Meralco admits delay in release of refunds

The Manila Electric Co. (Meralco) admitted yesterday that there will be a delay in the release of refunds for industrial and large commercial customers but has offered to issue them post-dated checks instead.

The P18-billion refund process for commercial and industrial customers is the fourth and last phase of the Supreme Court’s November 2001 order calling for Meralco to pay back customers some P30 billion in overcharges since 1994.

The last phase of the Meralco refund is subdivided into two phases — phase IV-A for small commercial and industrial customers and flat streetlights, including government hospitals and metered streetlights (GHMS) with contracted demand lower than 40 kilowatts; and phase IV-B for medium, large, very large and extra large commercial and industrial customers, including GHMS with a contracted demand of 40 kilowatts (kwh) or higher.

Based on the original proposal, customers under phase IV-A will only receive credit on future billing while those under phase IV-B will have the option to get their refunds through refund notes if they are customers of good standing.

In the amended proposal, Meralco will now provide customers under both phases, including customers with arrears, the option to get their refunds through post-dated checks.

In a statement, Meralco refund management task force Leonardo Mabale said the original schedule for the refund will be changed to later dates.

For phase IV-A, the refund will be moved from January 2005 to July 2005 while payment for phase IV-B is rescheduled from July 2005 to October 2005.

Mabale said the deferment would allow Meralco some relief in its cash flow, as he admitted the power utility firm would not be able to cover the last phase of the refund unless granted a longer period of repayment.

The original 36-month payment period for phase IV-A was shortened to just 18 months as prescribed by the Energy Regulatory Commission. The refund for phase IV-B will be based on a 63-month refund period depending also on ERC prescription.

"Although we acceded to the 18-month prescription, it was premised on our financial projections for 2005. Unfortunately, Meralco electric sales have been weaker than expected in the first five months of 2005. We project that there will be no significant rebound in our electricity sales performance until the end of the year. Because of this and the rate under-recoveries, managing cash flows while servicing the refund will be a challenge," Mabale said.

He disclosed that the option of issuing refund notes to its commercial and industrial customers had been replaced with post-dated checks which were be more cost-efficient, benefit more consumers and provide liquidity to a number of customers.

The fixed credit-to-future-bill option, however, remains for customers who do not opt for the post-dated checks. Customers who choose this option can also receive their refunds in cash after the first month of the refund implementation. But they have to inform Meralco on a monthly basis of their preference to receive the succeeding months’ refunds in cash.

Mabale also noted that the Bureau of Internal Revenue (BIR) has ordered Meralco, through Revenue Regulation No. 8-2005, to withhold a 25-percent creditable income tax on refunds to customers with active accounts, and 32 percent on refunds to customers with terminated accounts.

In the processing of refunds for phase IV-A and IV-B, Mabale said customers must submit their BIR Certificate of Registration indicating their tax identification number. The name indicated on the TIN should also be the same as that of the registered customer entitled to the refund.

Meralco will send letters to all qualified customers informing them of the details of the refund process and the steps they would have to follow to avail of the refund.