Republic of the Philippines


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ERC Orders Private DUs to Refund Regulatory Reset Cost

The Energy Regulatory Commission (ERC) directed all privately-owned electric distribution utilities (DUs) to refund the amount pertaining to the unutilized Regulatory Reset Cost, with corresponding interest, to their respective consumers.  The one-time refund shall be effected immediately in the July 2019 billing period.  

Under the Performance-Based Regulation (PBR) methodology, privately-owned DUs are allowed to charge Regulatory Reset Cost in their Revenue Requirement.  The Regulatory Reset Cost represents expenses incurred in engaging regulatory experts or consultants when setting and updating the DU’s electricity rates.

The Commission is of the view that the cost of regulation should be at the expense of the government and should not be a burden to the electricity consumers.  The amount collected as Regulatory Reset Cost for the 3rd Regulatory Period remained unused and inasmuch as the 17th Congress appropriated funds for purposes of regulatory reset, the Commission deems it prudent to refund the amounts collected by DUs for this purpose.  In directing the refund, private DUs’ customers will be benefitted by the said Regulatory Reset Cost refund”, ERC Chair Devanadera explained.

Based on ERC’s calculation, the Regulatory Reset Cost refund ranges from PhP0.04 to PhP0.08 per kWh.  In the case of MERALCO, customers can expect, at least, a PhP0.0731 per kWh refund in July.  Distribution utilities will be directed to submit a report on their compliance with the particular refund directive of the ERC, and the same shall be subject to the audit and review in the next regulatory reset to determine if further refunds are in order.

Electricity consumers of privately-owned distribution utilities are advised to check their electricity bills next month and find out if the Regulatory Reset Cost refund has been effected, including any relevant interest earned thereon.  The Commission shall endeavor to work with the 18th Congress to seek funding support that will allow us to exercise our mandate in ways that will ease the burden on the part of our consumers,” Chair Devanadera added.


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