Key Definitions
- Appraisal: Process of determining current values of fixed assets per ERC standards.
- Appraisal Report: The final product detailing assets valued and supporting data.
- Appraiser: ERC-accredited individual or company performing appraisals.
- Client/Enterprise: Entity retaining the appraiser.
- Commission: Refers to the ERC.
- Electric Power Industry Participant (EPIP): Entities engaged in generation, transmission, distribution, or supply of electricity.
- Property, Plant and Equipment (PPE): Tangible fixed assets with useful life over one year used or held by EPIPs.
Accreditation of Appraisers
- ERC accredits appraisers with prior SEC accreditation, upon submission of required documentation.
- Required documents include notarized applications, company profiles, licenses, certifications, client lists, financial statements, and good standing certifications.
- Permission to audit working papers must be granted in writing.
- Foreign appraisers may only work in collaboration with an accredited local appraiser.
- Accreditation is valid for three years and renewable upon payment of a P5,000 fee.
- Accreditation may be revoked for cause determined by the Commission.
Appraisal Standards
- General Standards:
- Appraisers must have adequate technical training and asset knowledge.
- Independence of mental attitude is essential.
- Due professional care must be exercised.
- Standards of Fieldwork:
- Proper planning and supervision of assistants.
- Sufficient evidence to support valuations must be collected.
- Standards of Reporting:
- Reports must state appraisal purpose and ERC compliance.
- Reports must declare appraiser independence.
- Minimum information per ERC guidelines must be included.
- Significant reservations or limitations must be disclosed.
- Qualifications of appraisal staff must be identified.
Independence Requirements
- Appraisers, stockholders, officers, and staff involved in the appraisal must not:
- Own stock in the subject enterprise.
- Be associated in management or equivalent capacity with the subject enterprise.
- Independence also considers financial interests of close family members living with or supported by appraiser personnel.
Approved Appraisal Methodologies
- Appraisers must adhere to revaluation policies under the Transmission Wheeling Rate Guidelines and related laws.
- Valuation methodologies must be generally accepted and justified if challenged by the ERC.
Minimum Contents of the Appraisal Report
- Purpose of appraisal clearly stated (e.g., rate making).
- Confirmation of adherence to ERC standards and appraisal independence.
- Appropriate valuation methodologies explained.
- Detailed listing of assets must include:
- Usage status (used, unused, or partially used with percentage).
- Method of asset existence verification (ocular inspection or other).
- For assets valued at P500,000 or more: related cost, voucher reference, original and remaining life.
- A suggested tabular format is provided for presenting asset details.
Amendment, Separability, and Effectivity
- Only the ERC may amend these guidelines.
- Invalid provisions do not affect the validity of remaining provisions.
- Guidelines become effective 15 days after publication in two newspapers of general circulation.