ERC orders ₱9.5-B refund to Meralco customers
More than 8 million consumers of Manila Electric Co. (Meralco) are poised to benefit from a slight reduction in electricity costs with the rollout of a P9.5-billion refund.
In its decision dated July 31, the Energy Regulatory Commission (ERC) ordered the company to refund the equivalent rate of P0.3448 per kilowatt-hour (kWh) within six months as a separate line item in consumers’ electricity bills.
ERC Chair and CEO Francis Saturnino Juan said the implementation would begin in the next billing cycle.
Under a rate reset process, a regulated entity such as Meralco must submit to the ERC its spending and proposed projects over a period, usually five years, unless extended by the regulator. This will then be the basis of the rate that will be passed on to consumers.
The multibillion-peso refund represents the price correction for the lapsed period from January to December 2025.
A lapsed period refers to the duration since the previous rate update, potentially affecting the pricing and revenue of regulated entities such as Meralco. During this period, consumers are charged using outdated rates, which may no longer reflect the current costs of the service as the company awaits new tariff adjustments.
The ERC said the power firm’s actual weighted average tariff, or the rate logged based on its actual revenues and energy sales, of P1.5224 per kWh was higher than the final distribution rate of P1.3522 per kWh.
The commission likewise included interest costs, reaching P496 million.
“Considering that Meralco collected the over-recovery during the regulatory years covered by the lapsed period, the Commission finds it prudent to include the interest cost in the computation of the total refund of Meralco relative to the instant case,” the ERC said.
Meralco is the country’s biggest power distributor, delivering electricity to about 8.3 million consumers in Metro Manila and nearby provinces.
In a statement on Sunday, Meralco said it supports government initiatives that provide relief to consumers.
“Meralco supports initiatives of the government to provide relief to consumers and ensure that they benefit from any approved refund as quickly and transparently as possible,” said Jose Ronald Valles, SVP and head of regulatory management of Meralco.
In July, the firm hiked its rates by P0.3428 per kWh to P14.8261 per kWh due to higher fuel prices.
The recent hikes in Meralco power bills have led to public frustration, with many even questioning some line items that are charged to consumers.
System loss
The charges being criticized include the lifeline program, senior citizen discounts, and renewable energy initiatives.
But regulators have maintained that the price hikes are “imposed in accordance with existing laws and policies.”
Defending the rate increases, the Pangilinan-led power company also said the impact on the generation charge of the oil price spikes and the weakening of the local currency against the US dollar was “beyond the control of Meralco.”
Generation charge accounts for more than half of the bill.
Amid sharp public uproar, especially on social media platforms, due to allegedly high rates, the Department of Energy (DOE), together with the ERC, said they would look into the electricity pricing of Meralco.
“As part of this comprehensive review, the DOE and ERC are rigorously assessing Meralco’s price structures to deliver fairer electricity bills for Filipino consumers,” the DOE said in a statement last week.
The DOE, ERC, and officials from Meralco held talks on how to implement President Marcos’ call to scrap system loss charges.
System loss is the difference between electricity entering a distribution network and the amount eventually billed to customers.
It covers technical losses caused by resistance in power lines, transformers and aging equipment, and nontechnical losses from electricity theft, illegal connections, defective meters and billing errors.
‘Who bears the cost?’
Meralco chair Manuel V. Pangilinan, however, warned that the power sector may not survive if the government moves to completely drop system loss charges, saying the costs are “too big” for industry players to bear.
“It is not a question of inefficiency. It is just the way it is, and there’s a cost to it. So the real question is who bears the cost,” Pangilinan told reporters last week.
“So, who’s going to pay for that? The industry? It’s going to cost tens of billions of pesos. Will you not survive?” he added.
DOE Secretary Sharon Garin said completing the President’s order may take a year.
“Consumers should only pay for the electricity they actually use, not for losses they did not cause,” Garin said.
Garin said the DOE would collaborate closely with regulators, lawmakers, and industry players to ensure customer protection from unusually high electricity billings, while keeping the long-term viability of the sector.
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