"As regulator of the electric power industry, the Commission in determining its actions on applications filed before it, has the consumer welfare as its primary consideration, thus, our decision to immediately authorize the fund," said ERC Chairperson Agnes Devanadera in a statement.to the ERC to use a refund scheme for its customers as the company has been using an"interim average rate" of ₱1.3810/kWh to calculate distribution rates over the years.
Meralco explained in its application that it is under a"performance-based regulation" format which allows its rates to reset after a 4-year regulatory period. In 2015, the ERC was supposed to determine a new rate for a new regulatory period but this did not push through because a requirement — the Issues Paper — was not officially released within the designated time frame. Since then, Meralco has been using the interim rate.
Meralco said that in order to resolve issues from using the interim rate, it calculated a refund amount of ₱13.9 billion based on the difference between actual weighted average tariff or AWAT of ₱1.4414/kWh compared to the interim rate. The AWAT is based on actual revenues from distribution, supply and metering charges, it said.
"This will allow the Honorable Commission to commence the next regulatory period prospectively, under a new set of [Rules for setting distribution wheeling rates] to be determined after due notice and public consultation," theMeralco explained that by implementing the refund, the ERC can come up with new rules to calculate the new rate to proceed with the next regulatory period that was delayed nearly six years ago.
"This new set of rules can then be the basis for the determination of the relevant rates for the next regulatory period, thereby returning Meralco to the regular [performance-based regulation] rate-setting methodology," said Meralco.
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