ERC NO. 05, S. 2005

Legal Basis: The resolution is grounded in Section 36 of Republic Act No. 9136, also known as the Electric Power Industry Reform Act of 2001 (EPIRA).
Purpose: To clarify the allocation of the 5% Reinvestment Fund mandated for Electric Cooperatives (ECs) following their applications for unbundling of rates.

General Requirement: ECs are required to maintain a Reinvestment Fund equivalent to 5% of their Gross Revenues to support the expansion, rehabilitation, and upgrading of their electric power systems.
Current Practice: ECs currently allocate these funds from their gross sales or revenues.

Cost Implications: Increases in generation and transmission costs lead to a proportional increase in the 5% Reinvestment Fund.
Financial Viability: The increase in revenue due to higher generation or transmission costs directly affects the financial viability of ECs.

Calculation Method:
- ECs shall calculate their reinvestment funds based on the Php/kWh rate approved in their unbundled rates.
- This rate is to be multiplied by the kWh sales for a specified period.
- The Php/kWh reinvestment fund is determined by dividing the total reinvestment funds incorporated into their approved revenue requirements by the annualized kWh sales.
Implementation: This method of calculation will take effect upon the approval of each EC's unbundled rates.

Immediate Effect: The resolution shall take effect immediately upon its adoption, dated 7 April 2005.

The resolution clarifies the allocation of the 5% Reinvestment Fund for Electric Cooperatives, emphasizing a specific calculation method based on approved unbundled rates.
Financial implications due to cost increases are acknowledged, with a direct correlation between gross revenue and fund allocation.
The resolution is immediately effective and mandates compliance from Electric Cooperatives upon approval of their rates.