Meralco proposes 2-pronged scheme on refund’s last phase

Power distributor Manila Electric Co. (Meralco) has proposed a two-pronged approach in undertaking the last – and costliest – phase of its customer refund scheme over a five-year period starting next year.

In a proposal submitted to the Energy Regulatory Commission (ERC), Meralco said it plans to carry out Phase IV of the refund process through a combination of fixed credit to bills and issuance of refund notes to affected clients.

The last phase will cost Meralco P28-billion worth of refund mostly to big commercial and industrial users, including other non-residential and general service customers.

Phase IV will be undertaken into two sub-phases, with Phase IV-A covering the smaller commercial and industrial customers, flat streetlights, government hospitals and metered streetlights with contracted demand of less than 40 kilowatts (kw). 

The refund mode is through a fixed monthly credit to bill from Jan. 2005 to Dec. 2007. The fixed amount, equivalent to a customer’s gross refund amount (GRA) divided by 36, will be deducted from the customer’s monthly bill for 36 months. This translates to an average reduction of 42 centavos per kilowatthour (kwh) in the customer’s monthly bill for the duration of the refund.

The refund coverage, gross refund kwh and GRA will be reflected in the customer’s Jan. 2005 bill," said Meralco senior assistant vice president and refund management task force head Leonardo Mabale.

Mabale said those with terminated contracts under Phase IV-A will receive their refund starting Nov. 2007 either in cash or by check.

The Meralco official said the refund for Phase IV-B, covering medium and large commercial and industrial customers with contracted demand of 40 kw or more, will commence in July 2005.

According to Mabale, this was originally targeted to start in May 2005 but because of the need for more time to process the refund notes once approved by ERC, Meralco moved it to July 2005.

"We hope the business groups understand the situation," Mabale said.

The refund mode will be through fixed credit to bills, similar to that of customers under Phase IV-A, except for the longer duration of 63 months starting in July 2005 and ending in Sept. 2010. This translates to an average of 21 centavos per kwh deduction in the customer’s monthly bill for 63 months. 

Customers covered by Phase IV-B and not in arrears for 90 days or more will be given the option to receive non-interest bearing refund notes. 

The refund notes will mature every quarter for 21 quarters (equivalent to 63 months).  The customer may encash the maturing portion (GRA divided by 21 quarters) of the refund note at the end of every quarter from Meralco’s paying agent. 

The refund note has a liquidity feature that allows the customer to generate additional funds to meet current obligations or expand business.  A customer can have his refund notes traded at the Philippine Fixed Income Exchange or rediscounted at commercial banks.

Those with terminated contracts under this group will have the option to receive refund notes with the same features as those offered to active services or to receive a refund check in Jan. 2008.

Meralco vice president for corporate communication Elpi Cuna, Jr., on the other hand, said that as of end-August, "Meralco has already processed the refunds to a total of 4.72 million customers or 91 percent of those entitled to the refund. Phase III refund is still on-going and is scheduled to be completed by the end of this year."