ERC orders Meralco to refund P1.4B ‘over recoveries,’ collect P2.38B ‘under recoveries’

The Energy Regulatory Commission (ERC) has ordered the Manila Electric Company (Meralco) to refund to customers over recoveries and at the same time collect under recoveries.

In a statement, the ERC said it directed Meralco to refund to its consumers its over collections in the following pass-through charges, namely Transmission Rate (TR), System Loss Rate (SLR), Lifeline Subsidy Rate (LSR), and Senior Citizen Subsidy Rate (SrCSR).  

The power industry regulator noted that upon review of Meralco’s submitted data for the period from January 2017 to December 2019, it validated the over recoveries in the said pass-on charges.  

The same review, however, also found that the power distributor incurred under recoveries in the Generation Rate (GR).  

“The Commission’s initial evaluation of the documents submitted by Meralco revealed that it incurred a total over collection amounting to P1.4 billion in the Transmission, System Loss, Lifeline Subsidy and Senior Citizen Discount Rates, but also incurred a total of P2.38 billion under collection in the Generation Rate,” said ERC Chairperson and CEO Agnes Devanadera. 

In its order, the ERC directed Meralco to implement its over and under-recoveries, by way of refunding and collecting the same, subject to the final evaluation by the commission.  

“Meralco received today an order from the ERC on the company's application to confirm pass-through charges from 2017 to 2019,” Meralco head of Utility Economics said.

“Meralco will immediately begin preparations to comply with the Commission's ruling,” Fernandez said.

ERC ordered Meralco to refund the over-recoveries at an average rate of P0.1331 per kilowatt-hour (kWh), for a period of approximately three months until fully refunded, and to collect the computed under-recovery in the Generation Rate, with an equivalent rate of P0.0395/kWh, for approximately 24 months until fully collected starting in the next billing cycle upon receipt of the order.

The regulator explained it ordered a longer period for Meralco to collect the under charges in order to protect the consuming public by mitigating the impact of the said under-recovery collection.

"At the beginning of its implementation, the Order will mean a net average reduction of 11.5-c/kWh in the pass-through charges of Meralco customers," Fernandez said.

The power distributor was also directed to reflect the over and under-recoveries in the monthly computations of GR, TR, SLR, LSR and SrCSR as “Other Generation Rate Adjustments (OGA)” for generation, “Other Transmission Cost Adjustments (OTCA)” for Transmission, “Other System Loss Adjustment (OSLA)” for System Loss, “Other Lifeline Rate Adjustment (OLRA)” for Lifeline Subsidy, and “Other Senior Citizen Rate Adjustment (OSrRA)” for Senior Citizen Subsidy.  

Meralco is, likewise, required to submit within 10 days from its implementation a sworn statement indicating its compliance with the ERC’s order.

Distribution Utilities (DUs) are required under ERC Resolution No. 16, Series of 2009 to file their respective applications to the ERC once every three years in order to ensure that the recovery of the said various pass-through costs is fair and proper.

“Let it be emphasized that the Commission, in acting on the pass on charges confirmation has the consumers’ welfare as its primordial consideration. We will find means, such as stretching the collection of any under collection to a longer period and effecting a quick refund for over collection, in order to temper the impact on consumer’s bill,” Devanadera said. —KG/BM, GMA News