Section 25 of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), provides that: “The retail rates charged by distribution utilities for the supply of electricity in their captive market shall be subject to regulation by ERC based on the principle of full recovery of prudent and reasonable economic costs incurred, or such other principles that will promote efficiency as may be determined by the ERC. Every distribution utility shall identify and segregate in its bills to end-users the components of the retail rate, as defined in this Act”.
The unbundling of rates is the breaking down of the specific components of providing electric service in the electricity bill to make the pricing of electricity more transparent and understandable to electricity consumers. The electric services as identified in the said Act refer to Generation, Transmission, Distribution and Supply.
BREAKDOWN OF GENERATION CHARGE
This is in compliance with ERC Resolution No. 5, Series of 2007, which entitled “Resolution Directing all Distribution Utilities to Post in their Respective Websites the Breakdown of their Generation Charges, Including But Not Limited to their Sources.”
With this, the electricity consumers will be able to know the components of computing the generation charge of the distribution utility.
Generation Charge refers to the cost of power generated and sold to the distribution utility by the National Power Corporation (NPC) as well as the Independent Power Producers (IPPs) and the distribution utility-owned generation facility.