ERC orders DUs to justify pass-through fuel charges

The Energy Regulatory Commission (ERC) has issued show-cause orders (SCOs) to 25 electric cooperatives and three private distribution utilities (DUs), mandating them to explain why they failed to justify pass-through fuel costs that they have reflected in the electricity bills of their customers. Corresponding to the SCOs, the power utilities were also directed to provide an acceptable justification or grounds why penalties shall not be meted against them. According to the regulatory body, its move “comes in the course of the ERC's ongoing fuel audit which aims to verify the accuracy of fuel charges imposed on electricity consumers under the power supply agreements (PSAs).” Specifically, the Commission stipulated that the non-compliance of the DUs on reportorial requirements “undermines the distribution utility’s primary obligation to procure energy supply for its captive consumers in the least cost manner.” The three private DUs served with SCOs had been: Iligan Light & Power Inc., Mactan Electric Company Inc.  and Olongapo Electric Distribution Co.; while the ECs include: Abra Electric Cooperative, Inc.; Aklan Electric Cooperative, Inc.; Albay Electric Cooperative, Inc.; Camiguin Electric Cooperative, Inc.; Capiz Electric Cooperative, Inc.; Camarines Sur II Electric Cooperative, Inc.; Cebu I Electric Cooperative, Inc. and Central Negros Electric Cooperative, Inc. The others are: North Cotabato Electric Cooperative, Inc.; Davao Norte Davao Oriental Electric Cooperative, Inc.; Don Orestes Romualdez Electric Cooperative, Inc.; Iloilo III Electric Cooperative, Inc.; Kalinga Apayao Electric Cooperative, Inc.; La Union Electric Cooperative, Inc.; Northern Davao Electric Cooperative, Inc.; Oriental Mindoro Electric Cooperative, Inc.; Pampanga III Electric Cooperative, Inc.; Pampanga Rural Electric Cooperative, Inc.; Surigao Sur II Electric Cooperative, Inc.; and Zambales II Electric Cooperative, Inc. The ERC qualified that at least five (5) ECs had been issued with two SCOs, including: Ilocos Sur Electric Cooperative, Inc.; Isabela II Electric Cooperative, Inc.; Lanao Del Norte Electric Cooperative, Inc.; Pangasinan III Electric Cooperative, Inc. (PANELCO III); and Zamboanga Sur I Electric Cooperative, Inc. The regulatory body stated that the specified DUs had been remiss in providing “the necessary information within the prescribed timelines set by ERC regulations.” The applicable rules had been anchored on Resolution No. 16, series of 2009; Resolution 24, series of 2011, then the approvals of the PSAs by the ERC. The ERC apprised the regulated power utilities that “the submission of reports related to fuel charges is a condition for the grant of authority to charge generation rates under their PSAs.” It reiterated that the DUs in question had been “directed to provide verified explanations to the ERC or face potential administrative penalties.” As explained by the regulator, the final audit on regulated entities “is part of broader efforts to enhance transparency and accountability in the energy industry,” emphasizing that “by scrutinizing fuel charges and ensuring their accuracy, the ERC aims to safeguard the rights and interests of electricity consumers, preventing the undue burden of unjustified costs.”