‘Power rates are fair’

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The Manila Electric Co. (Meralco) said its rates undergo a review and confirmation process to ensure  they are fair and reasonable.

Meralco made this statement on allegations by lawmakers at a hearing of the House Committee on Legislative Franchises last week that  Meralco  has been overcharging ts customers since 2012.

Jose Ronald Valles, Meralco first vice president and regulatory management head, said  as a highly regulated entity, the company “strictly adheres to the rules governing its operations and franchise and the rates we implement always have prior approval from the regulator. A testament to the strict review, these rates are still subject to periodic confirmation process by the ERC (Energy Regulatory Commission).”

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“The proper venue for discussing the refund claims is the ERC, which has the rate-setting power and the regulator has already decided on a refund totaling P48 billion, which Meralco implemented in a timely manner,” Valles added.

Meralco said records will show it is the only private distribution utility (DU) that has made a distribution refund in compliance with ERC directives.

The company said the setting of the weighted average cost of capital (WACC) is a function of the ERC, on  allegations Meralco has an “extremely high WACC.”

Meralco said its last approved WACC is the lowest  given by the regulator under the performance-based regulation (PBR) and was determined based on a set of rules that went through public consultation and thorough review by ERC.

Meralco  said its current WACC is also an industry rate that applies to all private DUs in the same category and is not company- specific.

It added the company does not have a determined WACC since July 2015 because there was no completed rate reset during the regulatory period up until now.

The company added its conduct of a competitive selection process (CSP) to secure power supply requires approval from the Department of Energy (DOE) for its Power Supply Procurement Plan and the Terms of Reference (TOR), to make sure  these are aligned with the requirements and standards set by the government.

“This is contrary to the baseless and malicious claims that Meralco’s TOR is tailor-fitted to favor select generation companies… Our past CSPs conducted are proof that no such tailor-fitting is happening, precisely because the TOR and other bidding documents are required to comply with existing policies of DOE and regulations of ERC and the resulting Power Supply Agreement needs to be approved by regulator,” Valles added.

Meanwhile, the ERC also asked Meralco to possibly improve the TOR of its ongoing CSP for 1,800 megawatts (MW) worth of electricity.

ERC chairperson Monalisa Dimalanta said in the same hearing she asked Meralco to make sure it is not unduly limiting the number of potential bidders.

There are six potential bidders for the upcoming 1,800 MW CSP.

“We already raised with Meralco our concerns on the limited number of potential participants that could participate (to the CSP),” Dimanlata said during the hearing.

Dimalanta said the ERC has given Meralco an “opportunity” to improve the terms which will be monitored and acted upon by the regulatory body, accordingly.

Apart from questioning Meralco’s rates and CSP rules, there are also proposals from lawmakers to possibly split the current franchise area of the DU into three. -J. Macapagal

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