(Update) SC orders Meralco to refund customers

The Supreme Court has ordered Manila Electric Co (Meralco) to refund its customers the additional charge of 13.27 centavos per kilowatthour (kwh) it collected from June 2004. The high court nullified on February 2, 2006 the Meralco increase which was allowed by the Energy Regulatory Commission (ERC). "Meralco is directed to refund to the affected consumers the amount of 13.27 centavos per kwh reckoned from when the same was charged and collected from the affected consumers," the court said in its order dated August 16. "Instead of an actual refund, Meralco may correspondingly credit in favor of the affected customers the appropriate amounts for their future consumption," it added. This was the second time that the Supreme Court had ordered Meralco to refund its customers. In 2003, the Supreme Court ordered Meralco to refund some P28 billion to its customers, saying the company could not pass on its income tax expenses to consumers. Meralco president Jesus Francisco said the country's largest power retailer will start studying ways to implement the refund. Big refund Initial Meralco estimates showed that the company will have to refund some P800 million for the three months that it collected the 13.27-centavo increase. But since the rate petition was for an increase in generation charge, Francisco said Meralco as a distribution utility "is not supposed to absorb the cost but should be passed on to the customers". "It all goes back to the issue of under recovery. We will ask the ERC for authority to recover this cost in another manner although we are not yet sure how. This is a case in 2004 and I don't know whether the cost of money will still be recovered," Francisco said. On June 2, 2004, the ERC allowed Meralco to collect an additional 13.27 centavos adjustment in generation charge by way of the periodic generation rate adjustment mechanism (GRAM). The GRAM is a cost recovery mechanism which allows power distributors to adjust their generation charges to reflect changes in fuel prices and the cost of power purchased from producers, including state-owned National Power Corp. The approved GRAM adjustment allowed Meralco to recover the cost of generation for the period of November 2003 to January 2004. According to Meralco, commercial and industrial consumers have to pay the full 13.27-centavo hike, but the increase will be smaller for lifeline residential customers. The Supreme Court however said the ERC order was made without giving consumers any opportunity to file their comments on the proposal to increase tariffs under the GRAM.- GMANews.TV