Meralco Urged to Refund Customers P150B in Overcharges, Cut Power Rates

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A former commissioner of the Energy Regulatory Commission (ERC) has urged power distributor Manila Electric Co. (Meralco) to refund its customers a total of P150 billion and lower power rates. This call comes after the government regulator re-computes Meralco’s weighted average cost of capital (WACC).

Alfredo Non, the former commissioner, has computed the refunds that Meralco customers are entitled to based on their monthly consumption:

  • P2,700 for those consuming 200 kWh monthly
  • P9,500 for those consuming 300 kWh monthly
  • P15,500 for those consuming 400 kWh monthly
  • P51,000 for those consuming 1,000 kWh or more monthly

“So, a total of P150 billion should be returned to us. I have already submitted my proposed computation to the ERC,” said Non.

Non’s computation also includes new rates that Meralco should charge after the refund is completed. He suggests the following rate cuts:

  • P22 per month for those consuming 200 kWh monthly
  • P79 per month for those consuming 300 kWh monthly
  • P129 per month for those consuming 400 kWh monthly
  • P428 per month for those consuming 1,000 kWh or more monthly

The need for a refund arises from Meralco charging P1.47 per kWh, while the provisional authority rate is only P1.38 per kWh. Non argues that since 2012, Meralco has not had a final rate and that the rates should be reset every four years.

“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,” explained Non. He believes there was an error in computing the provisional rate, which should have been P1.05 or P1.06 per kWh.

Non highlights two main issues: the incorrect computation from 2012 to 2015 and the WACC. The WACC is a crucial factor in determining power costs under the government’s rate-setting methodology called the Performance-Based Regulation.

Earlier, Laguna Rep. Dan Fernandez pointed out that the unadjusted WACC is the primary reason for consistently high power rates. He also mentioned that the current WACC was computed to help Meralco cope with the Asian financial crisis but was not recalculated after the crisis, leading to continued higher rates.

Non clarified that the figures he presented are his own calculations submitted to the ERC. He began conducting these calculations after his retirement in 2018.

Sen. Sherwin Gatchalian has called on the ERC to expedite the reset of the WACC, emphasizing the need for a thorough examination of the components determining it in Meralco’s case. The current WACC for Meralco stands at 14.97 percent since 2015.

“ERC should ensure that charges passed on to consumers by distribution utilities are fair and correct,” stated Senator Gatchalian.

According to the ERC timeframe, the review and reset of the WACC for distribution utilities, including Meralco, should be finalized by March 2024. However, Gatchalian expressed concern over the delay in completing the review for Meralco, which has exceeded a year.

Meralco has maintained that all its rates have been approved by the ERC.

Source: The Manila Times

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