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THE
Energy Regulatory Commission (ERC) will conduct a public
hearing on a “draft determination”—the respective price
control arrangements proposed by Manila Electric Co. (Meralco),
Dagupan Electric Corp. (Decorp), and Cagayan Electric
Power and Light Co., Inc. (Cepalco).
The
draft determination embodies the commission’s initial
position on the price-control arrangements proposed by
the three distribution utilities entering the
“performance-based regulation (PBR).”
“The
draft determination is not a final resolution and does
not have any impact on Meralco, Decorp and Cepalco’s
current distribution charges,” said chairman Rodolfo
Albano Jr.
“The
general public and electric power industry stakeholders
are encouraged to actively participate in the upcoming
public consultations to assist the ERC in coming up with
a sound final resolution on the price-control
arrangements for Meralco, Decorp and Cepalco that will
govern how their rates will be determined for the next
four years,” said Albano.
Meralco
president Jesus P. Francisco said early this year the
PBR application, once approved by the ERC, will allow
Meralco to increase its rates with which it expects to
boost its income for the year.
A
performance-based rate-setting method is an
internationally accepted alternative scheme, which
determines a utility’s annual revenue requirement based
on its projected operating and maintenance expenses,
estimated tax payments, regulatory depreciation charges
on assets used and investors’ return on capital.
Section
43 of the Electric Power Industry Reform Act (Epira)
calls for the establishment and enforcement of “a method
for setting transmission and distribution wheeling rates
and retail rates for the captive market of a
distribution utility, taking into account all relevant
considerations, including the efficiency and
inefficiency of the regulated entities.”
According to the same provision, the rate-setting method
so adopted and applied must ensure a reasonable price of
electricity. Francisco also said the shift to PBR will
result in a more reliable service.
While
the new methodology allows distribution utilities to
undertake various service and system upgrades, it also
strictly requires them to follow performance standards
on reliability and customer service.
Comments
on the draft determination of Meralco will be received
by the ERC until June 15 and the public hearing will be
on June 26. |
