Meralco to refund P452 million in over-recovery charges

MANILA, Philippines - Power utility firm Manila Electric Co. (Meralco) has been ordered to refund one centavo per kilowatthour (kwh) or P452 million worth of over-recovery charges to its customers.

The Energy Regulatory Commission (ERC), the country’s power sector watchdog, said the Meralco refund is inclusive of carrying charges, in over-recovery from its collection of previous power purchase adjustments (PPA) in 2001 and 2004.

“While the reduction to the electricity bill may be minimal, the ERC’s actions actually averted a rate increase that would have been inevitable had Meralco been just allowed to recover what is due it, without the ERC putting it to task to immediately return to the consumers what is due them,” said Francis Juan, ERC executive director.

The PPA charges take into account fluctuations in the costs of Meralco’s power suppliers. These costs are collected by the utility on behalf of its contracted power generating companies from its customers. The PPA has since been replaced by the generation rate adjustment mechanism (GRAM).

Juan said the refund was minimal because of the offsetting approved by the ERC on Meralco’s rate hike petition.

Specifically, the commission resolved three pending cases of Meralco pertaining to over- and under-recoveries in its transmission charges and implementation of its approved charges to recover certain under-recoveries in its PPA, and taken together, the ERC’s actions on these pending cases called for Meralco to implement a refund of its net over-recoveries at the cost of one centavo per kwh.

ERC said the first of these three cases relates to Meralco’s claims for under-recoveries in its transmission charges from June 2003 to July 2007 totaling P5.56 billion, which it filed in September 2007.

After disallowing some of the amounts included in Meralco’s application based on its finding that these were not duly substantiated or explained, the ERC approved Meralco’s recovery of the amount of P5.35 billion, inclusive of carrying charges, representing its under-recoveries for the period covered by the application.

The ERC also acted on Meralco’s plea for provisional authority in the subsequent application relating to its transmission charges that it filed in July 2009, which is for refund of its net over-recoveries in its transmission charges from August 2007 to August 2009, totaling P4.5 billion.

In this subsequent application the ERC granted provisional authority for Meralco to effect a refund of the total amount of P5.17 billion.

With this move, the net amount to be collected by Meralco representing its transmission charge under-recoveries was reduced to P174 million.