Meralco overcharged consumers by P14 billion in 5 1/2 years – Nasecore

MANILA, Philippines – Power utility giant Manila Electric Co. (Meralco) has overcharged its customers by P14.2 billion in a span of five-and-a-half years, according to a consumer advocacy group.

In a letter to the Energy Regulatory Commission (ERC), the National Association of Electricity Consumers for Reforms (Nasecore) said the computed amount is based on Meralco’s financial statements showing an accrued over-collection of P14.2 billion from June 2003 to December 2008.

“Our finding is based on this honorable commission’s decision dated March 20, 2003 granting Meralco’s revenue requirement of P20.1 billion (net of purchased power cost) in the latter’s rate unbundling application,” Nasecore president Pete Ilagan said.

Nasecore noted that in ERC’s order, it modified Meralco’s total rate base to P76.84 billion. Furthermore, Meralco’s return was increased from 12 percent to 15.5 percent.

With the change in Meralco’s rate base and return, Nasecore’s computation reveals a higher revenue of P22.96 billion, Ilagan pointed out.

To determine whether Meralco was getting its ERC-approved annual revenue requirement, Ilagan said they examined the company’s 2004-2008 annual reports and compared the allowed revenue requirements versus actual revenue generated.

Ilagan attributed Meralco’s over-collection to the ERC’s failure to study and review Meralco’s reportorial submissions, giving the company undue advantage to the detriment of trusting consumers.

“Nonetheless, our findings clearly conform to the COA audit report of Meralco overcharges in test years 2004 and 2007,” he said.

Ilagan added that all of these are contained in the COA audit report of disallowances of Meralco’s yearly expenses in the average amount of P3.197 billion transmitted to the ERC.

“In light of Meralco’s over-collections, we hope the honorable commission will exercise its motu proprio powers under the EPIRA (Electric Power Industry Reform Act) and direct Meralco to immediately put in an escrow account the said over-collections and penalize Meralco for abuse of its market power,” he said.

The Nasecore official also threatened ERC that it will go to higher courts if this issue is not resolved at the commission’s end.

“We hope this honorable commission will not simply advise Nasecore to file a more formal complaint because that will be an abdication of this commission’s functions of reviewing and evaluating submissions of the utilities to determine compliance and that the rate it granted Meralco was just and reasonable. Should the commission fail to favorably act on the information we voluntarily provided, we will be constrained to seek other relief,” he said.

The group wants Meralco to credit these overcharges to its customers’ future bills.

“If the ERC feels that this refund may result in the unviable operations of Meralco, we will most welcome the idea of having this amount treated as consumer equity so that the amount may stay with Meralco,” he said. –Donnabelle L. Gatdula (The Philippine Star)