Rules for Prepaid Retail Electric Service

Legal basis and authority to regulate

Section 43(h) of Republic Act No. 9136 vests the ERC with authority to review and approve changes on the terms and conditions of service of TRANSCO or any Distribution Utility (DU).
Section 4(o), Rule 3 of the IRR of Republic Act No. 9136 empowers the ERC to issue other essential rules in discharge of its functions as an independent quasi-judicial body.
The attached rules are adopted and promulgated pursuant to Section 43(h) of Republic Act No. 9136 and Section 4(o), Rule 3 of its IRR (preamble to Attachment).
The fines and penalties framework refers to the Guidelines to Govern the Imposition of Administrative Sanctions in the Form of Fines and Penalties pursuant to Section 46 of the Act, as amended (Section 6.1).

Policy objectives for prepaid service

The rules are designed to provide residential customers a choice for energy management strategies (Section 1.1.1).
The rules establish technical standards for Prepaid Retail Electric Service (PRES) using a prepaid metering system (Section 1.1.2).
The rules establish rules for PRES in addition to all other applicable existing customer protection rules (Section 1.1.3).
The rules are intended to enhance the operational efficiency of the DU (Section 1.1.4).
The rules are intended to promote demand side management (Section 1.1.5).

Scope, coverage, and key definitions

The rules apply to a Distribution Utility (DU) that offers prepaid service to its residential customers using a prepaid metering system as an alternative to existing postpaid service (Section 1.2.1).
The rules apply to residential customers availing of prepaid electric service (Section 1.2.2).
Republic Act No. 9136 is defined as the Electric Power Industry Reform Act of 2001 (Section 1.3, “Act”).
A Distribution Utility (DU) is an electric cooperative, private corporation, government-owned utility, or existing local government unit with an exclusive franchise to operate a distribution system in accordance with its franchise and the Act (Section 1.3, “Distribution Utility (DU)”).
The Energy Regulatory Commission (ERC) is defined as the independent and quasi-judicial regulatory agency created under Section 38 of the Act (Section 1.3, “Energy Regulatory Commission (ERC)”).
A Prepaid Meter is defined as an electric meter capable of: (a) loading purchased energy; (b) displaying real-time consumption information; and (c) warning when load is close to zero with a positive buffer before electricity is automatically disconnected (Section 1.3, “Prepaid Meter”).
Prepaid Retail Electric Service (PRES) is defined as electric service using a prepaid metering system that allows a residential customer to purchase credit and use electricity until credit is exhausted (Section 1.3, “Prepaid Retail Electric Service (PRES)”).
Capitalized terms not defined in the rules have the meanings under Republic Act No. 9136 (Section 1.3, last paragraph).

Requirements to offer PRES

A DU must file with the ERC for approval an application to provide PRES using a prepaid metering system prior to offering such services to residential customers (Section 2.1).
The application must include the DU’s legal name and business address (Section 2.1.1).
The application must include a written description of technical specifications of the prepaid metering system (Section 2.1.2).
The application must state the number of years of summarized record of electric charges that the prepaid metering system can produce (Section 2.1.3).
The application must specify the type of prepaid meter to be used with a certification that it meets the minimum requirements in the rules (Section 2.1.4).
The application must describe the manner energy is purchased and credited on the prepaid meter (Section 2.1.5).
The application must include the terms and conditions of service to the residential customer (Section 2.1.6).
The application must specify the manner by which the DU will recover the cost of the prepaid meter and metering system (Section 2.1.7).
The application must include the implementation of the lifeline rate (Section 2.1.8).
The application must provide a sample printed receipt or confirmation format (Section 2.1.9).
The application must state the location and manner of prepaid transaction (Section 2.1.10).
The application must provide the procedure for converting from postpaid to prepaid service and vice versa, including the refund and payment of bill deposit (Section 2.1.11).
The application must state the target date of implementation (Section 2.1.12).
The application must include a program on how to inform customers about PRES (Section 2.1.13).

Prepaid meter standards and operational rules

Prepaid meters must be certified by IEC or ANSI to comply with their standards (Section 2.2).
Prepaid meters must communicate to the customer the current balance, time, and date (Section 2.2).
Prepaid meters must display the customer’s previous thirty (30) day-period consumption and the number of days into the current thirty (30) day-period, followed by consumption in KWh (Section 2.2).
Prepaid meters must warn residential customers before remaining credit level goes below an agreed threshold (in Pesos and equivalent kWh) as agreed by the residential customer and the DU (Section 2.2).
A DU may use any prepaid metering system technology except one that transfers token data using a disposable magnetic stripe card (Section 2.2).
Prepaid meters must have an average accuracy as close as possible to zero error before being placed in service, with a fixed tolerance of plus or minus one half percent (+/- 0.5%) (Section 2.3).
Meters in service must have an allowable tolerance of average error of plus or minus two percent (+/- 2%) (Section 2.3).
For test load points (Light load and Full load), meter error must not exceed plus or minus three percent (+/- 3%) (Section 2.3).
Prepaid meters must be subject to ERC testing and certification (Section 2.3).
The ERC seal attached to the meter warrants that the prepaid meter is an acceptable type and that it operates within allowable tolerance limits (Section 2.3).
Prepaid meters may be installed inside or outside the residential customer’s house, but the residential customer must be provided with a mechanism or device for monitoring and managing consumption rate and receiving warning when credit reaches the agreed threshold (Section 2.4).

Customer cost limits, billing, and receipts

Customers must not be made to advance the cost of or to purchase the prepaid meter (Section 2.5).
DUs must not collect prepaid meter deposits from customers (Section 2.5).
The DU must allow purchase of electric energy credit in reasonably small increments (Section 2.6).
Unless the DU applies for and the ERC approves a different tariff for prepaid meters (including discounts, if any), rates applied in prepaid transactions must be based on the effective postpaid retail rate current at the time of purchase (Section 2.6).
The DU must continue to charge the lifeline rate to residential customers whose consumptions during a particular month do not exceed the approved lifeline cap (Section 2.6).
For Section 2.6, “month” is defined as the corresponding time interval for which the DU’s postpaid customers’ meters are read for purposes of billing (Section 2.6).
Every time a residential customer makes a payment, the DU must provide a receipt or written confirmation including: (a) name of DU; (b) receipt number; (c) date and time of purchase; (d) meter identification details; (e) credit amount in KWh and pesos; (f) tariff charge; and (g) number of purchase transactions made in the same month (Section 2.7).
The DU must provide reasonable means for customers to have easy access to purchasing electric energy credit for twenty four (24) hours to ensure continuous service (Section 2.8).
The DU must keep for each prepaid customer records necessary to produce a summary of purchases of electric energy credit for at least the preceding two (2) years (Section 2.9).
Within five (5) business days from receipt of a customer’s request, the DU must issue a summary of purchases and corresponding charges including dates and payment amounts covered by the summary (Section 2.9).

Bill deposit transfers for switching

A DU must refund the postpaid service bill deposit required for postpaid service to a residential customer who opts to apply for PRES, net of outstanding obligations, and including interest earned based on the ERC approved interest rate (Section 2.10).
If a residential customer under PRES decides to revert to postpaid service, the customer must pay a bill deposit equivalent to the average monthly purchase for the past six (6) months prior to reconnection to postpaid service (Section 2.10).

Entry, trial, retention, and required conversion

Customers have the option to apply for PRES on a voluntary basis (Section 3.1).
Customers should be allowed a trial period of six (6) months to assess using prepaid service (Section 3.2).
After the six (6) months trial period, customers may either: (a) enter into a prepaid service contract with a retention period of twenty four (24) months; or (b) revert to postpaid service (Section 3.3).
Customers connected under PRES for at least twenty four (24) months have the option to revert to traditional postpaid service after payment of a bill deposit under Section 2.10 (Section 3.4).
Customers who reverted to postpaid after the six (6) months trial period may still avail of the prepaid service subject to a retention period of at least twenty four (24) months (Section 3.4).
Customers unable to pay existing bills under postpaid service must be allowed to apply for PRES through a settlement scheme agreed upon with the DU for unpaid bills (Section 3.5).
Customers found guilty of illegal use of electricity by final judgment by regular courts or administrative agencies may be required by the DU to avail of PRES using a prepaid metering system (Section 3.6).
Customers required to avail under Sections 3.5 and 3.6 may revert to traditional postpaid service subject to the DU’s approval (Section 3.7).

Reporting duties to ERC

Each DU offering PRES using prepaid metering must file a monthly report to the ERC (Section 4.1).
The monthly report must include: (a) total KWh sales and revenues derived from PRES; (b) number of customers availing of lifeline rate and the total sales revenue derived from them; and (c) the effective rate applied and the corresponding unbundled charges (Section 4.1.1–4.1.3).

Filing and information display obligations

Applications for approval to offer PRES requiring a new rate schedule must comply with regulatory filing requirements for a rate case (Section 5.1).
The DU must provide a visual display or post printed itemization of the monthly unbundled charges in all vending or collection offices, and must furnish the itemization to the residential customer upon request (Section 5.2).

Fines, penalties, and administrative sanctions

Any violation of the rules is subject to fines and penalties imposed in accordance with the Guidelines to Govern the Imposition of Administrative Sanctions in the Form of Fines and Penalties pursuant to Section 46 of the Act, as amended (Section 6.1).

ERC exceptions, separability, repealing rules, and effectivity

Where good reason appears, the ERC may allow an exception from any provision of the rules if the exception is in the public interest and not contrary to law or any pertinent rules and regulations (Section 7.1).
If any part or section is declared unconstitutional or invalid, the remaining parts continue in full force and effect unless the declaration would render the whole rules unenforceable or non-implementable (Section 7.2).
Rules and guidelines issued by the ERC that are inconsistent with these rules are repealed or modified accordingly; rules and guidelines not affected remain in effect and applicable to PRES customers (Section 7.3).
The rules take effect fifteen (15) days after publication in a newspaper of general circulation (Section 7.4).