A RESOLUTION ADOPTING THE RULES GOVERNING THE AUTOMATIC COST ADJUSTMENT AND TRUE-UP MECHANISMS AND CORRESPONDING CONFIRMATION PROCESS FOR DISTRIBUTION UTILITIES

WHEREAS, pursuant to Section 43 (t) of Republic Act No. 9136, the
Energy Regulatory Commission (ERC) is mandated to promulgate rules and
regulations and perform such other regulatory functions as are
appropriate and necessary in order to ensure the successful
restructuring and modernization of the electric power industry;

WHEREAS, the ERC has adopted several automatic cost adjustment
mechanisms in separate issuances and it is deemed ideal to consolidate,
update, and rationalize the requirements under all these separate
issuances;

WHEREAS, the ERC finds its necessary to establish a systematized
confirmation process that conforms to the due process requirement of the
law for the following automatic cost adjustment and true-up mechanisms:

1. Automatic Generation Rate and System Loss Adjustment Mechanism;
2. Transmission Rate Adjustment Mechanism;
3. Lifeline Rate Recovery Mechanism;
4. Local Franchise Tax Recovery Mechanism;
5. Local Business Tax Recovery Mechanism;
6. Guidelines for the Calculation of the Over or Under Recovery in the
Implementation of Lifeline Rates by Distribution Utilities;
7. Guidelines for a True-up Mechanism of the Over or Under Recovery in
the Implementation of Inter-Class Cross Subsidy Removal by Distribution
Utilities;
8. ERC Resolution No. 12, Series of 2005, “ A Resolution Approving a
New Policy on the Treatment of Prompt Payment Discount (PPD)”;
9. Guidelines for the Calculation of the Over or Under Recovery in the
Implementation of System Loss Rate by Distribution Utilities; and
10. Rules for the Calculation of the Over or Under Recovery in the Implementation of Transmission Rates.

WHEREAS, on November 22 and 25, 2008, the ERC conducted public
consultations for the adoption of the proposed Rules Governing the
Automatic Cost Adjustment and True-up Mechanisms and Corresponding
Confirmation Process for Distribution Utilities;

NOW THEREFORE, the ERC, after considering the various views and
comments submitted by all interested parties, hereby RESOLVES, as it is
hereby RESOLVED, to APPROVE and ADOPT, the Rules Governing the
Automatic Cost Adjustment and True-up Mechanisms and Corresponding
Confirmation Process for Distribution Utilities herein attached as Annex “A”^[*] and made an integral part of this Resolution.

This Resolution shall take effect fifteen (15) days following its
publication in a newspaper of general circulation in the Country.

Adopted: 13 July 2009

(SGD.) ZENAIDA G. CRUZ-DUCUT Chairperson
(SGD.) RAUF A. TAN Commissioner	(SGD.) ALEJANDRO Z. BARIN Commissioner
(SGD.) MARIA TERESA A.R. CASTAÑEDA Commissioner	(SGD.) JOSE C.REYES Commissioner

 

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^[*] Text Available at Office of the National Administrative Register, U.P. Law Complex, Diliman, Quezon City