SC to ERC: Review Meralco rates | Inquirer News

SC to ERC: Review Meralco rates

/ 05:30 AM October 11, 2019

Saying it was championing consumers’ rights, the Supreme Court has ordered the Energy Regulatory Commission (ERC) to review its approval nine years ago of the unbundled rates of top power distributor Manila Electric Co. (Meralco).

In reversing a decision the Court of Appeals (CA) handed down in 2016, the Supreme Court said the regulatory body’s approval in 2011 of Meralco’s unbundled rates violated its mandate to approve rates that will provide electricity to consumers “in the least cost manner.”


The high court ordered the ERC to reevaluate the power company’s assets and “determine the parameters whether expenses that are not directly and entirely related to the operation of a distribution utility shall be passed on wholly or partially to the consumers.”

The justices made the ruling during their full-court session on Tuesday, the tribunal said in a statement on Wednesday.


Nasecore petition

It said the decision was written by Senior Associate Justice Antonio Carpio but did not release it yet.

When asked for comment, the ERC declined, saying it had not received a copy of the decision.

According to the statement, the high court partially granted the petition of the National Association of Electricity Consumers for Reforms (Nasecore) questioning the ERC order dated June 21, 2011.

Way of valuing assets void

In that 2011 order, the ERC upheld its decision dated May 30, 2003, approving Meralco’s unbundled rates.

The unbundled rates in the electricity bill gave a breakdown of the charges to consumers to show the cost of producing power, the cost of transmitting and distributing electricity, and other miscellaneous costs.


When the CA upheld the ERC order on Feb. 26, 2016, Nasecore went to the Supreme Court.

The statement said the Supreme Court voided the ERC’s adoption of the current or replacement cost in the valuation of Meralco’s regulatory asset base.

But the tribunal left it up to the ERC to come up with a “reasonable and fair valuation” of Meralco’s assets with the goal of providing electricity to consumers “in the least cost manner.”

COA review

The Supreme Court had previously affirmed the ERC’s order of May 30, 2003, granting Meralco’s petition for an increase in rates.

But the court also ordered the regulator to let the Commission on Audit (COA) look into Meralco’s accounts and check whether the rate increases were reasonable and whether they gave the power company a fair return.

 ‘Excess revenues’

In its Nov. 12, 2009 report, the COA said the unbundling of Meralco’s rates resulted in “overrecovery” and “excess revenues” due to factors that it said should not have been included in computing Meralco’s revenue requirements.

The ERC, however, found fault with the COA’s methods and set aside the audit agency’s findings, upholding its 2003 approval of Meralco’s unbundled rates.

In denying Nasecore’s appeal, the CA said a COA audit was not a requisite to fixing rates and that the ERC was not bound to accept the audit findings.

The appellate court also said that regardless of the Supreme Court order for an audit, the power to fix electricity distribution rates rested primarily with the ERC.

In reversing the CA decision, the Supreme Court stressed that the COA was mandated to examine the accounts of public utilities in connection with the fixing of rates “of every nature.” —DONA Z. PAZZIBUGAN

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