Meralco settles fine, appeals discounts for lifeline users

By Lenie Lectura – September 21, 2020
from Business Mirror

The Manila Electric Co. (Meralco) paid the P19-million penalty slapped by the Energy Regulatory Commission (ERC) for violating the billing advisories imposed on distribution utilities (DUs) during community quarantine from March to July this year.

“Meralco paid the P19-million penalty imposed in the decision,” it said Monday.

The ERC’s August 20 decision stated that Meralco failed to clearly indicate that the bills it sent out to its customers were estimated and it also did not comply with the mandated installment payment arrangement set by the commission.

The ERC said these failures reflect a “serious neglect” on the part of Meralco that resulted to a multitude of complaints.

“Meralco’s neglect to provide accurate and timely information especially during this time of pandemic has created chaos and confusion to most of the electricity consuming public,” ERC Chair Agnes Devanadera had said.

In the past months, Meralco caught the ire of lawmakers, regulators, government agencies and consumer groups who all complained of “confusing and hard to understand” electricity bills. In July, the ERC said it received 47,000 complaints related to “bill shock” and non-compliance with ERC advisories. Majority of the 47,000 complaints came from Meralco customers.

Deputy Speaker and Surigao del Sur Rep. Johnny Pimentel welcomed Meralco’s payment.

“Meralco’s action demonstrates good corporate citizenship that should be emulated by all firms in highly regulated sectors, especially those enjoying exclusive congressional franchises,” Pimentel said.

The lawmaker is hoping that Meralco would no longer impose the P47 convenience fee for online payments.

While Meralco has suspended the convenience fee and has refunded customers, it did not say if this is temporary or permanent.

Meralco, meanwhile, contested the ERC’s directive to provide a retail rate discount to lifeline customers, or those whose monthly energy consumption does not exceed 100 kWh for one month billing cycle.

The ERC, in the same order, directed Meralco to set to zero the Distribution, Supply, and Metering (DSM) charges of lifeline consumers. The DSM comprised of 22.4 percent of the total retail rate.  The total discount to be provided to all lifeline consumers is approximately P230 to P240 million. Meralco was also prohibited from recouping the same from non-lifeline consumers.

Meralco, in its Motion for Partial Reconsideration, said to set the DSM charges of lifeline customers to zero is unconstitutional and illegal because there is no law, not even the Electric Power Industry Reform Act (EPIRA), that compels a DU to grant discounts by setting DSM to zero.

“On the contrary, the EPIRA mandates that DUs should be able to recover just and reasonable costs and a reasonable return to enable them to operate viably. Had the legislature intended to grant this Honorable Commission the power to impose discounts and subsidies on the ground of economic recession, a provision to such effect would have been expressly included in the EPIRA or in any other law. Thus, with due respect, this Honorable Commission may not arrogate upon itself powers not conferred in its enabling laws,” said Meralco.

Meralco branded the unilateral imposition of the retail rate discount as “unduly oppressive and confiscatory,” saying this sets a “dangerous precedent” and will only result in “regulatory instability”.

“For then, any public utility maybe compelled to absorb the cost of providing a public service whenever the economy takes a downturn,” it said.

Moreover, the ERC directive unlawfully singled out Meralco. “Of the 150 DUs in the country, only Meralco was required to grant discounts due to the pandemic.”

The utility firm also pointed out that setting the DSM to zero amounts to rate-fixing which may only done through the procedure provided for under EPIRA and the Public Service Act with the required notice, publication and public hearing.

“In this case, the retail rate discount was imposed in a proceeding not intended for rate-fixing. In fact, prior to its receipt of the assailed decision, Meralco was not aware that this Honorable Commission would use this proceeding as a venue to fix the DSM charges of lifeline customers because this proceeding only concerned “bill shock” complaints,” Meralco said, adding that no application was filed, nor was there are any public hearing set.

Pending the resolution of Meralco’s appeal, the DU will implement the retail rate discount in its October billing.

“Nonetheless, we committed to implement the retail rate discount in the October 2020 billing subject to the resolution of the motion for partial reconsideration,” said Meralco spokesperson Joe Zaldarriaga.