QuestionsQuestions (ERC Resolution NO. 17, S. 2010)
It adopts the Valuation Handbook for the Optimized Depreciated Replacement Cost (ODRC) valuation of system fixed assets of privately owned distribution utilities operating under Performance-Based Regulation (PBR). The adopted Handbook is attached as Annex A.
It references Resolution No. 12-02, s. 2004 (Distribution Wheeling Rates Guidelines, later renamed RDWR), which requires asset re-valuation prior to the Third Regulatory Period; it also references prior asset valuation policy guidelines and guidelines for preparing asset schedules.
It must be undertaken prior to the commencement of the Third Regulatory Period.
(1) An independent appraisal company engaged by the Distribution Utility (DU), with the ERC also retaining a Regulatory Reset Expert/Experts to review the results and Valuation Report; or (2) Regulatory Reset Expert/Experts retained by the ERC, under Article XIV of the RDWR, to undertake valuation and prepare the Valuation Report.
The ODRC asset valuation must be undertaken in accordance with the requirements of the Valuation Handbook.
For the Second Regulatory Period, ERC conducted asset valuation through its appointed valuation experts; for the Third Regulatory Period, the asset re-valuation shall be undertaken by each Regulated Entity (with ERC reviewing and possibly adjusting if support is insufficient).
The ERC may make adjustments to the valuation when the supporting information provided by the DU to substantiate the valuation is insufficient.
Each Regulated Entity must conduct the valuation of its RAB in accordance with the Valuation Handbook, and the results form part of its Revenue Application.
The ERC posted the second draft of the Valuation Handbook on May 18, 2010; conducted expository public consultations on the draft; then posted the second draft for comments on July 7, 2010, with comments due not later than July 12, 2010.
Aboitiz and the Manila Electric Company (MERALCO).
It supersedes: (1) the Asset Valuation Policy Guidelines for Privately Owned Distribution Utilities Subject to Performance Based Regulation (final determination dated August 9, 2006), and (2) the Guidelines for Preparing Asset Schedules for Performance Based Regulatory Initial Asset Valuations dated March 2, 2009.
It will apply to the Third Regulatory Period and takes effect on July 1, 2011.
It takes effect fifteen (15) days following its publication in a newspaper of general circulation in the Philippines.
The DU’s valuation results for its RAB must be conducted in accordance with the Valuation Handbook, and those results form part of its Revenue Application.
Copies must be furnished the University of the Philippines Law Center–Office of the National Administrative Register (UPLC-ONAR) and all Privately Owned Distribution Utilities Operating under Performance Based Regulation.
Publication triggers the commencement of the effectivity period (15 days after publication), while furnishing UPLC-ONAR relates to administrative registration and formal recording of the ERC issuance.