The Energy Regulatory Commission’s (ERC) proposal to abolish residential electricity bill deposits has drawn warnings from infrastructure think-tank InfraWatch PH, which said the move could destabilize distribution utilities and drive higher long-term rates.

Under current regulations, residential customers are required to pay a bill deposit — generally equivalent to one month’s estimated electricity usage — as a security for payment when starting service, reconnecting after disconnection, or increasing capacity. Consumers may request refunds with accrued interest after meeting certain conditions, and utilities must manage these funds responsibly. The deposit system is intended to protect utilities’ financial stability, particularly smaller distributors and rural cooperatives.

InfraWatch PH, in a letter to ERC Chairperson Francis Saturnino C. Juan, said the policy “threatens to undermine [the] regulatory framework by introducing unquantified financial variables during critical rate-reset periods,” noting that utilities may be forced to raise revenue requirements to offset increased credit risks and financing costs.

“The result is predictable and mathematically certain: rate increases will be substantially larger than the one-time refund consumers receive,” the group added, highlighting a potential contradiction between short-term consumer relief and future rate pressures.

Smaller distribution utilities and rural electric cooperatives, which often operate on tight margins and limited financing options, could face **delayed payments to power generators, deferred maintenance, and service quality degradation**, InfraWatch PH warned. The think-tank also raised concerns over the absence of transparent mechanisms for utilities to recover lost working capital or manage elevated bad debts.

ERC Chairperson Juan has said the commission is studying proposals to abolish bill deposits and consulting stakeholders to explore ways to reduce upfront costs for consumers while protecting utilities’ financial viability. Legislative efforts, such as the *Anti-Bill Deposit Act* filed by Senator Sherwin Gatchalian, also seek to eliminate deposits nationwide and mandate refunds with interest, while encouraging alternatives like prepaid metering, flexible payment schemes, and voluntary credit insurance.

“InfraWatch PH does not oppose bills deposit abolition on principle. Our concern is methodological: that the Commission has embarked upon a significant structural change to the utility cost regime without the analytical framework, implementation coordination, and risk mitigation safeguards that responsible regulation requires,” the letter said. 

Do you think abolishing bill deposits will benefit consumers in the long run, or create bigger challenges for utilities? 

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