House Minority Leader 4Ps Party-list Rep. Marcelino “Nonoy” Libanan happily shared that Visayas consumers are expected to benefit from lower electricity rates following the Energy Regulatory Commission's (ERC) suspension on the flawed collection of excessive Line Loss and Congestion Cost (LLCC) charges.

“We expect to see lower power rates in the Visayas, and refunds to consumers who saw their electricity bills surge by anywhere from P2.00 to P5.99 per kilowatt-hour because of the erroneous pass-on of excessive LLCC charges,” Libanan said on Sunday, Aug. 16.

Prior to the ERC decision, Libanan had lashed out at the exorbitant LLCC charges during the Aug. 11 hearing of the House Committee on Energy, which was attended by officials from the ERC and the Department of Energy (DOE).

The lawmaker’s intervention came after the Eastern Samar Electric Cooperative Inc. (ESAMELCO) sought his assistance over what it described as the “rapidly increasing LLCC charged” through the Wholesale Electricity Spot Market (WESM), which had become a “significant financial burden” on consumers in the Visayas.

In its letter to Libanan, ESAMELCO estimated that excessive LLCC charges passed on to consumers in Eastern Visayas alone, or in Region 8, had accumulated to some P1.55 billion since January this year.

“The oppressive LLCC charges constitute an added burden on electricity consumers, many of whom are already struggling with rising living costs and finding it increasingly difficult to provide for the basic needs of their families,” Libanan said.

“Consumers should not be made to shoulder the cost of the electricity market’s defective pricing and settlement system. If consumers were overcharged, they deserve to get their money back,” he added.

LLCC, or Line Loss and Congestion Cost, is essentially the same charge referred to by the ERC as the “line rental” charge.

The charge is meant to cover two basic costs involved in delivering electricity: power lost as electricity travels through transmission lines, and the additional cost when transmission lines become congested and cheaper electricity from another area cannot be delivered.

In simple terms, LLCC is supposed to reflect the actual cost of moving electricity from where it is generated to where it is consumed.

The ERC on Aug. 13 ordered corrective measures after finding that the WESM had been incorrectly calculating the congestion component of electricity prices in certain situations, resulting in Line Rental or LLCC charges that were higher than they should have been, particularly when the high-voltage direct current (HVDC) links connecting Luzon, Visayas and Mindanao became constrained.

The ERC said the problem was not primarily in the formula for distributing market surpluses, but in the way the WESM pricing model computed electricity prices when the HVDC links reached their transmission limits.

Instead of properly reflecting congestion as an additional cost, the ERC said the system generated separate baseline prices for the affected regions, distorting the computation of Line Rental charges.

Under its order, the ERC directed the Independent Electricity Market Operator of the Philippines (IEMOP) to suspend the collection or payment of the Line Rental Trading Amount in cases where different electricity prices are generated because of constraints at HVDC interconnections or between pricing regions.

The ERC also ordered a permanent correction of the pricing methodology and directed IEMOP to engage an independent auditor to recalculate the market's Net Settlement Surplus and Net Settlement Deficit allocations dating back to June 26, 2021.

The audit could lead to refunds for consumers who were overcharged. IEMOP was ordered to submit a proposed methodology and timetable for refunding or collecting any resulting adjustments from affected market participants and consumers, with the adjustments potentially spread over several billing periods.