A RESOLUTION ADOPTING THE RULES FOR PREPAID RETAIL ELECTRIC SERVICE USING A PREPAID METERING SYSTEM

WHEREAS, Section 43 (h) of Republic Act No. 9136 (R.A. 9136) vests
upon the Energy Regulatory Commission (ERC) the authority to review and
approve any changes on the terms and conditions of service of the
National Transmission Corporation (TRANSCO) or any Distribution Utility
(DU);

WHEREAS, Section 4 (o), Rule 3 of the Implementing Rules and
Regulations (IRR) of R.A. 9136 empowers the ERC to issue such other
rules that are essential in the discharge of its functions as an
independent quasi-judicial body;

WHEREAS, the ERC proposed a set of Rules for Prepaid Retail Electric Service Using a Prepaid Metering System;

WHEREAS, the said Rules provide residential customers a choice for
energy management strategies, establish rules and technical standards
for Prepaid Retail Electric Service using a prepaid metering system,
enhance the operational efficiency of the DU, and promote demand side
management;

WHEREAS, the said Rules were posted on the ERC website and published
in a newspaper of general circulation to solicit comments from
interested stakeholders;

WHEREAS, public consultations were conducted in Cebu City and in Manila on August 26, 2008 and September 2, 2008, respectively;

WHEREAS, the first (1^st) and second (2^nd) revisions of the Rules
incorporating the comments of the stakeholders were posted on the ERC
website on November 10, 2008 and May 4, 2009, respectively;

NOW THEREFORE, after careful deliberation on the issues relative
thereto, the ERC RESOLVED, as it hereby RESOLVES, to APPROVE and ADOPT
the “Rules for Prepaid Retail Electric Service Using a Prepaid Metering
System”, herein attached as Annex “A” and made an integral part of this
Resolution.

All rules and guidelines, or any portion thereof, issued by the ERC,
not consistent with these Rules are hereby repealed or modified
accordingly. Rules and guidelines not affected shall remain in effect and applicable to Prepaid Retail Electric Service customers.

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

Let copies of this Resolution be furnished the University of the
Philippines Law Center-Office of the National Administrative Register
(UPLC-ONAR) and all entities engaged in the electricity metering.

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

Attachment

RULES FOR PREPAID RETAIL ELECTRIC SERVICE USING A PREPAID METERING SYSTEM

ERC CASE NO. 2008-010 RM

Pursuant to Section 43 (h) of Republic Act No. 9136 and Section 4
(o), Rule 3 of its Implementing Rules and Regulations (IRR), the Energy
Regulatory Commission (ERC) hereby adopts and promulgates the following
Rules for Prepaid Retail Electric Service Using a Prepaid Metering
System.

ARTICLE I
GENERAL PROVISIONS

1.1 Objectives

These Rules shall have the following objectives:

1.1.1 Provide residential customers a choice for energy management strategies;
1.1.2 Establish technical standards for Prepaid Retail Electric Service using a prepaid metering system;
1.1.3 Establish rules for Prepaid Retail Electric Service using a
prepaid metering system in addition to all other applicable existing customer protection rules;
1.1.4 Enhance the operational efficiency of the DU; and
1.1.5 Promote demand side management.

1.2 Scope

These Rules shall apply to the following:

1.2.1 A Distribution Utility that offers prepaid service to its
residential customers using a prepaid metering system as an alternative
to its existing postpaid service; and

1.2.2 Residential customers availing of prepaid electric service.

1.3 Definition of Terms

Act – Republic Act No 9136, otherwise known as the “Electric Power Industry Reform Act of 2001”.

Distribution Utility (DU) – An electric
cooperative, private corporation, government- owned utility or existing
local government unit which has an exclusive franchise to operate a
distribution system in accordance with its franchise and the Act.

Energy Regulatory Commission (ERC) – The independent and quasi-judicial regulatory agency created under Section 38 of the Act.

Prepaid Meter – An electric meter that has the
capability to load the purchased energy, to display real time
information on how the load is being consumed, and to give a warning
that the load is close to zero providing positive buffer before
electricity is automatically disconnected.

Prepaid Retail Electric Service (PRES) – An
electric service using a prepaid metering system designed to allow a
residential customer to purchase credit and then use electricity until
such time as the credit is exhausted.

Capitalized terms not otherwise defined herein shall have the meaning ascribed to them under Republic Act No. 9136

ARTICLE II
REQUIREMENTS FOR PREPAID RETAIL ELECTRIC SERVICE USING PREPAID METERING SYSTEM

2.1 Application for Approval to Offer Prepaid Retail Electric Service

A DU shall file with the ERC for approval an application to provide
PRES using a prepaid metering system prior to offering such services
to residential customers.

Each applicant shall be required to furnish the following information:

2.1.1 Its legal name and business address:
2.1.2 Written description of technical specifications of its prepaid metering system;
2.1.3 The number of years of summarized record of electric charges that the prepaid metering system can produce;
2.1.4 The type of prepaid meter to be used with a certification that
it meets the minimum requirements specified in these Rules;
2.1.5 The manner by which energy is purchased and credited on the prepaid meter;
2.1.6 The terms and conditions of the service to the residential customer;
2.1.7 The manner by which to recover the cost of the prepaid meter and metering system;
2.1.8 Implementation of the lifeline rate;
2.1.9 Sample printed receipt or confirmation format;
2.1.10 Location and manner of prepaid transaction;
2.1.11 The procedure for converting from post-paid to pre-paid service, and vice versa.
This shall include the refund and payment of bill deposit;
2.1.12 The target date of implementation; and
2.1.13 Program on how to inform the customers about the PRES.

2.2 Prepaid Meter and Metering System

The prepaid meter should be certified by the International
Electrotechnical Commission (IEC) or American National Standards
Institute (ANSI) that it complies with their standards.

The prepaid meter should also have the capability to communicate to
the customer the current balance, time and date; to display the
customer’s previous thirty (30) day-period consumption and the number of
days into the current thirty (30) day-period, followed by the
consumption in KWh; and to warn the residential customer before the
remaining credit level goes below the threshold (in Pesos and equivalent
kWh) as may be agreed upon by the residential customer and the DU.

A DU may use any prepaid metering system technology except one that
transfers token data using a disposable magnetic stripe card.

2.3 Accuracy Requirements of Prepaid Meter

All prepaid meters should have an average accuracy of as close as
possible to the condition of zero error before they are placed in
service. The tolerance limit of plus or minus one half percent ( +0.5%)
is fixed to allow the necessary variations.

The average error of plus or minus two percent ( +2%) is fixed as
the allowable tolerance for meters in service; Provided, that the error
at any test load points (Light load and Full load) does not exceed plus
or minus three percent ( +3%).

The prepaid meter shall be subject to ERC testing and certification.

The ERC seal attached to the meter is a warranty (1) that the
prepaid meter is an acceptable or accepted type, and (2) that it operates within the allowable limits of tolerance.

2.4 Installation Location of Prepaid Meters

Prepaid meters may be installed inside or outside the house of a
residential customer, Provided, that either way, the residential
customer shall be provided with a mechanism or device to be used in
monitoring and managing the rate at which energy is being consumed and
in receiving warning when credit drops to the agreed threshold.

2.5 Cost of Prepaid Meters and Metering System

Customers shall not be made to advance the cost of or to purchase
the prepaid meter. Prepaid meter deposits shall not be collected by the
DUs from their customers.

2.6 Prepaid Transaction

The DU should allow the purchase of electric energy credit in reasonably small increments.

Unless the DU applies for and the ERC approves a different tariff
for prepaid meters, including the application of discounts, if any, the
rates to be applied in any prepaid transaction should be based on the
effective postpaid retail rate current at the time of purchase;
Provided, however, that the DU shall continue to charge the lifeline
rate to residential customers whose consumptions during a particular
month do not exceed the approved lifeline cap.

For purposes of this section, the word “month” is hereby defined to
the corresponding time interval for which the meters of the DU’s
postpaid customers are read for purposes of billing.

2.7 Printed Receipt or Confirmation

Every time a residential customer makes a payment, the DU shall
provide a receipt or written confirmation of payment that includes the
following:

2.7.1 Name of Distribution Utility;
2.7.2 Receipt Number;
2.7.3 Date and time of purchase;
2.7.4 Meter identification (name of customer, meter and service identification numbers, etc.);
2.7.5 Amount of electricity energy credit (in kilowatt-hours and in pesos);
2.7.6 Tariff charge; and
2.7.7 The number of purchase transactions made in the same month

2.8 Easy Access to the Purchase of Electric Energy

The DU offering PRES using a pre-paid metering system shall allow
reasonable means by which the residential customer shall have easy
access to the purchase of electric energy credit for twenty four (24)
hours to ensure continuous service.

2.9 Summary of Electric Charges

A DU shall keep for each prepaid customer a record necessary to
produce a summary of purchases of electric energy credit for at least
the preceding two (2) years.

A DU shall, within five (5) business days from receipt of a
customer’s request, issue a summary of purchases of electric energy
credit and the corresponding charges which should include dates and
amounts of payments made during the period covered by the summary.

2.10 Refund and Payment of Bill Deposit of Postpaid Service Customers

The DU shall refund the customer bill deposit required for postpaid
service, including the interest earned based on the ERC approved
interest rate, to the residential customer who opts to apply for PRES,
net of outstanding obligations.

Should a residential customer under a PRES decide to revert to
postpaid service, a bill deposit equivalent to the average monthly
purchase for the past six (6) months has to be paid by the said customer
prior to the reconnection to a postpaid service.

ARTICLE III
ENTRY AND RETENTION

Subject to the availability of a DU’s prepaid electric service infrastructure:

3.1 Customers have the option to apply for a prepaid retail electric service on a voluntary basis.

3.2 Customers should be allowed to avail of the prepaid service
on a trial basis for a period of six (6) months to give them the
opportunity to assess the impact of using the prepaid service.

3.3 After the six (6) months trial period, the customer may:

3.3.1 Enter into a prepaid service contract with the DU with a retention period of twenty four (24) months, or
3.3.2 Revert to being a postpaid customer

3.4 Customers who have already been connected under PRES for at
least twenty four (24) months have the option to revert to the
traditional postpaid electric service after payment of a bill deposit as
provided under Section 2.10 of Article II of these Rules. On the other
hand, customers who reverted to being postpaid customers after availing
of the six (6) months trial period may still avail of the prepaid
service subject to the retention period of at least twenty four (24)
months.

3.5 Customers who have expressed their inability to pay existing
bills under a postpaid service shall be allowed to apply for a PRES
using a prepaid metering system through a scheme agreed upon with DU for
the settlement of the unpaid bills.

3.6 Customers who have been found guilty of illegal use of
electricity by final judgment by regular courts or administrative
agencies may be required by the DU to avail of the PRES using a prepaid
metering system.

3.7 Customers who were required to avail of the prepaid service
as provided under Sections 3.5 and 3.6 may revert to traditional
postpaid service subject to the DU’s approval

ARTICLE IV
REPORTORIAL REQUIREMENTS

4.1 Each DU offering PRES using prepaid metering system shall file
a monthly report to the ERC containing the following information:

4.1.1 Total Kwh sales and revenues derived from PRES during the period;
4.1.2 The number of customers who have availed of lifeline rate
during the period and the total sales revenue derived from them; and
4.1.3 The effective rate applied during the period and the corresponding unbundled charges.

ARTICLE V

MISCELLANEOUS PROVISIONS

5.1 Applications for approval to offer PRES that require new rate
schedule shall comply with the regulatory filing requirements for a rate
case.

5.2 The DU shall either provide a visual display or post a printed itemization of t he monthly unbundled charges in all its vending or
collection offices, which shall also be furnished to the residential
customer, if requested.

ARTICLE VI
FINES AND PENALTIES

6.1 Violation of any provisions of these Rules shall be subject to
the imposition of fines and penalties in accordance with the Guidelines
to Govern the Imposition of Administrative Sanctions in the Form of
Fines and Penalties pursuant to Section 46 of the Act, as amended.

ARTICLE VII
FINAL PROVISIONS

7.1 Exception Clause

Where good reason appears, the ERC may allow an exception from any
provision of these Rules, if such exception is found to be in the public
interest and is not contrary to law or any pertinent rules and
regulations.

7.2 Separability Clause

If for any reason, any part or section of these Rules is declared
unconstitutional or invalid, the parts or section hereof which are not affected thereby shall continue to be in full force and effect, unless
such declaration would render the whole rules unenforceable or
non-implementable.

7.3 Applicability and Repealing Clause

All rules and guidelines, or portions thereof, issued by the ERC,
not consistent with these Rules are hereby repealed or modified
accordingly. Rules and guidelines not affected shall remain in effect
and applicable to PRES customers.

7.4 Effectivity

These Rules shall take effect fifteen (15) days following its publication in a newspaper of general circulation.

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. CAS TAÑEDA Commissioner	(SGD.) JOSE C.REYES Commissioner