Biz group brands ERC’s PBR disadvantageous

CITY OF SAN FERNANDO — The Pampanga Chamber of Commerce and Industry Inc. (PamCham) lashed out Thursday on the Performance-Based Rate (PBR) of the Energy Regulatory Commission (ERC) expressing worry that it may in turn out be disadvantageous to consumers and offers too much protection to power distribution utilities.

PamCham president Renato Romero expressed concern over the PBR saying that it may be giving distribution utilities too much protection. Romero said that “unscrupulous” distribution utilities may abuse the PBR to the disadvantage of electricity consumers.

“Distribution utilities have the right to apply for PBR but we are expressing concern over the real purpose of the PBR. We are also concerned the PBR is opening the gate to pass on to consumers investments that they should be making on their own,” Romero said.

Under the PBR, the power utilities submit to the ERC their “revenue requirements” for a specific regulatory period detailing in their applications their market assumptions and their planned capital expenditures for expansion, upgrades, repairs and additional infrastructure that they need to maintain adequate, reliable and efficient services. The rates are set on the basis of the approved revenue requirement. Efficient and reliable distribution networks will also be maintained.

ERC started implementing the PBR in July 2007 with the Manila Electric Company, Cagayan Electric Power and Light Company Inc., and Dagupan Electric Corporation. Cotabato Light & Power Company, Iligan Light and Power Inc. and Mactan Electric Company started its implementation in April 2009.

The ERC, though, in previous statements to the media, said that PBR is more beneficial to consumers because it will allow the removal of price shocks, improve service levels and prevent abuse of utility monopoly positions. But Romero expressed concern on the qualifications of the ERC on distribution utilities applying for the PBR. The ERC said that it will ensure that distribution utilities will pass on to consumers only the value of those assets and equipment which were used in the generation of power, and not include other assets like staff houses and unused spare equipment.

Romero said that consumers should not take the burden of shouldering investments which the distribution utilities should shoulder against their generated funds. Romero also said that government agencies and lawmakers should review the PBR to determine whether it is fair on the part of the general consumers.

“We are also urging the ERC to set definite parameters and qualifications on distribution utilities applying under the PBR,” Romero said. He added that an open audit of the distribution utilities should also be made public so that consumers would know the actual performance of distribution utilities in their area.

A reliable source told Sun.Star Pampanga that two distribution utilities in Pampanga have applied for the PBR. (Ian Ocampo Flora)