VECO Unbundled Bill FAQ

1.) What is Generation Charge?
2.) What is Transmission Charge?
3.) What is Systems Loss Charge?
4.) What is Distribution Charge?
5.) What is Supply/Customer Charge?
6.) What is Metering Charge?
7.) What is Lifeline Subsidy Discount?
8.) What is Lifeline Rate Subsidy?
9.) What is Currency Exchange Rate Adjustment?
10.) What is Power Act Reduction?
11.) What is National Franchise Tax?
12.) What is Local Franchise Tax?
13.) What is Universal Charge?
14.) What is Local Franchise Tax Recovery?
15.) What is Surcharge?

Generation Charge
This is the cost of electricity supply generated and sold to VECO from the different power plants owned by Independent Power Producers (IPPs).

Transmission Charge
It is the cost of delivering electricity from the power suppliers to the receiving point/distribution of VECO.

Systems Loss Charge
It is the electricity used up (lost) in the distribution system for delivering power from VECO's receiving point to the consumer's metering point. This represents both technical and non-technical system losses. The Energy Regulatory Commission has set this at 8.5% for private distribution utilities as provided by Republic Act (R.A.) 7832.

Distribution Charge
It is the cost of distributing electricity from VECO's receiving point to its customers.

Customer Charge
A. Supply/Customer Charge
It is the cost of billing, collection and various customer-related services.

B. Metering Charge
It is the cost associated with measuring the amount fo energy consumed which include meter, meter-installations, accessories and meter reading.

Lifeline Subsidy Discount
RA 9136 provides that inter-class subsidies shall be removed, except the lifeline rates applicable to marginalized or low income residential electricity users. VECO's lifeline is set at 100 kWh. This discount is applicable only to the generation, transmission, distribution, supply, metering and the systems loss charges.

The Energy Regulatory Commission has set VECO's lifeline rate subsidy as follows:

Kwh ConsumptionDiscount*
20 & below

*Discount on Generation, Transmission, Distribution, Systems Loss Charge, Supply Charge, Metering Charge

Lifeline Rate Subsidy
This will cover the aid (subsidy) given to marginalized (Lifeline Rate) customers. The Uniform Retail Rate structure specified in R.A. 9136 makes it subsidy-free. It means that inter-class subsidies currently enjoyed under the existing rate structure shall be removed.

Currency Exchange Rate Adjustment
This is the recovery of the increase in principal payments of foreign denominated loans that may be brought about by the peso devaluation.

Power Act Reduction
Upon effectivity of R.A. 9136, NPC is mandated to reduce its rates for residential customers by 30 centavos per kilowatt-hour. since VECO buys only about 50% of its power needs from NPC, its Power Act Reduction would amount to more or less 15 centavos only. VECO has three Independent Power Producers - Toledo Power Corporation (TPC), Cebu Private Power Corporation (CPPC) and East Asia Utilities Corporation.

National Franchise Tax
Refers to 2% of gross revenue remitted to the national government as national franchise tax.

Local Franchise Tax
A range of 0.5% to 0.75% of gross revenue goes to local government as local franchise tax.

Universal Charge
It is a non-bypassable charge determined, fixed and approved by the Energy Regulatory Commission to be imposed on all electricity end-users. This is remitted to the Power Sector Assets and Liabilities Management (PSALM), owned and controlled by the government. This would include:

  1. Stranded costs/contracts of NPC. Payment for the NPC debts after sale of its generating assets in excess of the amount assumed by the National Government.
  2. Missionary Electrification. R.A. 9136 mandates NPC to carry on with its missionary function of providing electricity to non-viable, far-flung areas in the countryside even after its privatization.
  3. Environmental Charge. The amount of P0.0025 per kilowatt hour shall be collected from all end users. This environmental fund will be managed by NPC, to be used solely for watershed rehabilitation and management.
  4. Tax Equalization. It is the equalization of the taxes and royalties applied to indigenous or renewable source of energy vis-a-vis imported energy fuels.
  5. Stranded Costs/Contracts of Utilities. This refers to the distribution utilities' losses in value of generating assets and contracts approved by the ERB before December 31, 2000 as a consequence of industry deregulation.
This amount represents two percent (2%) of previous unpaid bills.

Local Franchise Tax Recovery

This is the computed amount to recover the local franchise tax imposed by the local government in your city or municipality from 1994-2000, which was not passed on the consumers.