InfraWatch PH has cautioned the Energy Regulatory Commission (ERC) that the proposed abolition of bill deposits for residential electricity consumers could unintentionally raise electricity rates and destabilize distribution utilities if implemented without safeguards.
In a letter to ERC Chairman Hon. Francis Saturnino C. Juan, the think tank noted that removing bill deposits disrupts regulatory predictability under the Performance-Based Regulation (PBR) framework and introduces costs that utilities would likely recover through higher rates.
Bill deposits provide low-cost working capital and a buffer against credit risk. Abrupt removal could force utilities to borrow commercially, raise bad debt provisions, and increase cost-of-capital assumptions—factors directly affecting electricity rates.
“The result is mathematically certain: rate hikes will surpass the one-time refunds given to consumers, undermining regulatory credibility,” InfraWatch PH Convenor Raymond E. Kahiwat said.
The group highlighted that smaller distribution utilities and rural electric cooperatives would bear the brunt, serving dispersed communities with thin margins. They also noted the absence of a coordinated framework to reconcile consumer protections, such as grace periods and disconnection suspensions under the Magna Carta for Residential Electricity Consumers.
InfraWatch PH recommended publishing a transparent regulatory impact analysis, aligning any policy change with the PBR rate-reset timeline, and implementing transition safeguards for smaller utilities. The ERC should also strengthen coordination with disconnection rules and define alternatives to bill deposits.
The think tank emphasized it does not oppose abolishing deposits in principle but called for a careful, data-driven, and coordinated approach to avoid long-term consumer harm.
“Immediate relief should not come at the expense of sector stability, regulatory predictability, and future infrastructure investment,” Kahiwat concluded.