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Energy Regulatory Commissio Order

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Energy Regulatory Commissio Order Republic of the Philippines ENERGY REGULATORY COMMISSIO San Miguel Avenue, Pasig City IN THE MATTER OF THE APPLICATION FOR APPROVAL OF ADJUSTMENT IN RATES PURSUANT TO THE TARIFF GLIDE PATH (TGP) RULES, WITH PRAYER FOR PROVISIONAL AUTHORITY ERC CASE NO. 2013-172 RC ORDER On August 23, 2013, Misamis Oriental II Electric Service Cooperative, Incorporated (MORESCO II) filed an application for approval of adjustment in rates pursuant to the Tariff Glide Path (TGP) Rules, with prayer for provisional authority. ). In the said application, MORESCO II alleged, among others, that: 1. It is an electric cooperative duly organized and existing under and by virtue of the laws of the Republic' of the Philippines, with principal office at the North Pbblacion, Medina, Misamis Oriental; 2. It is the holder of an exclusive franchise issued by the National Electrification Commissi0r1 (NEC) to operate electric light and power distribution services in the City of Gingoog and the Municipalities of Balingasag, Balingoan, Binuangan Claveria, Kinoguitan, Jasa-an, Lagonglong, Magsaysay, Medina, Salay, Sugbongcogon and Talisayan, all in the Province of Misamis Oriental; ERC Case No. 2013-172 RC ORDER/October 7,2013 Page 2 of 10 3. Sometime in 2009, it filed with the Commission an application for approval of its proposed adjustment in its rates pursuant to the Rules for Setting the Electric Cooperatives' Wheeling Rates (RSEC-WR); 4. In the said application, the Commission granted it provisional authority to implement the following initial tariffs on its Distribution, Supply and Metering (DSM) Charges, among others, to wit: Particulars Units PhP/kW 190.0268 PhP/kWh 0.5143 0.5134 PhP/Customer/Mo. 41.6104 41.6104 PhP/kWh 0.5828 PhP/Meter/Mo. 5.0000 31.1926 31.1926 PhP/kWh 0.3669 5. On May 2, 2011, the Commission promulgated the TGP Rules pursuant to Article VII of the RSEC-WR whereby during the Regulatory Period, the rate of the electric cooperatives (ECs) per group shall be adjusted using the following formula: Tariff x {1+lndex "I" - Efficiency Factor "X" + Performance Incentive "5'1 The Index, "I" shall be an escalation factor to be used in adjusting the rates to reflect the combined impact of inflation and the load growth. There shall be an efficiency factor "X" to account for the operational efficiency of the electric cooperatives in setting their rates. There shall be a performance incentive "S" which shall reward or penalize the electric cooperatives for the above or below standard performance, respectively. The TGP is intended as a cap and the EC may move up to the cap, if it is a positive adjustment. If the cap is lower ERC Case No. 2013-172 RC ORDER/October 7, 2013 Page 3 of 10 than the current average tariff, a reduction may be implemented. 6. The TGP is a rate adjustment mechanism which provides an opportunity for the ECs to adjust their rates once every three (3) years. The rate adjustments may occur at the start of the Fourth Year of the First Regulatory Period and every three (3) years thereafter; 7. Under the TGP, the Regulatory Period is six (6) years for each Entry Group. For the First Entrant Group, the First Regulatory Period is from January 1, 2011 to December 31, 2016. It belongs to the First Entrant Group; 8. Further, under the TGP Rules, the concerned EC shall use the following formula in determining the TGP for the First to Third Years of the Regulatory Period: TGPA = TGPn + TGPn+1 TGPn+2 Where: N = the First Year of the Regulatory Period and succeeding Regulatory Periods Except that for the first two (2) years of the First Regulatory Period, "X" will be equal to zero (0) and thereafter shall not be less than zero (0). The TGP calculated for each of the three (3) years will be summed to determine the possible rate adjustment the starting on the Fourth Year of the current Regulatory Period. 9. Applying the methodology embodied in the TGP Rules, it calculated the values of the "I", "X" and "S" and came up with the following results: TGPA Particulars "I" "5" TGPA "X" (Excluding "5") Year 2010 0.00% 0.00% 1.70% 1.70% 0.00% Year 2011 0.00% 0.00% 1.70% 1.70%) 0.00% Year 2012 2.99% 0.00% 1.90% 4.89% 2.99% Net Results 8.29% 2.99% ERC Case No. 2013-172 RC ORDER/October 7, 2013 Page 4 of 10 10. Applying the above values resulted in adjustments on its DSM Rates, as follows: 10.1 With Performance Incentive US" Customer Type Particulars Units Low Higher Residential Voltage Voltage Distribution Charges: Demand Charge PhP/kW 205.7835 Distribution System Charge PhP/kWh 0.5569 0.5560 Supply Charges: Retail Customer Charge PhP/Customer/Mo. 45.06 45.06 Supply System CharQe PhP/kWh 0.6311 Metering Charges: Retail Customer Charge PhP/Meter/Mo. 5.4145 33.78 33.78 Metering System Charge PhP/kWh 0.3973 10.2 Excluding Performance Incentive US" Customer Type Particulars Units Low Higher Residential Voltage Voltage Distribution Charges: Demand Charge PhP/kW 195.7119 Distribution System Charge PhP/kWh 0.5297 0.5288 Supply CharQes: Retail Customer Charge PhP/Customer/Mo. 42.85 42.85 Supply System CharQe PhP/kWh 0.6002 Metering Charges: Retail Customer CharQe PhP/Meter/Mo. 5.1495 32.12 32.12 Metering System Charge PhP/kWh 0.3779 11. Consequently, it prays that it be allowed to implement either of the above two (2) alternative calculated DSM rates, either provisionally during the pendency of the instant application or permanently by virtue of a final Decision, starting January 2014 and up to the next Regulatory Reset; ERC Case No. 2013-172 RC ORDER/October 7, 2013 Page 5 of 10 12. In support of the foregoing computations, the following documents are attached to the application and made integral parts thereof: Annex Nature of Document Proposed TGP calculations and supporting documents using the prescribed templates: A to A-2 Index "I" Calculation Efficiency Factor "X" Calculation Performance Incentive "S" Calculation B MFSR Sections Band E Billing Determinants Template C (kWh Sales, Number of Customers, kW Demand D Sam Ie Bills er customer t e E Re ional CPI F RFSC/Reinvestment Fund Utilization G Consumer Com laints H Audited Financial Statements 13. Finally, in compliance with the pre-filing requirements for the instant application, the following documents are, likewise, attached to the application and made integral parts thereof: Annex Nature of Document I Affidavit in su ort of the ra er for rovisional authorit Proof of furnishing copies of the application to the J to J-1 Sangguniang Bayan of Medina and the Sangguniang Panla/awi an of Misamis Oriental Publication of the application in a newspaper of general K to K-2 circulation in its franchise area or where it principally o erates with Affidavit of Publication Prayer 14. Thus, it prays that pending evaluation of the instant application or after due notice and hearing, as the case may be, it be allowed to implement either of the following two (2) alternative proposed new rates for its DSM Charges, starting January 2014 and up to December 2016: ERC Case No. 2013-172 RC ORDER/October 7, 2013 Page 6 of 10 14.1 With Performance Incentive "S" Particulars Units PhP/kW 205.7835 PhP/kWh 0.5569 0.5560 PhP/Customer/Mo. 45.06 45.06 PhP/kWh 0.6311 PhP/Meter/Mo. 5.4145 33.78 33.78 PhP/kWh 0.3973 14.2 Excluding Performance Incentive "S" Particulars Units PhP/kW 195.7119 PhP/kWh 0.5297 0.5288 PhP/Customer/Mo. 42.85 42.85 PhP/kWh 0.6002 PhP/Meter/Mo. 5.1495 32.12 32.12 PhP/kWh 0.3779 Finding the said application to be sufficient in form and in substance with the required fees having been paid, the same is hereby set for initial hearing, expository presentation, pre-trial conference and evidentiary hearing on November 14, 2013 (Thursday) at nine o'clock in the morning (9:00 A.M.) at MORESCO II's Main Office, North Poblacion, Medina, Misamis Oriental. MORESCO II is hereby directed to cause the publication of the attached Notice of Public Hearing, at its own expense, twice (2x) for two (2) successive weeks in two (2) newspapers of general circulation in the Philippines, with the date of the last publication to be made not later than ten (10) days before the date of the scheduled initial hearing. It is also directed to inform the member-consumers ERC Case No. 2013-172 RC ORDER/October 7, 2013 Page 7 of 10 within its franchise area, by any other means available and appropriate, of the filing of the instant application, its reasons therefor, and of the scheduled hearings thereon. Let copies of the application, this Order and the attached Notice of Public Hearing be furnished the Office of the Solicitor General (OSG), the Commission on Audit (COA), and the Committees on Energy of both Houses of Congress. They are hereby requested, if they so desire, to send their duly authorized representatives at the scheduled hearings. Likewise, let copies of this Order and the attached Notice of Public Hearing be furnished the Offices of the Mayors of the City and Municipalities within the franchise area of MORESCO II and the Provincial Governor of Misamis Oriental for the appropriate posting thereof on their respective bulletin boards. MORESCO II is hereby directed to furnish all those making requests therefor with copies of the application and its attachments, subject to reimbursement of reasonable photocopying costs.
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