Ex-ERC chief: Meralco owes its customers P150B in refunds

MANILA – A former commissioner of the Energy Regulatory Commission (ERC) said power distributor Manila Electric Co. (Meralco) should refund its customers P150 billion and cut power rates after the government regulator re-computes its weighted average cost of capital (WACC).

Alfredo Non said that based on his computation, Meralco customers were entitled to the following refunds:

– 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 P150 billion should be returned to us. I have already submitted my proposed computation to ERC,” Non said.

He said his computation included new rates that Meralco should charge after the refund is completed.

Non said the following rate cuts should be implemented:

– 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.

He said the refund was mainly because Meralco charged P1.47 per kWh, although the provisional authority rate was only P1.38 per kWh.

“Since 2012, there have been no complete rates,” said Non.

“The rates should be reset every four years. So, that means Meralco does not have a final rate,” he said.

He said Meralco bases its rate on the provisional P1.38 per kWh, which is “only temporary,” but it is not being followed.

“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.

He claimed there was an error in computing the provisional rate and that it should only be P1.05 or P1.06 per kWh.

“There are two issues here,” Non said. “The wrong computation from 2012 to 2015 and the WACC,” he said.

“These are the two things that will change our rate: if the error is corrected and the decrease in interest rates.”

WACC is one of the “building blocks” for computing power costs under the government’s rate-setting methodology called the Performance-Based Regulation.

Earlier, Laguna Rep. Dan Fernandez said the unadjusted WACC is the main reason for the consistently high power rates. Fernandez also said the current WACC was computed to allow Meralco to cope with the Asian financial crisis, but instead of recalculating after the crisis it continued to charge higher rates.

Non said the figures he presented were his own calculations submitted to the ERC.

“I started doing my own calculations after my retirement in 2018,” he said.

Sen. Sherwin Gatchalian had called on the ERC to expedite the reset of the WACC, saying the commission should examine components in determining it in Meralco’s case, which is 14.97 percent since 2015.

“ERC should make sure that charges passed on to consumers by distribution utilities to consumers are fair and correct,” the senator said.

According to the ERC timeframe, the results of the WACC review and reset for distribution utilities, mainly Meralco, should be finalized by March 2024.

But Gatchalian said the original date set by ERC to complete the review for Meralco has been delayed by more than a year.

Meralco has said all its rates had been approved by the ERC.

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