ERC approves lower distribution rates for Cepalco

Following the Energy Regulatory Commission (ERC)’s approval of a lower revenue cap for Manila Electric Co., the agency on Wednesday said it has approved lower distribution rates for Mindanao-based Cagayan Electric Power and Light Co. (Cepalco). Next July, Cepalco customers will enjoy a lower maximum average price (MAP) for 2012 (July 2011 to June 2012) at P1.2491 per kilowatt-hour (kWh) compared to the 2011 MAP of P1.5705 per kWh. The ERC approved on June 6 its final determination of the company’s revenue application for the Third Regulatory Period under the performance the based regulation (PBR). Cepalco’s application was filed on June 18, 2011 and covers the 2012 to 2015 regulatory years. With the final determination approved, Cepalco can translate the approved MAP into rate schedules for their customers and file their application before the ERC for approval. “The decreasing price trend on the third regulatory period for Cepalco is a good signal that the benefit of adopting the PBR rate-setting methodology is now taking effect," ERC chairperson Zenaida Cruz-Ducut said. According to the ERC, it disapproved certain projects under Cepalco’s proposed capital expenditures since they were unnecessary in their operations and were not based on international market prices. These budget cuts and system efficiencies reduced Cepalco’s return on capital component of the approved revenues compared to its proposal. “… The PBR has put pressure on the utilities to improve their systems and be more efficient in their operations," Ducut added, saying, “We are optimistic that the consumers will continue to enjoy the benefit of the PBR in terms of quality and reliable service and more affordable electricity rates." — BC/VS, GMA News