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Meralco to follow P13.8-b refund, shift to performance scheme

Manila Electric Co. welcomed the provisional approval of the Energy Regulatory Commission on the P13.885-billion refund that will bring relief to consumers amid the pandemic.

“Meralco hopes to put the PBR [performance-based regulation] mechanism back on track, that we appreciate the provisional approval and that we will follow the order as this will provide much-needed relief to our customers,” Joe Zaldarriaga, Meralco vice president for corporate communications, said.

PBR is an internationally-accepted methodology that uses projections of operating and capital expenditures to enable the regulator to evaluate facility investments to meet customer requirements and prescribed service levels.

It has a performance incentive scheme by which the regulator provides incentives and penalties to the utility to compel to be more efficient and reliable.

ERC directed Meralco over the weekend to refund P13.885 billion, or P0.1528 per kilowatt-hour, to customers over 24 months or until the amount is fully refunded.

“The commission approved Meralco’s prayer for the issuance of a provisional authority in order to allow their customers to immediately enjoy the benefits of the proposed refund and provide immediate rate relief especially during this time of pandemic,” said ERC chairperson and chief executive Agnes Devanadera.

The ERC said the provisional authority was limited to the refund of the amount sought by Meralco.

It said that except for authorizing the refund as applied, all other allegations, assumptions and computations made in the application were subject to the agency’s extensive evaluation and pertinent rules on the matter.

ERC also directed Meralco to reflect the refund as a separate line item in the bills of customers. It said the refund was without prejudice to the outcome of the final evaluation of the application after completion of both technical and legal proceedings.

Meralco, in its application, sought the ERC’s confirmation of its actual weighted average tariff against the ERC-approved interim average rate to determine if there are any over or under recovery.

“As regulator of the electric power industry, the Commission in determining its actions on applications filed before it, has the consumer welfare as its primary consideration, thus, our decision to immediately authorize the refund. We hope that the reduction in rate could help our consumers cope with the still ongoing pandemic,” Devanadera said.

The power distributor sought approval to implement the refund as the actual rate Meralco was able to collect is higher than the computed average rate ERC determined in the approval of the interim rate.

The refund rate of P0.1528 per kWh will be reflected as a separate line item in the bills of customers during the refund period.

Meralco is one of the first entrant “Group A” distribution utilities that entered performance based regulation, the rate-setting methodology adopted by the commission to set the distribution wheeling rates of the private DUs.

Topics: Manila Electric Co. , Meralco , Energy Regulatory Commission
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