Starting in a couple of weeks, the ERC will be holding regional public consultations on the adoption of an alternative regulatory framework for electric cooperatives. You can find the schedule and a link to the draft Issues Paper at the ERC site here.
Update: The ERC links are dead. Here’s the Issues Paper. Part 1. Part 2.
I’m slogging through the Issues Paper at the moment.
I’m only seven pages into a thirty-five page document, but so far I’d like to take issue with the first paragraph in Section 3.6 that begins:
The reinvestment fund appears to be the single revenue requirement component that is exclusively provided to the ECs. There is no such counterpart in the Revenue Requirement derived for the private distribution utilities under a rate of return regulation…
But, as I said in an August 2000 white paper I published with the wonky title “A Theoretical Basis for Potential Price Reductions In Transition to Private Ownership of Philippine Electric Generation”:
The Energy Regulatory Board (ERB) sets electric prices in the Philippines using a return on rate base methodology. In this methodology, consumers pay an annual depreciation (the return of capital) plus a return on rate base (return on capital). Rate base is essentially the un-recovered (that is, not yet recovered through depreciation) investment. However, the Philippines employs a concept sometimes referred to as price level depreciation. In this method, the rate base, instead of being tracked at original cost, is revalued each year to current price levels. It is a revalued rate base.
Price level accounting is commonly employed by electric utilities in developing countries, particularly where there are relatively high rates of local currency inflation. Under price level accounting, the utility will recover, through depreciation, an amount not equal to its original investment but rather an amount equal to the original investment adjusted for inflation. Part of the rationale for this is that it provides enough funds to replace the asset after it is retired.
So there. There is the counterpart, IMHO.
4 Comments
We wanted to determine which area/province has the low electric rates because we intend to set up a small footwear factory? Please advise where can we get information.
Leah, well that’s interesting. You’ll probably want to look at the Commercial Rates (as opposed to Residential) and it may depend on the size of your electricity usage.
However, I think I have a file that has all the “average” rates for each of the electric cooperatives for 2006. You can scan through and find the lower ones. Send me your email. But that file won’t include the private utilities that serve areas like Davao City, Cebu City, Cagayan de Oro, Tarlac and several others.
The lowest rates overall will generally be in Mindanao. Are you looking at Luzon specifically?
Hi Nick,
Thanks for your reply.
Would really want to get the rates and specific province/area in Mindanao? What is the average rate?
Also, getting the information for Luzon will be appreciated.
Leah
Leah, go to my Wiki page here and download the Financial & Statistical Summary excel worksheet file. One of the far right columns is “Average System Rate” – which is the average price of power from the EC. It’s just an indicator of price levels – but it’ll give you a place to start shopping from.
If you have problems with that file or need it in another format like pdf, go to the list of data files here, find the “2006 fin and stat summary” and download it in whatever format you want.