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Meralco seeks ERC approval to refund P13.89 billion in over-recoveries

MANILA Electric Co. (Meralco) has asked the Energy Regulatory Commission (ERC) for approval to refund P13.89 billion worth of over-recoveries based on its actual weighted average tariff charges (AWAT) from July 2015 to November 2020, according to a regulatory filing.

In an order dated Jan. 11, the ERC announced the schedule of hearing, which would be held in three separate events on Zoom starting Feb. 16.

Meralco applied for the approval of its final refund scheme last month, based on the calculation of its AWAT compared to the ERC’s approved interim average rate (IAR).

“To fully resolve these issues, (Meralco) proposes to true-up its AWAT as against its approved IAR for the period from July 2015 to November 2020. The difference between the AWAT and IAR will be the amount to be refunded to the customers,” Meralco told the ERC in its application. Meralco proposed to make the refund over a two-year period or until the amount is fully refunded.

The average refund rate was placed at P0.1528 per kilowatt hour (kWh), and would be allocated among the different consumer classes.

Meralco Head of Utility Economics Lawrence S. Fernandez said AWAT was based on Meralco’s distribution charges, which increased during the pandemic.

“During the pandemic, there were reduced operations and closures of business establishments. Residential consumption went up, and non-residential consumption decreased. So the distribution rate of Meralco differed from the interim average rate,” Mr. Fernandez said in a phone interview on Friday.

He also noted that distribution charges during the second half of 2015 went up.

“So the difference, our AWAT or rate of average tariff and the (IAR)…we propose to refund that to our customers,” he said.
Mr. Fernandez added the utility firm was following the IAR, which the ERC approved during the third regulatory period covering July 1, 2011 to June 30, 2015.

“What we’re implementing right now is the interim rate which the ERC approved. They approved a lower rate than what we filed and it was equivalent to an average of P1.381 (per kWh), and it was implemented beginning July 2015,” he said.

Mr. Fernandez said the ERC was supposed to approve the rules for the performance-based regulation of privately-owned distribution utilities from July 2015 onwards but it was not able to do so.

“The reset (of rules) is supposed to approve a rate and incorporate an annual verification mechanism. Because there was no rate….our AWAT filing sort of became like our annual verification. We compared it against the approved IAR and proposed to implement the difference as a refund,” he said.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., which has interest in BusinessWorld through the Philippine Star Group, which it controls. — Angelica Y. Yang

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