One of the most notable achievements of the Energy Regulatory Commission (ERC), Philippines is the establishment of internationally accepted rate-setting methodologies that promote efficiency among utilities which is the Performance-Based Rate-Setting Methodologies.

PBR employs a performance incentive scheme that encourages cost-cutting and economy of operations through the optimal use of assets as well as efficiency in service delivery that can lower electricity rates in the long term. It provides incentives for distributors to achieve efficiencies in the provision of services by allowing them to retain any savings in the cost of service provision for a period. Its objectives are to attain increased efficiency, improve dependable quality of service, reduce costs, and maintain reasonable rates.

For the transmission business, the ERC sets a revenue cap, for a 5-year regulatory period while for Private Utilities (PUs), the ERC sets a price cap for a 4-year regulatory period. Manila Electric Company (MERALCO), Dagupan Electric Corporation (DECORP), and Cagayan Electric Power and Light Company, Inc. (CEPALCO) are the first private distribution utility entrants to the PBR. By 2011, all private distribution utilities would be under PBR.