Legal basis and referenced frameworks
- Section 43(f) of Republic Act No. 9136 directs that the system loss cap mechanism set under Section 10 of Republic Act No. 7832 is to be replaced by caps determined by the ERC.
- The resolution cites Rule 15 Section 5 of the Implementing Rules and Regulations of Republic Act No. 9136 as providing for ERC-determined loss caps.
- The resolution also anchors its approach on the Philippine Distribution Code (PDC), specifically:
- Article 3.4 on System Efficiency Standards for Distributors.
- Article 3.4.1 classifying distribution system losses.
- Article 3.4.2 prescribing the system loss cap framework and the application and approval process for loss caps.
Policy objectives for the application format
- The resolution approves an application format intended to provide a uniform Distribution System Loss Cap application format.
- The resolution states the format is intended to promote transparency and accountability in all phases involving services provided by Distribution Utilities.
- The resolution states the format promotes a policy of full disclosure of all transactions involving public interest.
- The resolution states the format is intended to protect public interest as it is affected by rates and services of Distribution Utilities and other electric power providers.
Distribution system losses and cap framework
- The resolution recognizes that Article 3.4.1 of the PDC classifies Distribution System Losses into three (3) categories: Technical Loss, Non-Technical Loss, and Administrative Loss.
- The resolution states that under Article 3.4.2 of the PDC, there is a System Loss Cap for all distributors.
- The resolution states that the Distributor must identify and report separately to the ERC the technical and non-technical losses in its Distribution System.
- The resolution states that the ERC prescribes separate caps for Technical Loss and Non-Technical Loss after due notice and hearing, and these caps determine what the Distributor can pass on to its End-Users.
Administrative loss application and approval
- The resolution states that under Article 3.4.2 of the PDC, the Distributor must submit an application for the approval of its Administrative Loss.
- The resolution states that the allowance for Administrative Loss is approved by the ERC after due notice and hearing.
- The resolution states that the approval for Administrative Loss is based on connected essential Load.
Adoption of the uniform application format
- The ERC approves and adopts a format for Distribution System Loss Cap applications of all Distribution Utilities.
- The resolution makes the approved format an integral part of the resolution as ANNEX A.
- The adopted format is intended to govern the manner and presentation of Distribution Utilities’ applications for distribution system loss caps, including the process required by Article 3.4 of the PDC.
Procedural participation and basis for adoption
- The resolution records that on December 8, 2006, the ERC conducted a public consultation with Distribution Utilities and other Electric Industry Participants.
- The public consultation covered adoption of a format for Distribution System Loss Cap applications of all Distribution Utilities.
- The resolution reflects that the consulted format is designed to support transparency, accountability, and public protection in the regulatory determination of caps and related rates.
Publication, website posting, and filing
- The resolution takes effect immediately after its publication in a newspaper of general circulation in the Philippines.
- The resolution requires posting on the ERC Website.
- The resolution requires filing with the University of the Philippines Law Center Office of the National Administrative Register (UP-ONAR).