Meralco suffers double whammy

The Manila Electric Co. (Meralco) suffered a double blow yesterday when it reported a net loss of P2 billion in 2002 at the same time that the Supreme Court denied its second motion for reconsideration regarding a P28-billion refund order.

Meralco president Jesus Francisco said that the 2002 net loss was largely due to the failure to collect deferred purchased power adjustment (PPA) charges from customers.

He told financial news service AFX-Asia that his company will likely return to a net profit in three months due partly to high electricity sales. For 2001, Meralco reported a net profit of P1.4 billion.

"We are going to report a good figure for the first quarter. Our sales were very healthy and our systems loss lower than last year," he said without giving any figures.

The SC’s Third Division, however, told Meralco in a two-page resolution that "no further pleadings shall be entertained in this (refund) case" and that its two separate orders on the matter are final and executory.

The SC ruled on Nov. 15, 2002 that Meralco overcharged its subscribers from February 1994 when the power firm started treating its income taxes as part of operational expenses. It ordered the firm to pay back the excess charges to its customers, which was estimated to reach P28.15 billion.

On April 9, it upheld its decision and re-affirmed the refund order to Meralco with finality.

Lawyer Ismael Khan, Jr., assistant court administrator and chief of the SC information office, said that the Lopez-owned power firm is left with no other option but to refund the overcharges.

Khan added that the ball is now with the Department of Energy (DOE) and Electric Regulatory Board (ERB) to oversee the immediate refund.

In a 23-page motion for reconsideration last April 14, Meralco’s lawyers reiterated that it would be detrimental to the company’s financial stability if it is unable to recover income taxes paid to the government.

They also contended that the SC’s Third Division violated the Constitution since it should have resolved the matter by a full court after an oral argument.

Meralco said the SC should consider the opinion of Justice Artemio Panganiban, a member of the Third Division, that the case should be referred to the Court en banc since there were questions left unanswered.

Meralco noted that Panganiban himself paid attention to the new belief of the Energy Regulatory Commission that "income taxes are now reasonable costs that may be recoverable from the consuming public."

The power firm also cited a new law — Republic Act 9136 or the Electric Power Industry Reform Act — which authorized the Energy Regulatory Commission (ERC) to determine the rates that would "allow the recovery of just and reasonable amount rate base to enable the entity to operate viably."

The SC, however, argued that even if Meralco’s income tax liability would be included as an operating expense, the company would still enjoy excess revenue of P312,738,000 or 1.04 percent above the authorized rate in return of 12 percent.

Allowing Meralco to treat income tax as an operating expense would also set a dangerous precedent, the High Court said.

As this developed, the Katipunan ng mga Anak ng Bayan All Filipino Democratic Movement (KAAKBAY), one of the 40 petitioners against the PPA, hailed the SC decision.

"This move would enable the consumers to directly participate in decisions which would shape the power industry," KAAKBAY spokesperson Jowanes Ablog said.

Ablog also said that in commemoration of Labor Day, the government should seriously address the problems in the power industry, which greatly affect the lives of those in the labor sector. — With AFP