordance with the Guidelines for Administrative Sanctions pursuant to Section 46 of Republic Act No. 9136 as promulgated by the ERC.
The GRAM shall no longer be applicable to Distribution Utilities, and those using it must file their final applications within 60 days from the effective date of the Guidelines.
Exceptions can be allowed if good cause is shown, such exceptions are found to be in the public interest, and are not contrary to law or other rules and regulations.
PPD is a three percent (3%) discount electric distribution utilities receive from NPC for paying power bills on or before the 10th day following the billing period, part of which is considered in generating the adjusted generation cost.
System Loss is the percentage difference between kWh purchased/generated and kWh sold by a Distribution Utility. The System Loss Cap is the maximum level of System Loss recoverable from customers as established by the ERC.
OGA refers to any adjustments for under or over-recoveries in generation costs, recoveries from contracts violations, pilferages, and other necessary adjustments confirmed by the ERC, without any carrying charge.