ERC orders private utilities to true up electricity tariffs

The Energy Regulatory Commission (ERC) has ordered all privately owned distribution utilities (DUs) in the Philippines to file new tariff applications covering years when scheduled rate resets did not occur, as part of a broad effort to clear a long-standing regulatory backlog.

In a resolution released on December 15, the ERC adopted a “confirmation and true-up” approach, requiring privately owned distribution utilities to submit Actual Weighted Average Tariff (AWAT) applications for lapsed regulatory periods.

The filings will allow the commission to determine whether rates charged to consumers during those years remained reasonable and compliant with rules under the performance-based regulation framework.

“The new ERC has cut the Gordian knot. After more than a decade of delays in reviewing the rates of privately-owned distribution utilities, ERC now has both a clear roadmap and the unwavering determination to see this through,” ERC Chairperson Nino Juan said in a statement.

The directive forms part of a broader regulatory overhaul following the publication of the Rationalized Rules for Setting Distribution Wheeling Rates, issued under ERC Case No. 2025-011 RM.

The new rules establish a standardized methodology for calculating the maximum charges that distribution utilities may collect for delivering regulated electricity services to end users.

Distribution utilities are responsible for transporting electricity from the transmission system to residential, commercial, and industrial consumers, making their tariffs a significant component of monthly power bills.

In recent years, repeated delays in mandatory rate reviews left regulators and utilities without updated pricing benchmarks, prompting concerns over regulatory gaps and consumer protection.

The confirmation and true-up process aims to retroactively validate charged rates and ensure alignment with approved regulatory targets.

To streamline implementation, the ERC divided privately owned DUs into four entry groups, each assigned a First Regulatory Period between 2026 and 2031.

Utilities are required to submit rate reset applications nine months before the start of their assigned regulatory period.

Hearings—including jurisdictional, expository, evidentiary, and clarificatory stages—will be conducted three to seven months before implementation, with final decisions issued one to two months before each regulatory cycle begins.

The first group will undergo its First Regulatory Period from July 1, 2026, to June 30, 2030.

Utilities in the first group are Cagayan Electric Power & Light Company Inc., Cotabato Light & Power Company Inc., Dagupan Electric Corporation, and Manila Electric Company.

The second group is scheduled for Jan. 1, 2027, to Dec. 31, 2030.

Utilities in the second group include Clark Electric Distribution Company, Davao Light & Power Company Inc., Iligan Light & Power Company Inc., Mactan Electric Company, Olongapo Electricity Distribution Company, and Shin Clark Power Corporation.

The third group will undergo its First Regulatory Period from July 1, 2027, to June 30, 2031.

Utilities in the third group are Cabanatuan Electric Corporation, Ibaan Electric and Engineering Corp., La Union Electric Company Inc., Tarlac Electric Inc., Visayan Electric Company, and First Bay Power Corporation.

The fourth group is scheduled for Jan. 1, 2028, to Dec. 31, 2031.

Utilities in the fourth group include Angeles Electric Corp., Bohol Light Company Inc., MORE Electric and Power Corp., Subic EnerZone Corporation, San Fernando Electric Light & Power Company Inc., and Negros Electric Power Corporation.

The ERC said the staggered timeline is intended to allow a more systematic and thorough review of distribution rates.

All private DUs in the second through fourth groups are required to file reset applications by the deadlines assigned to their respective regulatory periods.

By institutionalizing the AWAT and rate reset processes, the ERC aims to restore regulatory certainty and strengthen consumer protection in the electricity distribution sector.