CA affirms ERC’s decision increasing Meralco rates

by Rey G. Panaligan March 21, 2016 (updated)
http://www.mb.com.ph/ca-affirms-ercs-decision-increasing-meralco-rates/

The Court of Appeals (CA) has affirmed the 2011 decision of the Energy Regulatory Commission (ERC) that allowed the Manila Electric Company (Meralco) to increase its rates by P0.0168 per kilowatt hour.

In a decision written by Associate Justice Victoria Isabel Paredes, the CA dismissed the petition filed by the National Association of Electricity Consumers for Reforms, Inc. (Nasecore) which challenged the ERC decision.

The ERC’s 2011 decision upheld its earlier 2003 ruling which granted Meralco’s application for the approval of its unbundled rates, appraisal of its properties, and proposed increase in rates.

In its application, Meralco told the ERC that the rate increase was needed to augment its growing operation and maintenance expenses, which include rents for leased properties on customer premises, construction work in progress, and building plants for future use.

The Supreme Court (SC) affirmed the ERC’s 2003 ruling that granted the increase. But the SC directed the ERC to seek the assistance of the Commission on Audit (COA) in conducting a complete audit of Meralco’s books, records, and accounts to see to it that the rate increases are reasonable and justified.

Implementing the SC order, the ERC asked COA to conduct an audit of Meralco’s books, accounts and records to determine whether the implementation of power firm’s approved distribution rates resulted in a fair return and whether the recovery of generation costs had been revenue-neutral to Meralco.

However, in its audit report the COA found that the unbundling of Meralco rates effectively resulted in over-recoveries or revenues in excess of the required revenue by P1.682 billion in 2004 and by P5.327 billion in 2007.

The COA told the ERC that the over-recoveries were determined after it discovered certain factors or items, which should not have been included in the computation of Meralco’s revenue requirements.

But the ERC ignored the findings of COA when it affirmed in 2011 its 2003 decision that allowed Meralco to increase its rates by P0.0168 per kilowatt hour.

The decision prompted Nasecore to elevate the issued before the CA.

In denying Nasecore’s petition, the CA said that even if the SC directed the ERC to request the COA to undertake a complete audit on the books, records and account of Meralco, it recognized that the power to fix the rates of electric distribution utilities primarily belongs with the ERC.



“After an examination of the assailed orders, we find that the ERC had dutifully complied with the order of the Supreme Court. Just because the ERC did not adopt the findings in the COA report does not mean that the ERC failed to follow the directive,” the CA said.