Immediate resolution urged for Meralco rate reset issue

By Sheldeen Joy Talavera, Reporter

THINK TANK InfraWatch PH called on the Energy Regulatory Commission (ERC) to act immediately on a long-overdue decision on Manila Electric Co.’s (Meralco) fifth regulatory reset.

In a letter to the ERC dated Oct. 30 addressed to then-acting ERC Chairperson Jesse Hermogenes T. Andres, InfraWatch Convenor Terry L. Ridon urged the regulator to release its decision on Meralco’s fifth regulatory period (5RP) covering the years 2022 to 2026.

“This will not only ensure that the benefits promised under PBR (performance-based regulation) are realized by customers but will also send the appropriate signals for investors to come in,” Mr. Ridon said.

Under the Electric Power Industry Reform Act of 2001, or EPIRA, the ERC is tasked with establishing and enforcing a methodology for setting transmission and distribution wheeling rates for distribution utilities.

Distribution utilities such as Meralco are subject to a PBR and a a rate reset process prior to the start of the next regulatory year.

The rate reset process is a forward-looking exercise that requires the regulated entity to submit forecast expenditures and proposed projects over a five-year period, to be reviewed by�� the ERC, which will then adjust rates.

Mr. Ridon said it is “high time” for the ERC to issue a formal order on the 5RP to allow parties to proceed with the 6RP, which will commence on July 2026.

He said Meralco’s rate reset should have been issued before July 1, 2022.

The same rules on rate reset “cannot legally be made to apply to a period that has already lapsed and where the forecasts are no longer relevant because actual costs have been incurred,” he said.

“To hold otherwise would be to deprive the PDUs (private distribution utility) and the consumers of PDUs alike of substantive and procedural due process,” he said.

Mr. Ridon said that the decision to consider the 5RP as lapsed is “correct and fair,” and is consistent with the ERC’s own rules and practice.

Asked to comment, ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said she has yet to see the letter.

She��said at a briefing last week that the commission hopes to issue its decision within the year.

Ms. Dimalanta said the commission has revisited the matter and made some “modifications” following a recent Senate hearing.

Meralco Senior Vice-President and Head of Regulatory Management Jose Ronald V. Valles has said that an estimated P16 billion worth of refunds are expected once the ERC resolves the rate reset and considers the 5RP a lapsed period.

“That’s a big, big, big relief for the consumers. That’s why we want to have closure already,” Mr. Valles said in a briefing.

He said that the power distributor is awaiting an official decision from the ERC to trigger the filing of the application for refund and start preparations for the next period of rate reset.

“In our review of the specific case of Meralco and the regulated entities under PBR, one thing is for sure — there needs to be changes and it has to start with strict adherence to timelines,” Mr. Ridon said.