MERALCO counters overcharging allegations

MERALCO power lines

The Manila Electric Company (MERALCO) refutes claims of overcharging customers made by Santa Rosa City Representative Dan Fernandez. 

MERALCO First Vice President and Regulatory Management Head, Atty. Jose Ronald Valles quashed the allegations saying that its rate goes through a review and confirmation process to guarantee its fairness like other distributors. 

“I would like to reiterate that as a highly regulated entity, Meralco strictly adheres to the rules governing its operations and franchise and the rates we implement always have prior approval from the regulator. A testament to the strict review, these rates are still subject to periodic confirmation process by the ERC,” said Valles.

Rep. Fernandez also alleged that MERALCO’s weighted average cost of capital (WACC) is excessive.

MERALCO retorted that the regulator sets the WACC and that, based on the distribution utility’s (DU) most recent WACC, the regulator has established the lowest WACC under the Performance-Based Regulation (PBR) for both NGCP and private DUs.

Following public input and an evaluation by the ERC, the WACC was changed in accordance with the regulations. 

Additionally, MERALCO also cited a study done by the International Energy Consultants claiming that the DU’s rates are reasonable since they are also at par with other countries whose power costs are subsidized by their own government. 

This outcome was due to the company’s ongoing initiatives to secure the most cost-effective supply available, including the implementation of a transparent Competitive Selection Process (CSP). 

Before starting CSP, Meralco would first secure approval from the Department of Energy (DOE) for its Power Supply Procurement Plan and the Terms of Reference (TOR) for the CSP, guaranteeing alignment with government requirements and standards.

“The CSP is a very transparent process, and the resulting PSAs from this bidding will still be subject to the review and approval of the ERC,” added Valles.