Republic of the Philippines


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ERC Orders Refund of Over-recoveries in Pass-through Charges

The Energy Regulatory Commission (ERC) directed Distribution Utilities (DUs), both private and electric cooperatives, to refund to their respective consumers the over-recoveries in the Generation Rate (GR), Transmission Rate (TR), System Loss Rate (SLR), Lifeline Subsidy Rate (LSR), and Senior Citizens Subsidy Rate (SrSR), otherwise known as pass-through charges.  Based on ERC’s initial evaluation, the DUs’ total over-recoveries ranges from as high as PhP657.58 Million to as low as PhP107 Thousand covering varying time periods.  

“The Commission ordered to refund the total amount of PhP2.8 Billion to the concerned sixty-three (63) DUs, particularly 38 in Luzon, 13 in Visayas, and 12 in Mindanao.  The refund should be effected for a period of twelve (12) months, except for Manila Electric Company (MERALCO) and Angeles Electric Corporation (AEC) which prayed for a shorter period of refund, starting on the next billing cycle from receipt of the ERC’s Order or until such time that the full amount shall have been refunded”, ERC Chairperson and CEO Agnes VST Devanadera clarified.  

Translated into rates, DUs will refund from as high as PhP1.3182/kWh to as low as PhP0.0025/kWh.  The over-recoveries in the Generation, Transmission, and System Loss charges were incurred in view of the difference between the actual and the estimated costs of Generation and Transmission Charges (which were based on the previous month), whereas for the Lifeline and Senior Citizens charges, the over-recoveries were due to the variance in the discount granted as against the actual subsidy charged and collected.

The DUs were likewise directed to submit within ten (10) days from their implementation a sworn statement indicating their compliance with the ERC’s Order.  The over and/or under-recoveries, as the case may be, are to be reflected in the monthly computations of GR, TR, SLR, LSR, and SrSR as Other Generation Adjustment (OGA) for Generation, Other Transmission Cost Adjustment (OTCA) for Transmission, Other System Loss Adjustment (OSLA) for System Loss, Other Lifeline Rate Adjustment (OLRA) for Lifeline Subsidy, and Other Senior Citizen Rate Adjustment (OSrRA) for Senior Citizen Subsidy.  

Furthermore, the DUs must submit a Report using the ERC’s prescribed format on or before the 30th day of the following month, together with the monthly reportorial requirements, and every month thereafter until the amount have been fully refunded or collected.

Pursuant to ERC Resolution No. 16, Series of 2009, which adopted the Rules Governing the Automatic Cost Adjustment and True-Up Mechanisms and Corresponding Confirmation Process for Distribution Utilities, the DUs are required to file their respective applications for the confirmation and approval of calculations of over or under-recoveries in the implementation of automatic cost adjustments and true-up mechanisms every three (3) years.

“The confirmation of the DUs’ pass-through charges are meant to protect the interest of the consuming public by way of ensuring that what were charged and collected from them are reasonable and accurate rates”, ERC Chair Devanadera added.

Section 25 of R.A. No. 9136 (or the Electric Power Industry Reform Act [EPIRA]) mandates the ERC to regulate the retail rates, which includes the former’s confirmation that the retail rates collected by Distribution Utilities (DUs) are in accordance with the approved rates of the Commission.


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