ERC to review “least cost obligation” on PSAs.

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With electricity prices rising nationwide, the Energy Regulatory Commission (ERC) is looking to review and update the parameters of distribution utilities (DUs) compliance with the “least cost” supply obligation. 

In a Philippine Star report, ERC chairperson Monalisa Dimalanta said that the rise in electricity prices in the country is a call to revisit the parameters by which the regulatory board has been approving power supply agreements. 

Since the signing of Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001, Dimalanta said that DUs have been mandated to provide the “least cost supply to their captive customers.” 

Dimalanta said that it’s time to re-evaluate if ERC is successful in enforcing the least cost prices among DUs and if it is “leading us truly to the goal of affordability.” 

Dimalanta added that the ERC will update the parameters on how DUs would comply with the least cost obligation under the EPIRA. 

Currently, the least cost obligation is evaluated on a per power supply agreement basis, Dimalanta said. The ERC chair added that the obligation does not stop once the PSA is approved, but it is a continuing obligation to provide the least cost in all its supply obligations to its customers. 

ERC will also be reviewing the competitive selection policy (CSP) to include technical standards and other pricing parameters which will lead to the realization of the least cost pricing. Furthermore, the regulatory board will also be reviewing the parameters involving system losses to assure that there will be no double counting of recovery. 

The framework for universal charges for missionary electrification will also be reviewed by the ERC in order to lead to a “more sustainable and viable program.” Dimalanta said that the review may lead to revisions and amendments to the EPIRA. 

The ERC will also be pursuing a regulatory reset exercise for DUs and will be completing the regulatory reset exercise for the National Grid Corporation of the Philippines (NGCP). 

Earlier, the Department of Energy (DOE) said that it will be issuing clarificatory guidelines on its and the ERC’s role in the CSPs for supply agreements.