In rural Philippines, the delivery of electricity to your home is a monopoly of electric cooperatives, which is supposed to be not-for-profit but enjoys more flexibility than investor-owned utilities. But again, as a monopoly, these cooperatives control the price of electricity.

That is why it is so convoluting to learn that 16 electric cooperatives and two private investor-owned distribution utilities have been found by the Energy Regulatory Commission of systematically overcharging their customers over the years by “ineligible contracts” that resulted in inflated electricity rates that have been charged to customers.

The finding resulted from an ERC investigation released last year. It directed those erring overcharging distribution utilities to “immediately refund all generation rates collected more than the load-weighted average TOU (time-of-use) rates.”

However, the millions of pesos customers owe have yet to be refunded. Pity the customers served by these utilities.

The electric cooperatives that have been caught overcharging by the ERC were:

• AURELCO (Aurora) from January 2018 to April 2023 and January 2019 to February 2020

• CASURECO I (Camarines Sur) from December 2016 to February 2023

• CASURECO II (Camarines Sur) from May 2015 to March 2023 and April 2016 to February 2023

• CENECO (Central Negros) from May 2021 to April 2022 and December 2021 to May 2022

• DASURECO (Davao del Sur) from January 2016 to February 2023

• FICELCO (Catanduanes) from May 2019 to April 2023

• ISECO (Ilocos Sur) from December 2012 to April 2023, May 2014 to December 2016, and March 2019 to April 2023

• ISELCO I (Isabela) from November 2011 to December 2011, January 2012 to October 2013, June 2015 to November 2016, and January 2019 to December 2019

• ISELCO II (Isabela) from March 2019 to February 2023

• NORECO I (Negros Oriental) from January 2017 to February 2018, February 2020 to April 2023, and December 2020 to April 2023

• NORECO II (Negros Oriental) from December 2020 to April 2023 and April 2021 to April 2023

• NUVELCO (Nueva Vizcaya) from November 2012 to September 2013, July 2015 to December 2016, and November 2016 to June 2018

• PANELCO I (Pangasinan) from August 2014 to February 2023

• PELCO III (Pampanga) from January 2013 to January 2023

• SORECO II (Sorsogon) from November 2012 to July 2013 and November 2013 to April 2023

• TARELCO I (Tarlac) from December 2020 to February 2023 and from November 2021 to February 2023.

The private investor-owned distribution utilities were:

•IEC (Ibaan, Batangas) from January 2017 to July 2021

•SFELAPCO (San Fernando, Pampanga) from January 2013 to December 2022.

According to Section 2 Article 2 of ERC Resolution No. 16 series of 2009, “In the case of ineligible supply contracts, generation costs from such contracts shall include the kilowatt-hours about ineligible contracts pegged at the DU’s load weighted average NPC TOU rates or the actual rate as billed by the IPP, whichever is lower.” This means that the much lower NPC TOU rates should be used for contracts not approved by ERC.

As ERC’s directive on the process, according to Section 1, Article 6 of the Guidelines for the Recovery of Cost for the Generation Component of Distribution Utilities’ Rates, “… Before including any new power supply contract costs in their Retail Rates, the Distribution Utility shall file a rate application with the ERC for its approval of such inclusion of power supply contract costs and the ERC shall have approved such rate filing.”

The failure of these utilities to comply with the ERC directive to have the power supply contract costs approved before passing it on to the consumers is a clear disservice to the customers who are already reeling at discovering that the distribution utilities they have been relying on over the years have been abusing their trust and patronage.

Meanwhile, the distribution utilities with the longest violations are SFELAPCO, SORECO II, ISECO, and PELCO III.

PELCO III was especially cited by ERC: “PELCO III is HEREBY WARNED that its continued non-compliance shall compel the Commission to refer the matter to the Department of Justice for further investigation and possible filing of criminal action under Section 463 of the EPIRA.

SO ORDERED.”

While the financial impact on individual customers requires further analysis, the collective overcharging represents a significant concern. The affected utilities are obligated to comply with the ERC’s refund directives. Customers can expect additional information regarding the refund process from their respective utilities.

The ERC’s actions highlight the importance of regulatory oversight and adherence to established procedures within the energy sector.