SEN. Win Gatchalian has urged the Energy Regulatory Commission to expedite the reset of the power distribution rate for Manila Electric Co. (Meralco), which some lawmakers blamed for the upward trend in power rates.
Gatchalian made the call after former Energy Regulatory Commission (ERC) chairperson Agnes Devanadera, during a House hearing, claimed that Meralco had paid for the expenses of ERC consultants tasked to determine the weighted average cost of capital (WACC) that has an impact on power rates. It has been discontinued.
His statement came in the wake of a privileged speech by Laguna Rep. Dan Fernandez pointing to the unadjusted WACC as the key reason for consistently high power rates which are among the highest in Asia.
Fernandez said the current WACC of Meralco was computed to allow the utility to cope with the Asian financial crisis then but this remained unchanged even after the crisis, allowing the utility to collect higher rates.
According to Gatchalian, it was inappropriate for Meralco to foot the bill for the regulator’s consultants.
“As we anticipate revised distribution rates that should be more favorable for our consumers, it is imperative that we not only hope but demand a refund if applicable,” said Gatchalian.
The ERC, he said, should scrutinize the factors that go into computing Meralco’s WACC, which had been stuck at 14.97 percent since 2015. The WACC is a key determinant in computing distribution rates.
“The ERC should make sure that rates being passed on by distribution utilities are fair and correct for consumers,” said Gatchalian. “Consumers should not be paying more than they should.”
According to the ERC schedule, the final determination for the fifth regulatory period rate reset for distribution utilities, including Meralco, is in March 2024. Gatchalian noted that the original date set by the ERC to reset Meralco’s WACC had been delayed already by a year.
Meralco had said that charges reflected in consumer bills had been reviewed and approved by the ERC and that it adheres to ERC orders on cost adjustments arising from regular reviews.
