Infrawatch PH called on the Energy Regulatory Commission (ERC) to resolve the long overdue tariff review of Manila Electric Co. as its customers are being deprived of the benefits of a timely rate reset process.
Infrawatch PH convenor Terry Ridon, in a letter to the ERC, urged the release of the reported decision that considered the 5th Regulatory Period (5RP) as lapsed and proceed with the 6RP to avoid further delays.
“This will not only ensure that the benefits promised under PBR are realized by customers but will also send the appropriate signals for investors to come in,” Ridon said.
InfraWatch said ERC chairperson Monalisa Dimalanta made public declarations that the 5RP of Meralco was concluded.
He said the ERC should issue the formal order to set the tone for the parties to proceed to the 6RP.
Ridon said the complexity of the rate reset process of private distribution utilities (PDUs) like Meralco is enshrined under the Performance Based Regulation (PBR) adopted by ERC which requires the submission of revenue requirements for the next four years to meet customer growth, performance standards and other regulatory compliances.
“The rationale for this strict timeline is not difficult to understand. PBR is a forward-looking rate-setting methodology based on forecast of revenue requirements, such as capital expenditures, operating expenditures, sales, taxes, other regulatory requirements, and return on the asset base,” Ridon said, adding that it is not legal to apply the rules to a period that already lapsed as actual costs have already been incurred.
“To hold otherwise would be to deprive the PDUs and the consumers of PDUs alike of substantive and procedural due process,” he said.
Ridon said the ERC’s decision to consider the 5RP as lapsed is correct and fair, and is consistent with the regulator’s own rules and practice.
“Obviously, a rate reset for the 5RP cannot anymore legally happen since 28 months have already lapsed making the 5RP Distribution Wheeling Rates (RDWR) clearly and legally inapplicable…. this entire process takes 18 to 21 months to complete, if we are to afford a genuine due process to all parties involved in the case,” he said.
He said any delay would consequently affect the timeline of Meralco’s 6RP.
Infrawatch said all PDUs were delayed by 10 years in the implementation of their rate reset and it is imperative to have a legally acceptable and practical solution to stop the delays and ensure the implementation of PBR in the next regulatory resets of PDUs.
The ERC evaluates the application for rate adjustment by PDUs based on the RDWR that it promulgates before the start of the reset pursuant to PBR.
Under this rule, the ERC is required to issue a decision on the application in the form of a final determination prior to the start of the applicable regulatory period which in the case of the 5RP began last July 1, 2022 — which was already more than two years ago.
