ERC urged to resolve Meralco’s rate reset
By Brix Lelis – November 11, 2024 | 12:00am
from The Philippine Star
This picture shows Meralco’s electric meter.
MANILA, Philippines — The Energy Regulatory Commission (ERC) should promptly resolve Manila Electric Co.’s (Meralco) rate reset, as further delays could hurt consumers and undermine investor confidence, a think tank said.
In a letter to the ERC, Infrawatch PH called for the immediate release of the long overdue decision on Meralco’s fifth regulatory period (5RP) covering the years 2022 to 2026, which was reportedly ruled as a lapsed period.
Meralco’s rate reset process is conducted through a performance-based regulation (PBR), an internationally accepted rate-setting methodology that requires the submission of revenue requirements for the next four years.
As such, Infrawatch PH convenor Terry Ridon said it is high time for the ERC to issue a formal order on the 5RP so Meralco can move forward with its 6RP set to commence in July 2026.
“This will not only ensure that the benefits promised under PBR are realized by customers but will also send the appropriate signals for investors to come in,” Ridon said.
The ERC evaluates the application for adjustment by private distribution utilities (PDUs) like Meralco based on the rules for setting distribution wheeling rates promulgated before the start of the reset pursuant to the PBR.
Under this rule, the power regulator is required to set a final determination prior to the start of the applicable regulatory period.
But in the case of Meralco’s 5RP, the final determination should have been issued before July 2022.
Ridon argued that the same rules “cannot legally be made to apply to a period that has already lapsed and where the forecasts are no longer relevant because actual costs have been incurred.”
“To hold otherwise would be to deprive the PDUs and the consumers of PDUs alike of substantive and procedural due process,” he pointed out.
During a lapsed period, consumers pay charges that are no longer reflective of the current cost of the service while awaiting the approval of a new rate.
Following the approval of a new rate, the ERC may order DUs to implement necessary adjustments such as a refund scheme to account for any discrepancies during the period.
Previously, Meralco senior vice president and head of regulatory management Jose Ronald Valles estimated around P16 billion worth of refunds to consumers once the ERC resolves the power distribution giant’s 5RP.
“That’s a big, big, big relief for consumers; that’s why we want to have that closure already,” said Valles, noting that the decision would trigger the start of the preparation for the 6RP and the refund application.
During her first press conference after being reinstated, ERC chairperson and CEO Monalisa Dimalanta said the commission is expected to issue the official decision on Meralco’s 5RP within this year.
Earlier this year, the Office of the Ombudsman slapped Dimalanta with a six-month preventive suspension order without pay due to alleged grave misconduct, grave abuse of authority and conduct prejudicial to public service.
The case stemmed from a complaint filed by consumer group National Association of Electricity Consumers for Reforms Inc. regarding delays in Meralco’s rate reset.
After initially denying Dimalanta’s motion for reconsideration, the Office of the Ombudsman overturned the suspension on Oct. 22, with President Marcos reinstating her as the head of the ERC eight days later.
