Consumers sue ERC over order on Meralco profits

REGULATORY FAILURE  Linemen inspect electric meters in Manila amid a court dispute on the fair profits of Manila Electric Co. —INQUIRER FILE PHOTO

Consumer groups have filed a petition for certiorari before the Court of Appeals (CA) challenging an Energy Regulatory Commission (ERC) order that increased profit margins for Manila Electric Co. (Meralco).

In their 66-page petition, Romeo Junia, the Power for People Coalition, Konsyumer, Partido Lakas ng Masa, and Sanlakas questioned the ERC order, which approved the rate allegedly without going through the legal rate-setting process, resulting in much lower refunds for consumers.

READ: Consumer groups seek CA’s help to stop ERC ruling on Meralco

Named respondents are the ERC, represented by chair and CEO Monalisa Dimalanta, and Meralco.

Junia pointed out that the ERC gave “undue advantage” to Meralco with the delay in reviewing its rates.

“The ERC made its first mistake as a regulatory agency when it allowed Meralco to charge more than it should have. That they allowed this to drag on across the terms of five ERC chairpersons is tantamount to regulatory failure, with Meralco among the main parties benefiting,” he said.

The petitioners said Meralco’s weighted average cost of capital (WACC), which is one of the factors in computing the distribution charge, has remained unchanged at 14.97 percent since 2011.

But, according to recommendations from the ERC’s own consultants, Meralco’s WACC should be at 8.27 percent for 2016 to 2019, they said.

“The ERC needs to be reminded of its mandate to protect consumers from high electricity prices. There is no place for negligence—or worse, corruption—especially in an industry imbued with public interest,” said lawyer Aaron Pedrosa, Sanlakas secretary general and one of the legal counsels of the case.

Rate recheck

Earlier in July, a retired official of the ERC also filed a petition before the CA calling for the recomputation of the rates charged by Meralco to its consumers from 2012 to 2022.

In his 33-page petition for review, former ERC Commissioner Alfredo Non alleged that the ERC’s dismissal of his motion for reconsideration on June 14 resulted in “unjust and reasonable rates” for Meralco to the “damage and detriments of Filipino consumers and simultaneously unjust enrichment” in favor of the company.

Speaking to reporters after the filing, Non said that if his computations based on international standards were adopted, Meralco consumers may be entitled to receive a refund of at least P160 billion.

Non argued that Meralco’s rate computation was incorrect because it was overstated—the company factored inflation into the calculation of the initial regulatory asset base and at the same time, they kept the nominal WACC that also includes inflation. INQ