EXPLAINER: What’s with MORE Power’s P141-M one-time refund?

By Francis Allan Angelo

Iloilo City, sole power distributor, MORE Electric and Power Corp, recently announced a one-time refund of P2.7644 per kilowatt-hour (kWh) for its approximately 92,000 consumers.

The refund of pass-through charges, as confirmed by Niel V. Parcon, MORE Power’s Vice President for Corporate Energy Sourcing and Regulatory Affairs (CESRA), is in compliance with the Energy Regulation Commission’s (ERC) Resolution 14 Series of 2022 (A Resolution Adopting the Revised Rules Governing the Automatic Cost Adjustment and True-up Mechanisms and Corresponding Confirmation Process for Distribution Utilities”.

ERC Resolution 14-2022 revised the rules on pass-through charges to ensure the protection of all electricity consumers and promote transparency and accountability among the distribution utilities (DUs) like MORE Power.

The ERC said the resolution enabled more transparent collection of pass-through costs or charges by DUs.

Pass-through costs are amounts collected by DUs, which include electric cooperatives and private utilities, for charges other than the distribution charge or the payment for use of the DUs facilities.

Simply, DUs collect these amounts from electricity consumers and pay the generation companies for energy generated and the system operator for the use of transmission facilities.

Other pass-through charges include taxes, feed-in tariff allowance, and universal charge which are all remitted by the DUs to the government.

The principle of pass-through dictates that the DUs shall not gain or lose from these charges, thus any excess due fluctuations must be transparent and returned to consumers.

The ERC said the 2022 revised rules aim to update the regulatory framework on recovery of costs by promoting transparency in prescribing detailed calculation of different components of the power bill.

It will also reinforce DUs’ accountability by ensuring accuracy and completeness of information provided to the ERC through more frequent submission of reports to facilitate confirmation of the DUs charges to consumers vis-à-vis the ERC authorized rates.

In addition, it sets a limit which, when exceeded, prompts an adjustment to correct over or under recovery of the pass-through charges.

It will also streamline the process and reduce regulatory lag for more efficient rate reviews.

The revised rules also directs the creation of a restricted fund by the DUs, in which over-collections are maintained and earmarked for the specific purpose of being used as repayment to customers in subsequent billing months.

The ERC said this results in a mechanism whereby DUs effect more timely refunds without being subjected to regulatory lag, under certain conditions.

“Through these initiatives, the ERC looks forward to 2023 in earnest anticipation of an era of strong, transparent and efficient regulatory governance, all towards the fulfillment of its mandate to give the consuming public the quality of service it deserves,” it said.

REFUND

In the case of MORE Power, the refund covers the accumulated differences in the billed amount computed from January 2023 until September, reflecting a P2.7644/kWh rate reduction in the bills received by customers from November 18 to December 14 billing cycle.

Parcon said there are likely to be discrepancies in the charges as costs vary or move in time due to market forces and other factors.

“Ang aton billing, like ang generation kag transmission charges, ang aton gina bill sa aton customer nagabase sa presyo sang nagligad nga bulan pero ang aton ginabayad sa aton mga suppliers nagabase sa rate sa current nga month. Starting January 2023, nag-accumulate na sa P141-M ang over or under-recoveries nga kun i-convert mo into rates, that’s equivalent to P2.76,” he said.

Parcon said all consumer classes, including residential, commercial, industrial, and government accounts, stand to benefit from the accumulated P141 million one-time refund.

Based on their calculations, residential customers consuming 200 kWh will enjoy a reduction of over P550 in their bills.