The Energy Regulatory Commission (ERC) has deferred the filing deadline for the applications of Luzon-based distribution utilities (DUs) for their cost recoveries.

The power distribution firms in the area were initially given October 30, 2009 deadline for the filing of their consolidated over- and under-recoveries from December 2008, but the regulator considered their preparation timeframe and the disturbance they have faced because of the successive strike of typhoons.

Under a resolution issued by the commission, it stated that the Luzon DUs’ filing of their consolidated cost recoveries “shall be deferred until further notice.”

The regulatory body further noted that some DUs “affected (by the typhoons) already requested that the deadline for their filing be extended.”

In allowing the deferment, the ERC justified that “the period within which the Luzon DUs may prepare for the aforesaid filing may be too short given the calamities that have recently visited the country.”

The regulatory policy allowing the DUs to recoup previous under-recoveries or filing for pass on of over-recoveries is a precursor move to henceforward enforcement of automatic cost adjustments for various cost items in the electricity rates.

Apart from the calculation of over- or under-recoveries in the generation rate, the policy also integrates formula in adjustments for true-up mechanisms which may cover costs relating to lifeline rate or inter-class subsidies, system loss and transmission rates.

True-up mechanism would refer to accounting practice that uses adjustments to rates and billings to ensure that customers are not over-billed through charges being passed on by utilities. Regulatory policy allows power distribution utilities to recoup costs automatically, but these are subject to reconfirmation process by the ERC to ascertain that they are passing on ‘just and accurate’ amount and prudently-incurred costs to consumers.