Law Summary
Previous Commission Practice on Prompt Payment Discount (PPD)
- Commission deducted 50% of total PPD on NPC generation and transmission bills from DUs' revenue requirements in unbundling decisions.
- Acknowledges that availing PPD depends on the DU's capability.
Basis for Policy Reconsideration
- Recognizes that DUs may or may not avail PPD, affecting rate adjustments.
- Guidelines for Automatic Adjustment of Generation Rates allowed passing on 50% of PPD only if availed by DU.
- Commission, exercising its rate-fixing mandate under Section 43(f) of EPIRA, decides to reinstate previously deducted 50% of PPD for DUs who availed of it.
Policy on Reinstatement of PPD
- Allows reinstatement of 50% of total PPD previously deducted from approved revenue requirements.
- Reinstatement to be done by adding back amounts to distribution, metering, or supply function in the unbundled rates.
- The same allocation factor used for Other Revenue Items (ORI) containing the PPD shall be applied.
- Billing determinants used in unbundling shall be applied to determine the reinstated rate per customer class.
Implementation and Effectivity
- Commission to determine amount to reinstate per DU and adjust the resultant rates accordingly.
- Appropriate Orders will be issued specifying reinstated amounts and effectivity.
- Resolution takes effect immediately as of July 20, 2005.
Legal and Regulatory Concepts
- Ensures transparency and accountability in the separation of distribution business from related undertakings.
- Addresses fairness in treatment of discounts and their reflection in rates charged to consumers.
- Balances operational realities of DUs with consumer protection principles in rate setting.
- Reinforces the regulatory body's authority to adjust rates based on actual financial considerations.