MERALCO refutes overcharging allegations, highlights regulatory compliance

The Manila Electric Company (MERALCO) has categorically denied recent allegations of overcharging, calling them baseless and a distortion of the truth. 

The distribution utility (DU) firm reiterated that all components of its rates are thoroughly reviewed and approved by the Energy Regulatory Commission (ERC) before being collected from consumers.

“MERALCO has no power to unilaterally set rates and only the ERC has the authority to determine what rates MERALCO can charge after public hearings and rigorous scrutiny, to ensure that these rates are fair, reasonable and least cost,” the company said in a statement.

MERALCO explained that power rates undergo periodic reviews by the ERC, which could result in adjustments such as refunds or additional collections based on the regulator’s assessment.

As an example, the company cited the ERC’s decision to lower MERALCO’s distribution rate to Php 1.3522 per kilowatt-hour (kWh) for the period from July 1, 2015, to June 30, 2022. This adjustment led to a total refund of Php 48 billion, which MERALCO implemented promptly from 2021 to 2023.

Addressing allegations about its weighted average cost of capital (WACC), MERALCO clarified that this is determined by the ERC. The last WACC approved for the company applied to the period from 2011 to 2015 and was the lowest among distribution utilities and transmission companies at the time. 

Net of tax, together with the effective WACC and corporate income tax stood at 10.5%, significantly lower than the 12% return approved by the Philippine Supreme Court in several jurisprudence.

MERALCO also debunked accusations of asset overstatement and double charging during a recent Senate hearing, asserting that the valuation of its assets starting in 2011 did not account for inflation. The company emphasized that these claims are based on dissenting opinions from the ERC Decision resolving its rates for the lapsed period and the accusations of a retired ERC official.

“Since ERC is a collegial body, MERALCO will follow only the majority Decision consistent with the Rule of Law and democratic principle that the rule of majority governs,” MERALCO stated.

The company reaffirmed its commitment to delivering reliable, stable, and safe electricity service at the least cost while strictly following the rules and regulations governing its operations.