MANILA, Philippines—The Energy Regulatory Commission (ERC) has ordered Manila Electric Co. (Meralco) to open its books to Commission on Audit (COA) scrutiny, to determine if the power distributor’s past rate increases were justified.

In a letter dated Sept. 3 to Meralco president and chief operating officer Jesus Francisco, ERC chair Zenaida Ducut directed the utility to coordinate with the COA within 10 days so the audit could start as soon as possible.

The ERC also ordered Meralco to provide the COA with office space and facilities to conduct the audit.

Earlier, COA Chair Reynaldo Villar had written Ducut on August 27, to say an audit should be conducted to comply with the Supreme Court ruling in the Meralco v Genaro Lualhati et al. unbundling case in December 2006.

Meralco vice president for corporate communication Elpi Cuna on Aug. 28 said the company was “ready and willing to allow the COA to conduct an audit of our books and accounts pursuant to the SC decision on Meralco’s unbundling case.

“However, the company believes such an audit must be conducted only for the purpose of ensuring that the rates being charged by the company strictly comply with those approved by the ERC in its unbundling decision.”

Change of heart

The audit will cover the period 2004-2007 and would entail the full scrutiny of Meralco’s books, records and accounts “to see to it the rate increases Meralco had asked for were reasonable and justified,” Villar said.

In the past, the COA had turned down requests to audit Meralco, a private firm.

In an April 26, 2004, letter to the ERC, the COA had said: “We regret to inform you this office cannot extend such assistance, as this is not among the mandated functions of this commission.”

Cuna said COA’s “sudden change of heart” and “enthusiasm to audit Meralco” were a source of wonderment to the distribution utility.

“Why the sudden desire now to audit Meralco, when there have not been any amendments to the Constitution with regard to the jurisdiction of COA?” he said.

Meralco, meanwhile, was asked to explain why it needed to raise electricity rates when the price of oil in the world market was going down.

Pampanga Rep. Juan Miguel Arroyo, chair of the House committee on energy and son of President Macapagal-Arroyo, said an explanation was made more necessary on the heels of the Supreme Court-mandated refund of the meter deposits of the utility’s customers.

“They should explain why they are asking for an upward rate adjustment, when the price of crude is going down,” said Arroyo in a telephone interview Thursday.

“People might think the proceeds of the price increase will only be used to cover the refund of the meter deposits. If that is the case, para tayong ginigisa sa sarili nating mantika (it’s like being fried in our own lard),” he said.