DOE tightens rule on pass-on charges to consumers
On account of the recent breakdown of power plants, the Department of Energy (DOE) said it will further tighten the rules on the pass-on of different cost components in the electricity bills of consumers – including the replacement power being secured by generation companies (GenCos) when their facilities suffer forced outages.
Energy Undersecretary Felix William B. Fuentebella said the pass-on policy was clearly stipulated in the
competitive selection process (CSP) rules being institutionalized by the department.
He explained that when GenCos will submit their bids to off-taker distribution utilities (DUs), they are required to itemize all the charges that will eventually be billed to the consumers – and if they fail to do that, they are prevented from enforcing the pass-on of such costs.
“The CSP Rules signed by Secretary (Alfonso) Cusi is emphasizing that policy -- that all bids should itemize pass-on costs. If they are not itemized in their bids with the DUs, these cannot be passed on,” the energy official said.
Fuentebella expounded “the purpose of that policy is to make sure that consumers are protected from the ‘unseen’ pass-on costs.”
At the same time, the DOE official noted that tightening such rules for all players could inject much needed transparency as well as setting a level playing field for all technologies.
Like in recent events wherein question of replacement power had been raised due to the plants out from the system because of unplanned shutdowns, cost impact on consumers relating to the tight supply had turned out to be a pressing issue again.
Fuentebella nevertheless intimated that the application of the ‘stricter policy on pass-on costs’ will be prospective, therefore, it is not applied yet in the recent circumstances in the industry.
Most of the GenCos are claiming that their capacities are fully contracted and charges on replacement power are not supposed to be passed on, but this remains to be seen when the May billings of consumers in the Luzon grid will be dispatched.
Fuentebella qualified it is the job of the Energy Regulatory Commission (ERC) to validate if the claims and assertions of the GenCos of “no costs pass-on” are really enforced.
At least for future power supply contracts that will be subjected to a mandatory competitive bidding, he reiterated that all GenCos are required “to comply with the policy that all pass-on items should be included in the rates in their bids – if it’s not there, it cannot be passed on.”