The Energy Regulatory Commission (ERC) has slapped Isabela II Electric Cooperative (ISELCO) with P2.0 million penalty due to its failure to validate the generation charges it passed on to its customers and for not complying with required fuel audit process.

The regulatory body stipulated that the power utility failed to “comply with the submission of fuel cost invoices and documents.”

On the enforced penalty, the Isabela electric cooperative had been ordered to pay within 15 days from the receipt of the ERC decision.

The regulator also pressed ISELCO II “to submit the necessary documents,” as continuing non-compliance could lead to the suspension of its authority “to collect and include fuel costs in the generation rate.”

The Commission stressed that “this violation by the respondent (ISELCO II)  is a serious dereliction of its duty under the EPIRA (Electric Power Industry Reform Act),” in reference to the law which underpinned the overall restructuring of the power sector.

The ERC emphasized that it established ISELCO’s administrative culpability due to its “inaction on the Commission's letter-order dated 13 December 2022 requesting fuel data and supporting documents in connection to its power supply deal with Anda Power Corporation.”

The regulatory agency argued that the warranted submission of data and supporting documents “would have allowed the Commission to assess the correctness of the fuel charges amidst the surge in generation costs in 2022.”

The industry regulator conveyed that it had given ISELCO II “ample time to submit the requirements,” but to no avail, hence, that rendered its non-compliance to be unjustifiable.

As stated by the ERC, “a DU’s (distribution utility’s) duty does not end when electric power is supplied and the charges have been collected. It also has the essential duty under the law, to make sure that those charges are transparent and reasonable, correct, uninflated, fairly computed, and consistent with its obligation to supply electricity in the least cost manner.”

The Commission similarly reminded the power utility that it is “obligated to ensure that the conditions set by the Commission in its approval of the power supply contract are met by the parties concerned.”

The regulatory agency added “it is incumbent upon a DU to conduct an independent verification of all the costs toward ensuring that only reasonable and correct costs, determined in a transparent manner, are passed on to consumers.”

Further, the Commission had endorsed its decision to the National Electrification Administration (NEA) so the latter can also carry out ‘motu propio’ investigation on the matter.