ERC Guidelines on Power Rate Adjustments

Applicable to all Distribution Utilities (DUs) operating under an exclusive franchise.

Act: Refers to Republic Act No. 9136 (Electric Power Industry Reform Act of 2001).
Average Transmission Rate (ATR): Transmission cost per unit of electricity based on ERC unbundling.
Deferred Accounting Adjustment (DAA): Part of generation rate used to recover deferred balances.
Distribution Utility (DU): Electric cooperatives, private corporations, government utilities or LGUs with exclusive distribution franchise.
Energy Regulatory Commission (ERC): Regulatory agency established by the Act.
Generation Cost: Reasonable and prudently incurred costs for purchased power.
Generation Rate (GR): Cost of power from NPC and IPPs charged to customers, computed by specified formula.
Ineligible Supply Contracts: Power supply contracts not approved by ERC/ERB.
Other Generation Rate Adjustments (OGA): Adjustments including under/over-recoveries, contract violations, pilferage; no carrying charge applied.
Prompt Payment Discount (PPD): 3% discount for timely NPC bill payments.
System Loss: Percentage difference between power purchased/generated and sold.
System Loss Cap: Maximum allowable system loss percentage set by ERC.
System Loss Rate (SLR): Rate based on formula accounting for generation costs, transmission rate, and system loss factor.

Formula: GR = AGC + OGA
Adjusted Generation Cost (AGC) includes all approved generation costs less half of PPD, divided by total purchases.
OGA includes verified adjustments for under/over-recoveries and contract violations; excludes generation costs from ineligible contracts.
ERC mandates automatic refund via OGA if DUs recover costs from ineligible contracts, plus possible penalties.

SLR calculated monthly using formula: SLR = (GR × U) + (ATR × U), where U is a gross-up factor based on actual or capped system loss plus company use.
System loss can be calculated per customer class if data available.

DUs must submit all relevant calculations and supporting documents by the 20th of each month including invoices, bills, receipts, and ERC forms.
ERC conducts semi-annual verification comparing actual costs and revenues; failure to verify within six months deems rates final.
Post-verification adjustments included in OGA for subsequent periods.
OGA items require ERC verification within 45 days before recovery.

Upon effectivity, the Generation Rate Adjustment Mechanism (GRAM) is discontinued.
Final GRAM filings required within 60 days from effectivity covering the period until then, to calculate final DAA.

Violations subject to fines and penalties per ERC guidelines implementing Section 46 of the Act.

ERC may grant exceptions if justified and consistent with the public interest and law.
Separability clause ensures invalid provisions do not affect remaining provisions.
Guidelines take effect 15 days after publication in two newspapers of general circulation.