ERC urged to make power firms more consumer-oriented

MANILA, Philippines - The Energy Regulatory Commission (ERC) has been urged by a noted industry analyst and University of the Philippine professor to ensure power industry players remain oriented toward pro-consumerism in their operational and marketing activities.

Dr. Prospero de Vera III of the UP National College of Public Administration and Governance said that, as regulator, the ERC must make sure more power players such as distribution utilities (DUs) must be governed by ERC’s new regulatory regime called the performance based regulation (PBR).

“Since ERC subjected a number of DUs and our national transmission company under PBR in April 2009, many of them have “re-invented themselves to become consumer-driven organizations,” said De Vera.

De Vera identified one feature of this regulation scheme, the guaranteed service levels system (GSLs), which have “changed the behavior if not the attitude of power firms to be on their toes in keeping their customers satisfied and reducing customer complaints.”

The ERC installed the GSL system that rewards or penalizes any firm that falls short of its “threshold levels” on specific types of pro-consumer actions.

De Vera illustrated the behavior-changing GSL system by citing specific target actions or standards for a distribution utility firm. For example, if a customer experiences a total aggregate of 35 hours in one regulatory year, the DU will pay each customer P120. On the other hand, if a household suffered brownouts 25 times or more in one year, the DU will pay the customer P150.

ERC has also set a standard for the response time of a DU in restoring electricity during brownouts. “If such restoration has taken more than 15 hours in one instance of a brownout, the DU will pay P120.

The ERC also made sure that the DU is not remiss in its obligation to keep its word to applicants for new power connection. If the DU is one day late in “connecting” the household, the DU pays P47 per day of delay, up to a maximum of P235.

“This ERC-directed standard has steadily evolved a pro-consumer culture among players in the electric power industry,” stressed De Vera, adding that this kind of regulation has finally changed the behavioral pattern of power companies whose mindset has changed in favor of the consumer.

De Vera noted that almost six months into the application of the PBR, the country’s largest distribution utility, Meralco, paid more than a P100 million to its customers in the form of fines and penalties prescribed by the GSL system. “It is only under PBR that a penalty and fine system is being imposed. It has thus strengthened consumer welfare and protection, which is a very important component in national development,” revealed De Vera.