ERC solicits comment on rules for wheeling rates

THE Energy Regulatory Commission (ERC) has asked industry participants to comment on draft rules covering the setting of distribution wheeling rates for privately owned distribution utilities operating under its performance-based regulation.

The draft rules on wheeling rates — or the transmission of electricity from an electrical grid to an electrical load outside the grid — covers the fourth regulatory period, which started on July 1, 2015 and ends on June 30, 2019.

This comes amid the regulator’s review of its performance based regulation, aimed at making the rate-setting mechanism simpler, less complicated and more responsive to the evolving electricity industry.

Up for the industry’s input is an appropriate interest rate to be used other than the Manila Reference Rate (MRR), or the weighted average interest rates announced by the Bangko Sentral ng Pilipinas that is based on the combined promissory note and time deposit transactions of sample commercial banks.

The interest rate is used in the ERC formula for deriving a distribution utility’s under- or over-recovery. The purpose of the recovery is to correct the maximum average price-cap where an under- or over-recovery of revenue has occurred during the previous regulatory year. This happens when the actual weighted average tariff per kilowatt-hour for a regulatory year was found to be higher, or lower, than that approved for that year. —