Scope
- The guidelines apply to all Distribution Utilities operating under the Electric Power Industry Reform Act of 2001.
Key Definitions
- Act: Republic Act No. 9136 (Electric Power Industry Reform Act of 2001).
- Distribution Utility (DU): Electric cooperatives, private corporations, government-owned utilities, or local government units with exclusive franchise to operate distribution systems.
- Energy Regulatory Commission (ERC): The regulatory body under Section 38 of the Act.
- Inter-Class Cross Subsidy: Subsidy rates charged or deducted from customers as part of ERC-approved rate unbundling.
- Inter-Class Cross Subsidy Adjustments (ICSA): Over or under recoveries in pesos from implementation until phase-out of inter-class cross subsidy rates.
- Cross Subsidy Charge: Amount in pesos per kWh reflecting cross subsidy over/(under) recoveries, included in the Universal Charge upon ERC approval.
- Universal Charge: Charge for recovery of stranded debts and costs under Section 34 of the Act.
Calculation of Cross Subsidy Charge
- Formula: Cross Subsidy Charge = ICSA / S
- Where ICSA equals total inter-class cross subsidy adjustments in pesos,
- and S equals projected kWh sales for the period.
- DUs must calculate cross subsidy over/under recoveries and submit to ERC within 60 days after the removal period.
- Submission includes soft and hard copies in the prescribed format.
Verification and Approval Process
- ERC must verify DUs’ cross subsidy charge calculations within 90 days after submission of complete documents.
- Failure to verify within 90 days renders the submitted rates final and confirmed.
- Post-verification, ERC will issue an Order establishing the adjustment to be included in the Universal Charge.
Billing and Recovery
- DUs bill customers the approved Cross Subsidy Charge as part of the Universal Charge.
- Recovery or refund of over/under recoveries continues until full amount is collected or refunded.
Penalties for Non-Compliance
- Violations are subject to fines and penalties pursuant to ERC’s Guidelines for Administrative Sanctions under Section 46 of RA 9136.
Exception Clause
- ERC may allow exceptions if found to be in public interest and lawful.
- DUs can propose alternative mechanisms within 15 days from guideline effectivity.
- Alternatives take effect only after ERC approval.
Separability Clause
- If any provision is declared unconstitutional or invalid, other provisions remain effective.
Effectivity
- Guidelines take effect 15 days after publication in a newspaper of general circulation.