Meralco Plans ₱19B Refund, Critics Call It Insufficient
- February 6, 2025
The Manila Electric Company (Meralco) is requesting approval for a P19-billion refund due to overcharges from July 2022 to December 2024. Meralco Utility Economics Head Larry Fernandez said the company has already announced the refund in newspapers.
The reimbursement, referred to as the AWAT (Actual Weighted Average Tariff) refund, is based on excess charges beyond approved rates. If approved, it will be spread over three years and credited to customers’ bills.
On average, all customers will receive a refund of P0.11 per kilowatt-hour (kWh) over three years, while residential customers will get a higher refund of P0.19 per kWh.
Energy Regulatory Commission (ERC) Chairperson Monalisa Dimalanta confirmed that Meralco is in the pre-filing stage, working with the agency’s legal team. However, Dimalanta stated that the P19-billion amount could change if the commission revises it after a thorough review by its experts.
(Also read: DOE: Rising Electricity Prices Could Have Been Avoided)
A change in ERC’s decision
ERC has reversed its earlier decision allowing Meralco to skip the fifth regulatory reset of its distribution rate for 2022-2026. A regulatory reset is a periodic review that adjusts electricity rates based on costs and market conditions.
Dimalanta stated that the decision was made by the commissioners under then-Officer-in-Charge Jesse Hermogenes T. Andres while she was under preventive suspension. She resumed her duties on October 31, 2024.
Senator Sherwin Gatchalian, vice chair of the Senate Committee on Energy, warned that without a rate reset, Meralco’s charges might not reflect current market conditions, potentially raising costs for consumers and businesses.
“As consumers, we are expressing our opposition to the ERC’s decision to forego the 5th regulatory reset of Meralco’s distribution rate. The rate must go through the resetting process,” he said.
Critics: Refunds should be more than P19B
On January 22, Senate Deputy Minority Leader Risa Hontiveros stated that Meralco must refund an estimated PHP100 billion in overcharges to consumers before Congress renews its legislative franchise.
In her recent interpellation on Meralco’s franchise renewal, Hontiveros called for a Senate investigation into the company’s pricing practices. She accused Meralco of artificially raising electricity prices by employing tactics such as applying an inflated weighted average cost of capital (WACC), exaggerating its regulatory asset base, and charging consumers for inflation twice since 2012.
“As the country’s largest distribution utility, Meralco should be working with the government to provide affordable, reliable electricity – not violating regulations in pursuit of greater profit,” she argued.
Former ERC Commissioner Alfredo Non also estimated that Meralco owes over ₱100 billion in refunds due to overcharges since 2015. While the ERC ruled on the matter, Non challenged the decision in court, where the case remains unresolved. He emphasized that the key issue is for the ERC to determine Meralco’s final average rate, which currently stands at ₱1.35/kWh.
Meanwhile, Meralco has refuted claims of overcharging, emphasizing that it does not have the authority to set rates independently. In a statement issued on Friday, Meralco clarified that only the Energy Regulatory Commission (ERC) has the power to approve the rates it can charge, ensuring they are “fair, reasonable, and at the lowest possible cost.“
Regarding Meralco’s WACC, the company stated that “this is set by the regulator and that the last ERC-approved WACC of Meralco was determined in 2011 to apply to a period from July 1, 2011 to June 30, 2015.”
The company also noted that its WACC was the lowest compared to other electricity providers and power transmission firms during that period.
(Also read: Renewables make up lion’s share of new energy projects in 2025)
Consumer group criticizes ERC
Meanwhile, the National Association of Electricity Consumers for Reforms (NASECORE) criticized the ERC for its lack of action in initiating the refund process.
NASECORE President Pete Ilagan stated that the ERC should not have waited for Meralco to file a petition, as regulating utilities is part of its role. Ilagan cautioned that consumers would be disadvantaged, as it seemed Meralco was determining the refund amount instead of the ERC determining the proper sum to be reimbursed to customers.
In an earlier briefing, Dimalanta mentioned that the commission aimed to finalize Meralco’s rate reset by the first half of 2025.
Sources:
https://www.pna.gov.ph/articles/1242355
