ERC urged to hasten reset of Meralco distribution rate

By Lenie Lectura – November 29, 2023
from Business Mirror

Senator Sherwin Gatchalian on Tuesday urged the Energy Regulatory Commission (ERC) to fast-track the reset of the power distribution rate for the Manila Electric Co. (Meralco) to determine if the utility firm had overcharged its customers.

The senator’s call followed remarks by former Energy Regulatory Commission (ERC) Chairperson Agnes Devanadera at a House hearing that Meralco had previously paid for expenses of ERC consultants who were tasked with determining the weighted average cost of capital (WACC) that has an impact on power rates. It has been discontinued.

His statement also came in the wake of a privilege speech by Laguna Rep. Dan Fernandez pointing to the unadjusted WACC as the “key reason” for consistently high power rates, which are among the highest in Asia.

Fernandez said the current WACC of Meralco was computed to allow the utility to cope with the Asian financial crisis then but remained unchanged even after the crisis, which enabled the utility to collect higher rates.

According to Gatchalian, it was “inappropriate” for Meralco to foot the bill for the regulator’s consultants. “As we anticipate revised distribution rates that should be more favorable for our consumers, it is imperative that we not only hope but demand a refund if applicable,” said Gatchalian.

The ERC, he said, should scrutinize the factors that go into computing Meralco’s WACC, which had been stuck at 14.97 percent since 2015. WACC is a key determinant in computing distribution rates.

“The ERC should make sure that rates being passed on by distribution utilities are fair and correct for consumers,” said Gatchalian in Filipino. “Consumers should not be paying more than they should.”

According to ERC’s schedule, the final determination for the fifth regulatory period rate reset for distribution utilities, including that of Meralco, is in March 2024. Gatchalian noted that the original date set by the ERC to reset Meralco’s WACC had been delayed already by a year.

Meralco had stated that charges reflected in consumer bills had been reviewed and approved by the ERC and that it adheres to ERC orders on cost adjustments arising from regular reviews.