After years of stalled reviews, the Energy Regulatory Commission (ERC) is moving to reset the process for determining distribution rates of privately owned utilities by requiring them to account for periods when rate resets were not conducted.

In a resolution released in December 15, the ERC directed privately owned distribution utilities (PDUs) to file Actual Weighted Average Tariff (AWAT) applications covering these lapsed periods, adopting a confirmation and true-up approach to reconcile rates under the Commission’s performance-based regulation framework.

Distribution utilities are responsible for delivering electricity to end-users, and their approved rates form part of consumers’ monthly power bills. When rate resets are delayed for extended periods, both utilities and regulators are left without an updated basis for determining whether charges remain reasonable, making the resolution of these backlogs a key regulatory issue.

The directive forms part of a broader regulatory overhaul following the publication of the Rationalized Rules for Setting Distribution Wheeling Rates (RRDWR), which establishes a standardized method for setting the maximum rates PDUs may charge for regulated distribution services.

Rather than reviewing all utilities at once, the ERC divided PDUs into four entry groups, each assigned a defined First Regulatory Period spanning from 2026 to 2031. The grouping sets staggered timelines for when utilities must submit rate reset applications and undergo regulatory review.

Under the new schedule, PDUs in the second, third, and fourth entry groups are required to file their reset applications nine months before the start of their respective regulatory periods. Hearings will be conducted three to seven months before implementation, with decisions issued one to two months ahead of effectivity.

ERC Chairperson Nino Juan said the move marks a turning point in long-delayed rate regulation. “The new ERC has cut the Gordian knot. After more than a decade of delays in reviewing the rates of privately-owned distribution utilities, ERC now have both a clear roadmap and the unwavering determination to see this through,” he said.

With clearer timelines now set for addressing missed rate reviews, how will the ERC’s reset process affect pricing transparency and regulatory certainty in the distribution sector?

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