The Energy Regulatory Commission (ERC) unveiled its proposed regulatory framework for rural electric cooperatives (ECs) as it invites the public to comment on the proposed "Classification and Benchmarking Analysis of Philippine Electric Cooperatives" and the "Proposed Methodology for Efficiency Benchmarking of Philippine Electric Cooperatives".
"In line with the objectives of the EPIRA (Electric Power Industry Reform Act), the ERC initiated the development of a new regulatory framework of the ECs that is more responsive to the ECs’ needs. The proposed regulatory framework also encourages reforms in the ECs’ structure and operations for greater efficiency and lower costs," ERC Chairman and CEO Rodolfo B. Albano, Jr. said.
The Classification of ECs is based on principles of: (a) Rationality, which demonstrates the improvement in operational efficiency brought by capital and operational expenditure; (b) Regulatory efficiency, which involves stream-lined methods indicating regulatory compliance; and (c) Simplicity, which seeks to make the utilities’ operations customer-friendly.
The Benchmarking method, on the other hand, is the process of comparing actual performance with an identified standard. As far as standards are concerned, they may be set based on average (mean or median) performance or "best-in-class" performance. The benchmarking is envisioned to assist the ERC in setting expenditure ceilings or targets for the non-power costs of ECs, which will put them squarely on the road to enhance efficiency.
The proposed EC regulatory framework will undergo public hearings on May 3 (for Luzon) and May 4, 2007 (for Visayas and Mindanao). The deadline for the submission of comments is on May 11, 2007 (Friday). "The proposed methodology introduces incentives to allow efficiency gains to be shared between the EC and end-users, while easing the regulatory burden and cutting down the regulatory lag," Chairman Albano added. /MP
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