The Energy Regulatory Commission (ERC) is laying down revised rules on recovery of costs pertaining to capital projects implemented by electric cooperatives.

The regulatory body has been soliciting comments and inputs on its proposed Rules amendments from affected stakeholders, with submissions set on or before December 7 this year.

In the draft rules, the ERC prescribed planning periods for load growth depending on capital projects that the ECs would embark on.

In particular, the regulator proposed a 15-year planning horizon for high-voltage lines or sub-transmission lines; substations including transformers, primary distribution circuits and points of connection to a transmission network.

For substation transformers, the proposed planning period shall stretch for 10 years; while medium-voltage to low-voltage distribution and other network assets must be for five years.

Regulated ECs are directed to submit their proposed five-year capital expenditure (capex) program based on the groupings and schedule from March 2010 to January 2011 as prescribed by the ERC.

“While it is prudent to install assets with some surplus capacity to cater to future growth in demand, it is not economically efficient to install assets where the capacity is so large that it would not be fully-utilized at the end of the assets’ economic life,” the regulator noted.

The ERC opined that “the appropriate span of the planning period” is a function of factors, namely: the anticipated load levels at the end of the planning period; forecasted growth rate of system or its major portions; the age of the electrical supply facilities; and the validity of future economic factors such as inflation rate.”

The type of capital projects that must be implemented, according to the regulator, are facilities intended for safety; capacity to meet customer requirements; power quality; rural electrification and other projects with funding subsidy; reliability improvements and system loss reduction above performance standards.