ERC, energy sector deserve thanks for customer relief

April 22, 2020
https://www.manilatimes.net/2020/04/22/opinion/editorial/erc-energy-sector-deserve-thanks-for-customer-relief/717057/

AS much of the country struggles to cope with the loss of income during the enhanced community quarantine (ECQ) that has been imposed over Luzon and many other areas of the Philippines, the Energy Regulatory Commission (ERC) has risen to the occasion by offering consumers some timely and much-needed relief. Because the ERC and the electricity sector are often perceived as being inconsiderate of consumer welfare, we think their efforts deserve to be highlighted.

On April 16, Energy Secretary Alfonso Cusi announced that the ERC had issued an advisory directing distribution utilities and retail electricity suppliers to give a grace period to customers who have bills with due dates that fall between March 16 and April 30— the period of the ECQ in Luzon. Interest charges, late payment fees and other additional charges are also to be waived.

Besides distribution utilities and retail electricity suppliers, the order also applies to the National Power Corp., National Transmission Corp., National Grid Corp. of the Philippines and the Power Sector Assets and Liabilities Management Corp. (Psalm). It covers power bills and rate adjustments; fuel/resource suppliers of generating facilities, including coal, oil, steam supply and natural gas; independent power producers; universal charges as administered by Psalm; and Independent Electricity Market Operator of the Philippines Inc. total trading amounts and other charges.

The ERC also suspended the collection of the feed-in tariff allowance (FiT-All), for renewable electricity suppliers, which will save consumers an additional P0.04 per kilowatt-hour during the ECQ period.

According to the ERC directive, the total amount of deferred bills can be collected in four monthly installments, beginning with the May billing, provided the May bill for any customer has a due date no earlier than May 15. The ERC did, however, also urge customers who are able to do so to settle their power bills before the May billing to ease the impact on the power sector.

Neither the ERC nor the Department of Energy indicated whether the billing moratorium would be extended beyond April 30 if the lockdown is extended anew, but as it is, the program must come as a wonderful surprise to electricity consumers. Households and businesses, which have seen their incomes severely reduced or disappear entirely during the ECQ and are struggling to make ends meet, can breathe a sigh of relief that they will not have to worry about their electric bills until things normalize and will not be hit with a large bill shock later.

It is worth mentioning that even before the ERC directive, many distribution utilities in ECQ-affected areas, including the Manila Electric Co. (Meralco), had already made accommodations for their customers such as extending bill due dates, deferring late charges and suspending disconnections for overdue bills. Other utilities such as water distributors have also implemented similar measures to ease the burden on their customers.

It is a welcome development to see the government embracing these kinds of measures because they do offer substantial relief to consumers without requiring any government spending at all. For the companies involved, many of whom are not generally regarded favorably by the public, the effort certainly helps to improve their reputations.

The majority of the power sector is impressively profitable during normal times; thus, there should be no real worry that the industry will suffer a serious financial downturn that might put energy supplies at risk. But there are smaller distributors, mainly local cooperatives, that were operating on very thin margins, or even at a loss, before the onset of the coronavirus pandemic, and for these, the ERC directive may cause real difficulties. Having excellently done one part of its job to look out for consumer welfare, the ERC should follow up by carefully assessing the financial impact on these at-risk utilities and be prepared to recommend ways in which the government can help them to remain viable.