Meralco offers P13.9-B refund to customers within 24 months

Published January 14, 2021, 3:13 PM by Myrna M. Velasco
https://mb.com.ph/2021/01/14/meralco-offers-p13-9-b-refund-to-customers-within-24-months/

Power utility giant Manila Electric Company (Meralco) has applied for regulatory approval on its proposal to refund to its customers P13.885 billion cost over-recoveries arising from the implementation of its actual weighted average tariff (AWAT) within the lapsed regulatory period from July 2015 to November 2020.

The utility firm sought to reflect the refund to customers within 24 months or two years and shall be made effective upon the approval of the Energy Regulatory Commission.

For this targeted Meralco pay-back to customers, the ERC has already calendared public hearings on February 16 and 23, primarily for determination of compliance with jurisdictional requirements and expository presentation as well as pre-trial conference and presentation of evidence. The last scheduled hearing will be on March 2, 2021 with continued presentation of evidence.

Based on Meralco’s petition, the propounded refund to be reflected in the bills had been calculated at P0.1528 per kilowatt-hour (kwh) and will continuously be implemented until the full refund is consummated in two years.

For residential consumers, the estimated refund will be P0.2761 per kwh; while other classifications of electricity end-users will enjoy a rate reduction ranging from P0.0366 per kwh to P0.1811 per kwh.

Meralco indicated that based on its computation, its AWAT for the lapsed period from 2015 to 2020 hovered at P1.4414 per kwh; while its approved rate had just been at P1.3810 per kwh; hence, there had been resulting over-recoveries that it will need to return to customers.

The utility firm similarly proposed to the regulatory body that “the refund rate will be reflected as a separate line item in the bills of customers during the refund period.”

Meralco further prayed that “pending the hearing on the merits of the case, a provisional authority be issued to immediately implement the refund to customers.”

The power firm similarly asked the ERC to “confirm the resulting calculation of the total amount to be refunded,” which it had pegged at P13,885,845,931 in its filing.

It added that “pending final approval of the instant application, the issuance of a provisional authority will allow Meralco’s customers to immediately enjoy the benefits of the refund sought to be implemented, providing welcome relief to consumers this time.”

Within the specified lapsed period of its AWAT, the distribution, supply and metering (DSM) revenues collected by Meralco had been: P54.753 billion for regulatory year 2016; P57.188 billion for 2017; P60.747 billion for 2018; P63.275 billion for 2019; and P66.269 billion for 2020.

Further, the utility firm is seeking the regulator’s imprimatur to declare the true-up in its lapsed AWAT to have been resolved, following approval of the refund and until such time that a new rate has been determined for Meralco in the next regulatory period.

“A regulator’s ability to implement interim rates and impose a refund are remedies to cure the disruptions caused by a regulatory lag,” the applicant-firm stipulated.

The ERC is still finalizing modifications in the tariff-setting of regulated power utilities under the performance-based regulation (PBR) methodology, hence, Meralco and other regulated players have yet to enter their next tariff reset period.