COA tapped to review Meralco refunds

By Danessa Rivera – July 16, 2020 – 12:00am
from The Philippine Star

MANILA, Philippines — The Energy Regulatory Commission (ERC) plans to tap the Commission on Audit (COA) to review the refunds to be made by Manila Electric Co. (Meralco) to its customers.

“The ERC is short of auditors so we are mulling to seek the assistance of the COA to find out if the refunds that Meralco is supposed to have undertaken have already been completed or not,” ERC chairperson Agnes Devanadera said in a statement.

“We believe that there must be proper auditing by an independent party, and we are confident that the COA is the best entity that could render their evaluation on Meralco’s refund, COA is reliable and unbiased,” she said.

Meralco said it would comply with the ERC as it awaits advisories on the refund.

“We have always and consistently cooperated with the regulator and we shall await any advisory in relation to this,” Meralco spokesperson Joe Zaldarriaga said in a text message.

The ERC, in previous years, ordered Meralco to refund the bill deposit, meter deposit, and income tax that it collected from its customers.

The issue on bill deposits has been a recurring issue with distribution units (DUs), particularly with Meralco as the country’s largest power distributor.

Bill deposits collected from residential and non-residential consumers are intended to guarantee the payment of electricity bills for new and/or additional service and from disconnected consumers who were previously not subject to bill deposit.

The bill deposit shall be equivalent to the estimated billing for one month based on the load schedule of the consumer to guarantee payment of his bills.

In May 2018, the ombudsman suspended then ERC commissioners Alfredo Non, Gloria Victoria Yap-Taruc, Josefina Patricia Asirit and Geronimo Sta. Ana for three months for failing to act on the misuse of bill deposits by DUs.

As its basis for the suspension order, the ombudsman said the four commissioners continuously refrain from strictly implementing rules defining the nature of bill deposits as “mere guarantee in payment of bills” which must be returned upon termination of the DUs’ service.

Currently, only Asirit remains as a commissioner while the rest have retired.

In April last year, the Makabayan bloc asked the Supreme Court to stop Meralco from collecting bill deposits from its customers.

This as the lawmakers pointed out that it was not allowed under the Electric Power Industry Reform Act (EPIRA) and the franchise of Meralco. Under EPIRA, DUs are only allowed to impose distribution wheeling charges and connection fees approved by the ERC.

In 2002, the Supreme Court ordered Meralco to refund the income tax it overcharged its over three million consumers for several years as it should not be passed on to customers.

Based on the petition of the  Energy Regulatory Board (ERB), predecessor of the ERC, Meralco charged 18.4 centavos per kilowatt-hour (kwh) instead of 16.7 centavos from 1998 up to the present.

Thus, Meralco was ordered to refund some P10.8 billion to consumers based on overcharging allegedly committed from February 1994 to February 1998.

It can be recalled that the ERC had previously sought the assistance of the COA to establish whether the implementation of the approved unbundled distribution rates resulted in a fair return and the recovery of generation costs were indeed revenue-neutral to Meralco.

COA then conducted a complete audit of the books, records, and accounts of Meralco.

“We are preparing to discuss our upcoming engagement with the COA as soon as practicable.  We will rely on COA’s expertise to verify and ensure that what were supposed to have been refunded or credited to the consumers’ electricity accounts have been duly returned to them,” Devanadera said.