The Philippine ERC continues to move at warp speed toward restructuring and I give them kudos for a level of transparency that hasn’t been seen in this sector, ever. They are publishing documents and holding public consultations like crazy.

But with all this transparency, one over-arching policy that keeps getting embedded continues to puzzle me - particularly as appled to the upcoming comment period on the Setting of Rates and Subsidies for Missionary Electrification.

That issue –> Retail rates continue to have pass-through provisions for fuel and exchange rate fluctuations (GRAM and ICERA in ERC parlance).

This puts the full risk of these uncertainties directly onto those that are least able to hedge that risk. IPPs and utilities, on the other hand, are in a position to hedge fuel and currency risk. They could then pass along the cost of that hedging to ratepayers, but putting the hedging responsibility itself onto consumers absolutely puzzles me. Except, of course, that it’s in the best interest of the IPPs and utilities to do that.