QuestionsQuestions (ERC Resolution NO. 16, S. 2005)
It is issued pursuant to Section 74 of Republic Act No. 9136 (EPIRA) and Rule 16, Section 4 and Rule 18, Section 3 of the EPIRA Implementing Rules and Regulations.
To ensure transparent and reasonable prices and move toward true cost of service; ensure revenue-neutral position for distribution utilities in implementing cross subsidy removal; protect public interest affected by rates and services; and ensure quality, reliability, security, and affordability of electricity supply.
They apply to all Distribution Utilities. A DU includes any electric cooperative, private corporation, government-owned utility, or existing local government unit with an exclusive franchise to operate a distribution system under the EPIRA.
Inter-Class Cross Subsidy refers to subsidy rates charged or deducted from customers that are part of the rate unbundling approved by ERC. ICSA refers to over or under recoveries (in pesos) incurred from the time the approved inter-class cross subsidy rates were implemented until they were phased out.
It is the inter-class cross subsidy over/(under) recoveries in pesos per kWh to be recovered from all electricity consumers through the Universal Charge during the period determined by ERC. It cannot be passed-on without prior ERC approval and shall not be subject to any carrying charge.
It is the charge, if any, imposed for recovery of stranded debts, stranded contract costs of NPC, stranded contract costs of eligible contracts of DUs, and other purposes under Section 34 of the EPIRA.
Cross Subsidy Charge = ICSA / S, where ICSA is the summation of inter-class cross subsidy charge per customer class multiplied by its actual kWh sales, and S is projected kWh sales for the period.
No later than sixty (60) days from the end of the scheme, DUs must submit to ERC their calculation of inter-class cross subsidy over/(under) recoveries incurred.
DUs must submit soft and hard copies of all calculations related to Article II (2.1) using the format provided in Annex A.
ERC verifies within ninety (90) days upon submission of complete documents. If ERC fails to verify within that period, the rates are deemed final and confirmed.
ERC issues an Order establishing the adjustment resulting from verification to be included in the Universal Charge as the cross subsidy charge. Implementation occurs in the period prescribed by ERC.
DUs bill customers/end-users the Cross Subsidy Charge from all electricity end-users as approved by ERC. Recovery or refund is done through the Universal Charge pursuant to Rule 18 until the full amount of over/(under) recoveries is fully refunded/collected.
Violations are subject to fines and penalties in accordance with ERC Guidelines on the Imposition of Administrative Sanctions in the Form of Fines and Penalties pursuant to Section 46 of EPIRA, promulgated on May 17, 2002.
Where good cause appears, ERC may allow an exception if it is in the public interest and not contrary to law, rules, and regulations. A DU must submit, within fifteen (15) days from effectivity, its proposed alternative mechanism/formula; only after ERC approval may recovery/refund resulting therefrom be allowed.
They take effect fifteen (15) days after publication in a newspaper of general circulation in the country.
If any provision is declared unconstitutional or invalid by final judgment of a competent court, the other provisions not affected continue in full force and effect.