Meralco refutes overcharging claim for being without basis

MANILA, Philippines - Manila Electric Co. (Meralco) refuted yesterday the claims made by the National Association of Electricity Consumers for Reforms (Nasecore) that the company overcharged its customers by P14 billion over a five-and-a-half year period. 

Meralco regulatory affairs head Jose Ronald Valles said these accusations are unfounded and baseless.

He pointed out that Nasecore’s findings were based on the Energy Regulatory Commission’s decision dated March 20, 2003. “That, in itself, however, is misleading as the commission’s final decision on the rate unbundling was contained in the order dated May 30, 2003.”

He added that Nasecore president Pete Ilagan is misrepresenting facts to mislead the public, “which is why he has chosen not to rely on the findings contained in the commission’s May 30, 2003 order. “We note that even the Supreme Court has affirmed these findings of the commission as supported by evidence and Mr. Ilagan should respect the Supreme Court decision,” he noted.

Valles added that Ilagan’s accusations of “overcollections” and “abuse of market power” are clearly malicious. 

“Our unbundled rates were duly approved by the Commission after public hearings and extensive evaluation by the regulator of our capital and operating expenditures. Only actual costs incurred and assets ‘used and useful’ in delivering service in the year 2000 were incorporated in the Meralco’s unbundled rates.

The 15.5 percent rate of return equivalent to Meralco’s weighted average cost of capital was determined by the regulator to be the fair rate of return for Meralco and this was also upheld by the Supreme Court. We, therefore, see no valid reason for Mr. Ilagan to repeatedly accuse Meralco of overcharging, other than to promote his ill-motivated personal interest,” he said.

Mr. Ilagan should also not be referring to the earlier Commission on Audit (COA) report as being final. The COA findings were merely recommendatory. While the COA is an audit body, it is not an adjudicating body. It is the ERC, not the COA that is the body mandated to determine electricity rates. It will be recalled that the competence of the ERC to rule on these technical matters was upheld by the Supreme Court. In any case, we will respond to the baseless and self-serving allegations of Mr. Ilagan in more details, once we receive a copy of his letter to ERC,” Valles said.

Meanwhile, the ERC has junked the petition of Meralco consumer Gerardo Lualhati alleging that the power utility firm has overbilled its customers by P39 billion from 2004 to 2007.

The ERC said Lualhati’s petition did not have merit and its petition to replace the current rates to 90.77 centavos per kilowatthour (kwh) has been denied. 

In his petition filed in July 15, 2008, Lualhati claimed the power utility firm overcharged its residential customers because the approved distribution price for 2006 was only P1.083 per kwh compared to the P2.063 per kwh uniform price charged by Meralco.

In its decision, the ERC, however said there were inconsistencies between allegations of Lualhati numbers and the figures in Meralco’s final determination of its rates.

The regulatory body noted that Lualhati computed Meralco’s distribution charge including the system loss charge, which is not a component of the distribution charge.

ERC said Lualhati arrived at the P39 billion by merely dividing Meralco’s annual revenue by its annual energy consumption which should not be the case.