ERC Establishes Rate-Setting Framework for Off-Grid Transmission Wheeling and System Operation Charges

The Energy Regulatory Commission (ERC) has issued Resolution No. 19, Series of 2026, adopting the Rules for Off-Grid Transmission Wheeling and System Operation Charges. The Rules establish a standardized methodology for determining transmission wheeling, system operation, and metering charges applicable to Small Grid Transmission Network Providers (SGTNPRs), Small Grid System Operators (SGSORs), and Small Grid Metering Services Providers (SGMSPs).

The Rules prescribe the methodology for computing the Annual Revenue Requirement (ARR) of each regulated off-grid function for a regulatory year. The ARR is composed of the Return on Capital, Return of Capital or regulatory depreciation, Operating Expenses (OPEX), and applicable taxes. The Small Grid Transmission Network Provider Rate and Small Grid System Operation Rate are assessed in Philippine pesos per kilowatt (PhP/kW), while the corresponding customer charges are calculated using the customer’s load billing determinant. Metering charges are imposed in Philippine pesos per metering point per month and consist of: (1) a common metering charge applicable to all off-grid transmission customers and (2) a per voltage-level charge based on the voltage level and type of metering installation. These rates and charges apply to Generation Companies (GenCos), Distribution Utilities (DUs), and directly connected customers receiving services within the off-grid system.

The Rules also establish mechanisms for adjusting approved rates when operating circumstances materially change. Rate adjustments may be sought in cases involving force majeure events, interconnection of the Small grid and the Main grid, and significant changes in generation or load growth. In force majeure cases, the regulated off-grid entity may apply to recover prudently incurred and verified incremental costs necessary for the repair, restoration, or replacement of affected assets. Separately, each regulated off-grid entity must annually review any under- or over-recovery and submit a report to the ERC. Where an under- or over-recovery exists, the entity must file a true-up adjustment application for ERC approval.

The Resolution likewise establishes procedural requirements for billing and dispute resolution. Billing statements must be issued within ten (10) days after the close of each billing period. Off-grid transmission customers are given fourteen (14) days to report any billing errors. Billing disputes must first be settled by the parties within thirty (30) days; if unresolved, the dispute must be referred to the ERC. Pending resolution, the regulated off-grid entity must continue providing service, provided that the customer pays all undisputed amounts before their due date.

Customers remain obligated to pay all undisputed amounts. If the customer fails to pay the undisputed amounts, the regulated off-grid entity may notify the customer of its intent to suspend service. The suspension becomes effective five (5) days from the customer’s receipt of the notice.