The Energy Regulatory Commission (ERC) is poised to modify an earlier decision on the Manila Electric Company’s (Meralco) rate reset under the fifth regulatory period (5RP), according to reinstated chairman Monalisa Dimalanta. In a briefing Monday, Dimalanta said this was in response to feedback received during a recent Senate hearing on the agency’s budget for the upcoming year.
“While a decision on Meralco’s 5RP was made before my suspension, the Senate discussions highlighted the need for us to revisit this issue,” Dimalanta said. She emphasized that modifications will incorporate sentiments expressed during the hearing, which could impact on how the 5RP is structured moving forward.
Meralco’s 5RP, which spans from 2022 to 2026, has significant implications for its customers. Jose Ronald Valles, Meralco senior vice president and head of regulatory management, said customers could receive refunds of approximately P16 billion once the ERC finalizes the rate reset. He explained that should the ERC declare the 5RP as lapsed, the confirmed rate would be P1.3522 per kilowatt-hour (kWh), down from the P1.57 per kWh that Meralco initially proposed.
“The refund will cover the average weighted actual tariff (AWAT) that exceeds P1.3522 per kWh for the entire 5RP period,” Valles elaborated. He said that due to the sales mix—particularly higher residential electricity consumption—Meralco’s AWAT surpasses the approved distribution rate at the moment.
Valles said the ERC previously authorized a rate of P1.3810 per kWh, later reduced by 3 centavos after a comprehensive review. He said had the ERC approved the higher proposed rate, customers face minimal or no refunds instead.
The ERC is also under pressure from the Senate, particularly from energy committee vice chairman Sherwin Gatchalian, who argues that a thorough review of Meralco rates would lead to a lower weighted average cost of capital (WACC) than the current 14.97 percent. Gatchalian said, “A lower WACC would ultimately benefit consumers, as it would reduce high distribution charges.”
Meralco’s next rate reset for the sixth regulatory period (6RP) is scheduled for July 2026, but the outcome of the ongoing discussions and modifications regarding the 5RP will play a crucial role in shaping the company’s regulatory landscape and customer relations in the near term.
