The Manila Electric Co. (Meralco) should refund its customers a total of P150 billion, a former commissioner of the Energy Regulatory Commission (ERC) told the agency.
In a recent radio interview, Alfredo Non said that based on his own computation, Meralco customers are supposedly entitled to a one-time refund amounting to around P2,700 per month for those consuming 200 kilowatt hour (kWh) a month; P9,500 per month for 300kWh; P15,500 per month for 400kWh; and P51,000 per month for those consuming 1,000 kWh a month or higher.
“So P150 billion should be returned to us. I have already submitted my proposed computation to ERC,” Non said.
ERC Chairperson Monalisa Dimalanta confirmed this. “It was submitted as part of his motion for reconsideration in the case so we will resolve it as part of the case,” she said via Viber.
The refund allegation was initially raised by some lawmakers during last week’s hearing of the House Committee on Legislative Franchises.
Meralco had already disputed this and denied the baseless claims that it overcharged its customers starting 2012.
The company said it has no power to unilaterally set its own rates. All rates reflected in the electricity bills of customers are approved by the regulator following a very stringent and transparent process of public hearings.
“I would like to reiterate that as a highly regulated entity, Meralco strictly adheres to the rules governing its operations and franchise and the rates we implement always have prior approval from the regulator. A testament to the strict review, these rates are still subject to periodic confirmation process by the ERC,” Meralco First Vice President and Regulatory Management Head Ronald Valles said.
In the same radio interview, Non also said Meralco should lower power rates after regulators re-compute its weighted average cost of capital (WACC).
“Now after the refund is paid, the monthly bill will change. Those using 200 kWh per month will have their rate reduced by P22 per month, those using 300 kWh/month will decrease by P79 per month, those using 400kwh/month will decrease by P129 and those using 1000 kwh/month will decrease by P428. That’s my initial computation, depending on how the appreciation of the ERC is.”
The refund, alleged by Non, stemmed from the provisional authority rate of P1.38 per kWh set by the ERC versus Meralco’s rate of P1.47 per kWh.
“Since 2012, there have been no complete rates. The rates should be reset every four years so that means Meralco does not have a final rate. They use P1.38 provisional rate, it’s only temporary. From 2012 until now, Meralco’s average billing rate to us is P1.47 per kWh. So, there is already an overbilling of P0.09 per kWh,” said Non.
‘Error in computation’
He also pointed out an “error” in the provisional rates. Instead of P1.38 per kWh, he said this should only amount to P1.05 per kWh or P1.06 per kWh.
“There are two issues here. The wrong computation from 2012 to 2015 and the WACC, which according to Congressman Dan Fernandez, should have gone down from 14.97 percent to around 10 or 11 percent. These are the two things that will change our rate: If the error is corrected and the decrease in interest rates.” Earlier, Fernandez said the unadjusted WACC is the “key reason” for consistently high power rates. Also, he said the current WACC of Meralco was computed to allow the utility to cope with the Asian financial crisis then but this remained unchanged even after the crisis, allowing the utility to collect higher rates.
Meralco, for its part, siad the setting of the WACC is a function of the regulator. Its last approved WACC is the lowest given by the regulator under the Performance Based Regulation (PBR). The WACC was determined based on a set of rules that underwent public consultation and thorough review by ERC.
“This WACC is an industry WACC that applies to all private DUs in the same category and is not company specific. In addition, Meralco does not have a determined WACC since July 2015 because there was no completed rate reset during that regulatory period up until now,” the utility firm said.
Meralco cited a recent study of the International Energy Consultants which concluded that Meralco’s rates are “fair and reasonable” since they reflect the true cost of electricity as against other countries whose power costs are heavily subsidized by their governments.
Non said it is up to the ERC to come up with its own computation. Dimalanta said the agency is already reviewing the issues raised during the hearing and a resolution will be issued soon.
“I started doing my own calculations after my retirement in 2018. After I did the calculations, I submitted it to the ERC but of course it’s now up to them already.”
Meralco had said all rates in the electricity bill have received prior lawful and regulatory approval and that they adhere to any orders for cost adjustments arising from regular reviews of its rates by the ERC.