The Philippine Rural Electric Cooperatives Association, Inc. (PHILRECA) is one with the Energy Regulatory Commission (ERC) and other energy stakeholders in seeking immediate relief on the persisting high line rental charges.
Held on 02 March, 2026, PHILRECA, in partnership with the Commission, along with the Federation of Rural Electric Cooperatives in Region 8 (FRECOR 8), Independent Electricity Market Operator of the Philippines (IEMOP), and the National Grid Corporation of the Philippines (NGCP), collectively discussed approaches and initiatives to mitigate the effects of high line rental charges under the pricing mechanism of the Wholesale Electricity Spot Market (WESM).
FRECOR 8 Representative and Samar I Electric Cooperative, Inc. (SAMELCO I) General Manager, Atty. Edson G. Piczon emphasized the urgency to review and evaluate the WESM pricing mechanism, which affects consumers in the island of Visayas, particularly Regions VI and VIII.
“Since 2023, there have been approximately five unusual spikes in line rental costs—now referred to as Line Loss and Congestion Costs (LLCC). Three of these incidents exceeded ₱300 million each, all of which were shouldered by the MCOs of Region VIII,” Atty. Piczon remarked.
“Reducing the adverse effects of high line rental charges will not only ease operational strain on ECs but will ultimately benefit concerned MCOs in the countryside.”
Likewise, FRECOR 8 extends its gratitude to the Commission for organizing the consultative meeting and discussion, which creates a collaborative environment aimed at safeguarding the welfare and interests of the MCOs.
“FRECOR VIII expresses its appreciation to the Commission and to Chairman Juan that the proposed measures are already under deliberation and are expected to be issued soon,” he added.
During the discussion, IEMOP proposed the further disaggregation of the Total Net Settlement Amount into three distinct components, namely: (1) Net Settlement Surplus (NSS) attributable to losses, (2) NSS attributable to congestion, and (3) NSS attributable to the System Marginal Price (SMP).
Under the proposal, each NSS component shall be allocated using its own dedicated allocation methodology, consistent with established settlement principles, and calibrated according to the corresponding Locational Marginal Price (LMP) elements.
Such an approach ensures that the allocation of surplus is causally aligned with specific market drivers, losses, congestion, and energy price formation, resulting in enhanced transparency, cost reflectivity, and settlement accuracy within the WESM framework.
For its part, PHILRECA welcomes the ERC’s decisive action in reviewing the proposal, applicable regulatory mechanisms, and streamlining measures to cushion the burden of elevated line rental charges. This initiative proactively demonstrates the Commission’s responsiveness to the long-standing concerns raised by ECs and their respective MCOs about cost pressures that directly affect the affordability and sustainability of electric service.
“The Commission’s pursuit of providing relief to affected MCOs is a welcome development for the rural electrification sector. Reducing the adverse effects of high line rental charges will not only ease operational strain on ECs but will ultimately benefit concerned MCOs in the countryside,” PHILRECA affirmed.
The Association expresses its readiness to continue constructive engagement with the ERC and other stakeholders to ensure that reforms are implemented efficiently and transparently. As the voice of ECs nationwide, PHILRECA remains steadfast in advocating policies that uphold the affordability, reliability, and sustainability of electric service in rural communities.
