ERC orders Meralco to refund P19.95B to customers

The Energy Regulatory Commission (ERC) on Friday directed the Manila Electric Company (Meralco) to refund its customers nearly P20 billion worth of over-recoveries.

In an order issued March 14, the ERC announced it granted provisional authority for Meralco to implement its proposed refund scheme over a period of 36 months for a total of P19.95 billion.

The amount covers “over-recovery of rates for the lapsed period from July 1, 2022 to December 31, 2024.”

The power industry regulator recalled that on December 17, 2024, it issued an order under ERC Case No. 2022-015 “declaring the period from July 1, 2022 to June 30, 2025 pertaining to Meralco’s original fifth regulatory period as lapsed.”

With this, the agency directed the power distributor to file, within 30 days from receipt of the said order, an application for the true-up calculation of its Maximum Average Price (MAP) versus the Actual Weighted Average Tariff (AWAT) covering the period declared as lapsed, subject to evaluation, confirmation, and approval of the ERC.

Last January, Meralco announced it proposed a P19-billion refund covers the difference between the company’s actual weighted average tariff, and the last approved rate of P1.36 per kWh from July 2022 to December 2024.

This would translate to a refund of 19 centavos per kWh for residential customers, with the prevailing rate at P11.7428 per kWh as of January 2025.

In a 3-2 vote, the ERC said it resolved to grant the proposed refund scheme of Meralco but disallowed its proposed offsetting of alleged under-recoveries from July 1, 2015 to June 30, 2020 in the amount of P862.034 million, resulting in a refund amount of P19.958 billion higher than Meralco’s proposed P19.096-billion refund scheme.

“The said provisionally approved refund amount is equivalent to an average refund rate P0.1189 per kilowatt-hour for all of the distribution utility's customer classes,” it said.

The ERC said it ordered Meralco to immediately implement the refund in the next billing cycle upon receipt of the order.

“The commission further directed Meralco to reflect the refund rate as a separate line item in customer bills as ‘AWAT(Refund)/Collect.’ The distribution utility is also required to submit a report in the prescribed format until the amount of over-recovery has been fully refunded,” it said.

The ERC said its chairman, Monalisa Dimalanta, dissented from granting the approved refund proposal as she argued that directing a short refund period of 12 months—justified as it is under a provisional authority and thus limited to a one-year effectivity—would have yielded a more substantial refund amount for the consumers.

Moreover, the regulator said that  its commissioner Catherine Maceda, also dissenting, continued to question the validity of the true-up calculation and further said that consumers stand to lose more due to the protracted refund period, reiterating that the refund should be completed in the shortest time possible.

In a statement, Meralco spokesperson Joe Zaldarriaga said the power distributor has "yet to receive the official ERC Order."

However, Zaldarriaga said that Meralco was "informed that the regulator will be granting a Provisional Authority on Meralco’s refund application."

"We welcome this development as this will provide relief to our customers especially as we approach the summer months when rates historically increase due to high demand for electricity," he said.

The Meralco spokesperson added that the P19.95-billion refund was filed in compliance with ERC Order that declared July 2022-June 2025 as "lapsed period."

"This period was supposedly under the 5th Regulatory Period (5RP) but the reset process was not completed," Zaldarriaga said.

"The total approved amount covers the difference between Meralco’s actual weighted average tariff (AWAT) and Meralco's approved distribution tariff from July 2022 to December 2024. Another application will be filed after Meralco has incurred, completed, and determined the AWAT for the remaining period from January to June 2025," he said. — AOL/ RSJ/ VDV, GMA Integrated News