Question & AnswerQ&A (ERC Resolution NO. 16, S. 2005)
The purpose is to establish a "true-up" mechanism for over or under recoveries in the implementation of inter-class cross subsidy removal by distribution utilities to ensure transparent pricing, revenue neutrality, public interest protection, and maintaining quality and affordability in electric power supply.
The guidelines apply to all Distribution Utilities, which include electric cooperatives, private corporations, government-owned utilities, or local government units with exclusive distribution system franchises.
Inter-Class Cross Subsidy refers to subsidy rates either charged or deducted from customers that are part of the rate unbundling approved by the ERC.
ICSA are the over or under recoveries in Philippine Pesos incurred from the time the approved inter-class cross subsidy rates were implemented until the time they were phased out.
The formula is: Cross Subsidy Charge = ICSA / S, where ICSA is the inter-class cross subsidy over/(under) recoveries in pesos and S is the projected kWh sales for the period.
They must submit the calculation to the ERC no later than sixty (60) days from the end of the inter-class cross subsidy removal scheme.
If ERC fails to verify within ninety (90) days upon receipt of complete documents, the rates submitted by the Distribution Utilities shall be deemed final and confirmed.
Distribution Utilities shall recover or refund the Cross Subsidy Charge through the Universal Charge applied to all electricity consumers until the full amount of over or under recoveries has been settled.
Violations are subject to fines and penalties under the Guidelines to Govern the Imposition of Administrative Sanctions pursuant to Section 46 of Republic Act No. 9136 promulgated by the ERC.
Yes, the ERC may allow an exception if good cause appears, if it is in the public interest, and is not contrary to any laws or regulations. Distribution Utilities seeking exception must submit an alternative mechanism within fifteen (15) days from the effectivity of the guidelines.
These guidelines take effect fifteen (15) days after publication in a newspaper of general circulation in the Philippines.
The Universal Charge is the fee imposed for the recovery of stranded debts, stranded contract costs of NPC and eligible distribution utilities contracts, and other purposes pursuant to Section 34 of the Electric Power Industry Reform Act.