ERC tightens tax recovery rules for power users

Electricity consumers can expect clearer billing and stronger safeguards against overcharges after the Energy Regulatory Commission (ERC) tightened rules on how distribution utilities (DUs) recover local taxes.

Under Resolution No. 09, Series of 2026, DUs must fully document and justify real property, local franchise, and business tax charges before passing them on—curbing improper or excessive collections.

ERC Chairperson and CEO Francis Saturnino C. Juan said Wednesday the revised framework balances consumer protection with the financial viability of utilities.

“These revised rules ensure that consumers are charged only for taxes that are valid, reasonable, and properly verified.

By requiring transparency and strict monitoring, we are empowering consumers to better understand their electricity bills while ensuring that distribution utilities remain financially viable,” Juan said.

Consumers will see these charges itemized as RPT, LFT, and BT in their electricity bills, with mandatory refunds for any over-collection. Any shortfall may only be recovered in future billings with ERC approval.

For distribution utilities, the rules tighten cost recovery: only taxes that are actually paid, properly documented, and collected within a set period may be passed on, subject to ERC validation.

Local government units, meanwhile, benefit from a more structured and enforceable system for tax recovery, helping ensure legitimate taxes are collected without dispute.

The rules also limit the recovery of past tax liabilities. Arrears—excluding penalties and interest—may only be passed on under strict conditions and, for electric cooperatives, require approval from member-consumers.

The ERC said the resolution followed consultations with distribution utilities, consumer groups, and industry associations, reinforcing its push for transparency and accountability in electricity pricing.