MERALCO ordered to return Php1.4B “over recoveries,” collect Php2.38B “under recoveries”

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(UPDATED) The Manila Electric Company (MERALCO) has confirmed receipt of the Energy Regulatory Commission’s (ERC) order to refund to its customers over-recoveries of its pass-through charges worth Php1.4 billion and to collect under-recoveries worth Php2.38 billion.

MERALCO utility economics head Lawrence Fernandez said that the company will immediately prepare to comply with the commission’s ruling.

Based on its review of MERALCO’s submitted data from January 2017 to December 2019, the ERC validated the over recoveries in pass-on charges, which include the following: Transmission Rate (TR), System Loss Rate (SLR), Lifeline Subsidy Rate (LSR), and Senior Citizen Subsidy Rate (SrCSR).

The ERC also said that MERALCO, the country’s largest power distributor, incurred under recoveries in the Generation Rate (GR).

MERALCO was ordered to refund the over-recoveries at an average rate of Php0.1331 per kilowatt hour (kWh), for around three months until fully refunded, and to collect the computed under-recovery in the GR, with an equivalent rate of Php0.0395/kWh, for around 24 months until fully collected starting on the next billing cycle upon receipt of the order.

The agency likewise directed a longer period for MERALCO to collect the under charges in order to protect the consuming public by mitigating the impact of the said under-recovery collection.

In addition, MERALCO was directed to reflect the over and under-recoveries in the monthly computations of GR, TR, SLR, and other charges.

The power giant was given ten days from receipt of the order to submit to the commission its plans on how to implement the directive.

Distribution utilities like MERALCO are required under ERC Resolution No. 16, Series of 2009 to file their respective applications with the commission once every three years in order to ensure that the recovery of various pass-through costs is fair and proper.

“Let it be emphasized that the Commission, in acting on the pass on charges confirmation has the consumers’ welfare as its primordial consideration. We will find means, such as stretching the collection of any under collection to a longer period and effecting a quick refund for over collection, in order to temper the impact on consumer’s bill,” ERC Chairperson Agnes Devanadera said in a statement.

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