No ERC decision yet on Meralco’s 5RP application withdrawal

MANILA, Philippines — The Energy Regulatory Commission (ERC) has yet to come out with a decision on Manila Electric Co. (Meralco)’s urgent omnibus motion to withdraw its fifth regulatory period (5RP) application for its proposed annual revenue requirement and performance incentive scheme, calling the case complicated.

“We are still waiting for the memo from our legal, their evaluation, since it is very complicated that they (Meralco) withdrew and they will refile,” ERC chairperson and CEO Monalisa Dimalanta said.

“We are still studying what is the right process and what is the right step. So we are still waiting for the evaluation,” she said.

Meralco filed in March 2022 its 5RP application covering the regulatory years (RY) 2023 to 2026, which begins on July 1, 2022 and ends on June 30, 2026.

The company, however, decided to withdraw the application citing several factors.

Meralco said one of the factors is that resolving the application would violate the express provision of the Rules for Setting Distribution Wheeling Rates, wherein the annual revenue requirement must be based on forward looking analysis of forecast cash flow requirements and must represent the optimal forecast revenue requirement.

According to Meralco, the last hearing conducted in the case was on Sept. 16, 2022 and while the pre-trial conference has been completed, the ERC has not issued the pre-trial order and has likewise not set the case for hearing or presentation of evidence since then.

Due to delays, the company said the resolution of the application was no longer based on forecasts as the first regulatory year of the 5RP ended on June 30, 2023, while the second regulatory year of the 5RP is almost at its midway.

Meralco likewise cited supervening factors like additional operating expenses and capital expenditures due to new regulatory and legal impositions that need to be considered in the new 5RP application.

“It is to the best interest of the consumers that RY2023 and RY2024 be treated similarly to the lapsed period with the final rate of P1.3522 per kWh, which is much lower than the average rate of P1.57 per kWh originally applied for in Meralco’s application,” Meralco said.

Under its urgent omnibus motion, Meralco indicated that it intends to refile the application no later than Feb. 15, 2024, before the start of RY2025.

Meralco will also refile its 5RP application with the new period covering RY2025 to RY2028.

The company earlier said new 5RP forecasts were being prepared in anticipation of the ERC’s approval of its proposed withdrawal and refiling of the application.

“We don’t know yet what the ERC will rule on the motion to withdraw. We are waiting for the ruling and as soon as we get that, we will comply with whatever the order is. But we are ready to file the 5RP reset application by February next year as what we have proposed to the ERC,” Meralco first vice president and head of regulatory management Jose Ronald Valles said.