To address regulatory lag adversely affecting cash flows of electric cooperatives, the Energy Regulatory Commission (ERC) finally laid down the rules that shall govern tariff-setting for this segment of the power industry.

In promulgating Resolution No. 20, series of 2009 which sets the rules in setting the wheeling rates of ECs, the regulatory body justified that “the current rates of ECs are no longer responsive since the costs of providing electric service to the consumers increased significantly from the time their rates were determined by the Commission based on 2000 test year.”

The proposed wheeling rates rules have been based on ERC mandate to find viable alternative rate-setting methodology that shall address distortions in the existing scheme of tariff determination for power utilities.

With the new tariff setting rules, the process of regulatory approvals is also seen eased; unlike in the old set-up wherein it takes too long even for just one tariff application to be resolved.

For instance, the regulatory body indicated that if the current tariff determination stays and all the 120 electric coops will file at the same time, it may take ERC 10 years to resolve all of these applications.