Meralco lauds ERC for resolving AWAT application
By Alena Mae S. Flores – June 19, 2024, 7:45 pm
from manilastandard.net
Saying that regulatory delays cause “irreparable” damage to distribution utilities and customers, power retailer Manila Electric Co. (Meralco) on Wednesday commended the Energy Regulatory Commission (ERC) for resolving the issue of its actual weighted average tariff (AWAT) application.
“All distribution utilities [Dus] and consumers cannot afford any further delay resulting from the prolonged lag in the resolution of the rate cases pending at the ERC,” said Meralco senior vice president and head of regulatory management office Jose Ronald Valles.
“These delays cause significant harm to both DUs and consumers,” Valles said. “They deprive consumers of the benefits promised by performance-based regulation (PBR) in terms of more efficient service and reliable supply of power.”
Valles said Meralco received the ERC’s order on the AWAT case Friday. The order confirmed the regulator’s earlier final and executory decision in a separate case which reduced Meralco’s tariff during the lapsed period to 1.3522 pesos per kilowatt-hour from 1.3810 pesos per kWh.
“The ERC, in issuing this order, took the best interest of the consumers and the industry as a whole. As a result of the true-up method adopted by ERC to resolve the lapsed period of Meralco, consumers benefitted from the refund of more than P48 billion ordered by ERC,” he said.
Valles said the ruling also paved the way for the closure of lapsed period of all DUs and the resumption of the implementation of PBR to set the future tariffs of the DUs without further delay.
Under the PBR methodology, privately-owned DUs are allowed to charge regulatory reset cost in their revenue requirement. The regulatory reset cost represents expenses incurred in engaging regulatory experts or consultants when setting and updating the DU’s electricity rates.
Valles said the ERC had not set the rules to govern the lapsed period of the DUs, hence, no tariff adjustments were given to the DUs despite their huge investments in terms of capital expenditures, operating expenses and compliance with regulatory requirements.
“Since the PBR is based on forecast of annual revenue requirements, this rule cannot apply to the lapsed period without violating due process and the established principle against retroactive rate-making. Hence, the ERC correctly exercised its quasi-judicial rate-making power to fix the rate of Meralco, pursuant to the police power granted to it under the law,” he said.
Valles said the ERC ensured that the whole process for setting Meralco’s final rate for the lapsed period was “transparent, fair and complied with all legal requirements and due process as all interested parties were given opportunity to be heard and in fact, submitted their comments and participated throughout the entire proceedings.”
Power retailer Manila Electric Co. said Tuesday regulatory delays create “irreparable” damage to distribution utilities and customers, as it lauded the Energy Regulatory Commission for resolving the issue of its actual weighted average tariff (AWAT) application.
“All DUs and the consumers cannot afford any further delay resulting from the prolonged lag in the resolution of the rate cases of all DUs that are pending at ERC,” Meralco senior vice president and head of regulatory management office Jose Ronald Valles said.
“Unfortunately, these delays cause grave and irreparable injury to all parties, DUs and consumers alike, and deprive them, especially the consumers, the benefits promised by PBR [performance-based regulation] in terms of more efficient service and reliable supply of power and should therefore not be tolerated,” Valles said.
Valles said Meralco received the ERC’s order on the AWAT case Friday, which confirmed the regulator’s earlier final and executory decision in a separate case which reduced Meralco’s tariff during the lapsed period to P1.3522 per kilowatt-hour from P1.3810 per kWh.
“The ERC, in issuing this order, took the best interest of the consumers and the industry as a whole. As a result of the true-up method adopted by ERC to resolve the lapsed period of Meralco, consumers benefitted from the refund of more than P48 billion ordered by ERC,” he said.
Valles said the ruling also paved the way for the closure of lapsed period of all DUs and the resumption of the implementation of PBR to set the future tariffs of the DUs without further delay.
Under the PBR methodology, privately-owned DUs are allowed to charge regulatory reset cost in their revenue requirement. The regulatory reset cost represents expenses incurred in engaging regulatory experts or consultants when setting and updating the DU’s electricity rates.
Valles said the ERC had not set the rules to govern the lapsed period of the DUs, hence, no tariff adjustments were given to the DUs despite their huge investments in terms of capital expenditures, operating expenses and compliance with regulatory requirements.
“Since the PBR is based on forecast of annual revenue requirements, this rule cannot apply to the lapsed period without violating due process and the established principle against retroactive rate-making. Hence, the ERC correctly exercised its quasi-judicial rate-making power to fix the rate of Meralco, pursuant to the police power granted to it under the law,” he said.
Valles said the ERC ensured that the whole process for setting Meralco’s final rate for the lapsed period was “transparent, fair and complied with all legal requirements and due process as all interested parties were given opportunity to be heard and in fact, submitted their comments and participated throughout the entire proceedings.”
