Sta. Rosa Rep. Dan Fernandez of Laguna on Sunday said power consumers in Metro Manila must expect a windfall from a P105-billion refund in their power consumption in the past six years, while those outside the Manila Electric Co. jurisdiction may likely share over another P100 billion more, this time from their power distributors.
He said Meralco and other power distributors in the country have been unlawfully allowed by government power regulator Energy Regulation Commission (ERC) to earn more than what the law prescribes since 2016.
He earlier exposed irregularities in the computation of weighted average cost of capital (WACC) being blamed on ERC officials and electricity distribution firms.
During a hearing called by the committee on energy, Fernandez berated key ERC officials over their failure to conduct computations of the WACC that should form the legal basis for setting the allowable profit of power distribution companies.
Under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001, a re-computation of the WACC should have taken place during the fourth regulatory period covering 2016 to 2019.
“ERC’s inability to do its responsibility as provided by law is highly suspicious. As a result of their negligence, ERC officials made electricity costs in the country one of the highest, if not the highest in the region,” he said.
By not computing the WACC, the ERC used the previous WACC of P14.97 percent, thus, allowing power distributors to escalate their profits by applying the said WACC rate, he added.
He said the current economic situation prevailing in the country, applicable WACC from 2016 to 2022 should have been steadily placed at a low 6 percent to a high of just 8 percent.
The assumptions were taken from the computations conducted by the Securities and Exchange Commission and Bloomberg, a highly respected international financial news and research firm.
Acting director Legario Galang Jr. of the Regulatory Operations Service insisted that no computation was conducted because there remained no rules that would guide them in recommending the WACC rate adjustments.
“I beg to disagree. You had seven years to do your job, what you are telling us is just unacceptable,” Fernandez said.
As a result of the ERC’s non-compliance to the provisions of the EPIRA, electricity users throughout the country were charged over P430 billion since 2016, he added.
While the overcharged amount could be computed, there is no way for anybody to determine the adverse impact to the country’s economy of the high cost of electricity, he noted.
“ERC and the country’s power distributors connived in driving away prospective investors. They have settled in our neighbors, Indonesia, Malaysia, Vietnam, to name a few,” he lamented.