PECO ORDERED TO REFUND PHP527.7M TO CONSUMERS: But who will implement the reimbursement?

By Francis Allan L. Angelo

 

The Energy Regulatory Commission (ERC) ordered Panay Electric Co., the erstwhile distribution utility in Iloilo City, to refund more than PHP527.7-million representing over-recoveries in various charges from January 2012 to December 2014.

In a decision issued on September 23, 2020 and promulgated on December 28, 2020 but made public this week, the ERC ordered PECO to refund the following:

a) Generation Rate (GR) over-recoveries amounting to PHP358,441,371.36;

b) Transmission Rate (TR) over-recoveries amounting to PHP112,690.64;

c) System Loss Rate (SLR) over-recoveries amounting to PHP162,939,228.50;

d) Lifeline Subsidy (IS) over-recoveries amounting to PHP6,152,699.94; and

e) Inter-Class Cross Subsidy over-recoveries amounting to PHP149,829.43.

The Commission also directed PECO to “immediately implement the refund, upon receipt of this decision, and to submit, within ten (10) days from its implementation, a sworn statement indicating its compliance with this Decision.”

The decision was signed by ERC Chair and CEO Agnes VST Devanadera and Commissioners Alexis M. Lumbatan, Catherine P. Maceda, Floresinda G. Baldo-Digal, and Marko Romeo L. Fuentes.

The decision stemmed from the application for the approval of the calculations for the automatic cost adjustment and true-up mechanisms for:

a) generation rate;

b) system loss rate;

c) lifeline subsidy rate; and

d) senior citizen rate,

These cost adjustment and true-up mechanisms are yearly filings the ERC requires of distribution utilities and electric cooperatives to determine if they accurately charge their consumers.

The filings could result in two things – recoveries or refund.

If recovery is in order, the DU or cooperative can charge extra on top of the consumers’ monthly bills. The recovery charges will be converted to the equivalent peso value per kilowatt-hour (kWh) and spread over a certain period, say three to five years, to avoid burdening the consumers.

In the case of a refund, the DU or cooperative will also break down or convert the total refundable amount into the equivalent peso value per kWh and will be subtracted from the monthly bills of the consumers over a certain period to ensure the viability of the DU or cooperative.

For example, if the equivalent refund over a 5-year period is PHP1.00 per kWh, the consumers are entitled to the same reduction in their monthly billings.

The question now is who will implement the refund since PECO is no longer the DU in Iloilo City?

To recall, MORE Electric and Power Corp. took over the power distribution services from PECO in February 2020 after securing its congressional franchise via Republic Act 11212 which was signed into law in February 2019.

While the two firms are locked in prolonged court battles over MORE Power’s franchise and the expropriation of the power distribution assets, MORE Power has begun operating and billing the consumers.

MORE Power refused to comment on the matter.

Power industry insiders, however, believe that PECO can still appeal the decision given its status.

Daily Guardian also tried to reach ERC officials to clarify the implementation of the refund, but they have yet to reply.

For now, consumers will have to wait until the situation is threshed out.