Luzon DUs ordered to refund over-recoveries to customers

Published February 1, 2021, 7:00 AM by Myrna M. Velasco
https://mb.com.ph/2021/02/01/luzon-dus-ordered-to-refund-over-recoveries-to-customers/

At least 20 distribution utilities (DUs), including electric cooperatives, in the Luzon grid had been ordered to refund over-collections to their customers; and their mandated paybacks range from P0.0014 to P0.6266 per kilowatt hour.

According to the Energy Regulatory Commission (ERC), the scale of over-collections of the Luzon power utilities had piled up to P146 million for the period January 2017 to December 2019.

The regulatory agency added these over-recoveries accrued from various pass-on costs, primarily generation rate, transmission rate, system loss rate, lifeline subsidy rate and senior citizen subsidy rate.

As emphasized in the ERC ruling, the refund to customers must be implemented by the Luzon power utilities over a 12-month period starting in the next billing cycle – following the DUs’ receipt of the regulatory body’s decision.

ERC Chairperson Agnes T. Devanadera stipulated that “upon our initial evaluation, the Commission found that the Luzon-based DUs incurred over-recoveries in the various pass-through charges that they collected from their customers.”

She further explained “these pass-through charges should be revenue-neutral on the part of the DUs, and they are not allowed to incur any additional revenues or losses therefrom.”

To recall, the ERC separately decided on the refund of over-recoveries of Manila Electric Company (Meralco) in December last year; while also allowing it to recoup the under-recoveries incurred in its billings to customers.

The regulatory body enforced a three-month refund timeframe for the country’s biggest power utility; while the collection of its under-recoveries had to be stretched over two years.

As emphasized by Devanadera, “the Commission resolved to prioritize the resolution of cases that will provide some customer relief in terms of rate reduction to help consumers with the still going pandemic.”

The verdict on the pay-back of over-recoveries is in line with the adopted policy for DUs to have compliance filings; and if it will be established that they have over-recoveries in their billings, they shall be mandated to refund these amounts correspondingly to their customers.

While there had been automatic adjustments in some pass-through components of the DUs’ tariffs, it was qualified that there is a rule on re-evaluation of these charges and any over- or under-recoveries have to be allowed for pass-on also.