QuestionsQuestions (ERC Resolution NO. 55)
The legal basis is Section 43(f) of Republic Act No. 9136 (EPIRA) and Rule 15, Section 5 of its Implementing Rules and Regulations, which amend the old cap on recoverable system losses and require ERC-determined caps based on factors such as load density, sales mix, cost of service, delivery voltage, and other technical considerations.
The text references Section 10 of Republic Act No. 7832 as the former cap on recoverable rate of system losses, which is amended and replaced by ERC-determined caps under EPIRA.
It provides the framework for system efficiency standards for distributors, including how distribution system losses are categorized and how loss caps are set and applied.
The PDC classifies distribution system losses into three categories: (1) Technical Loss, (2) Non-Technical Loss, and (3) Administrative Loss.
The Distributor must identify and report separately to the ERC the technical and non-technical losses in its Distribution System.
After due notice and hearing, the ERC prescribes the caps for the technical and non-technical losses that the Distributor can pass on to end-users, and separate caps must be set for Technical and Non-Technical Losses.
The Distributor must submit an application to the ERC for approval of its Administrative Loss allowance; ERC approves it after due notice and hearing based on connected essential load.
To approve and adopt a uniform format for Distribution System Loss Cap applications of all distribution utilities.
The format aims to: (1) provide uniform application format, (2) promote transparency and accountability, (3) promote full disclosure of transactions affecting public interest, and (4) protect public interest as reflected in rates and services of distribution utilities and other providers.
It conducted a public consultation with distribution utilities and other electric industry participants for adopting the format; this supports procedural due process and stakeholder input prior to adoption.
The ERC approves and adopts the format attached as Annex A, which becomes an integral part of the resolution and governs how distribution utilities apply for loss caps.
It reflects regulatory principles of accountability, public participation, and transparency in administrative rule-making/issuances that affect public interest (electricity rates and service quality).
It takes effect immediately after publication in a newspaper of general circulation in the Philippines, must be posted on the ERC website, and must be filed with the UP Law Center Office of the National Administrative Register (UP-ONAR).
Distribution utilities must use the adopted uniform format when filing applications for Distribution System Loss Caps, and must follow the PDC framework for separating and reporting technical/non-technical losses and applying for administrative loss allowances.
Caps apply to technical and non-technical losses that the distributor can pass on to end-users. Administrative Loss allowance is subject to ERC approval through an application based on connected essential load.
It governs the ERC’s prescription of caps (for technical and non-technical losses) and the approval of the allowance for administrative losses; both require due notice and hearing.