Meralco urged to cut rates, refund P29.6B to consumers

MANILA — Bayan Muna chairman Neri Colmenares and electric consumers advocacy group Matuwid na Singil sa Kuryente Consumers Alliance Inc. (MSK) have urged Meralco to refund the P29.6 billion it ‘overcharged’ customers from 2013 to 2018.

Neri also supported the move to reduce Meralco’s distribution, service, and metering (DSM) rate charges in relation to the refund.

“The Matuwid na Singil sa Kuryente (MSK) has already filed a petition at the Energy Regulatory Commission (ERC) last year and we hope that they would immediately act on it. The petition seeks for a rate reduction for 2019 onwards of at least P0.2852 per kwh to stop the unconscionable profits from further accumulating. This will reduce Meralco’s net profits by about P13.4 billion, bringing it down from 25 percent return on equity to 12 percent per year as mandated by the Supreme Court as fair for public service monopoly granted by the government,” Neri said.

“The regulations allow Meralco to impose a maximum rate to consumers that will give Meralco a specified revenue that is considered reasonable. If Meralco actually collects excess revenues, then it means that Meralco charged excessive rates and the excess revenue should be returned to the consumers through rate reduction. It is unconscionable, even plunderous, for Meralco to keep those excess charges,” he said.

Neri noted that the rates are supposed to be recomputed every regulatory period of four years each.

“The current rate was for the third regulatory period that was for July 2011 to June 2015 and based on a forecasted sales of 30.61billion kwh for 2013. Based on a 3.5 percent annual growth, the current Meralco rate would be valid only if the sales of Meralco for 2018 is 36.005 billion kwh. But their sales for 2018 was 44.31 billion kwh or higher by 8.31 billion kwh resulting to P11.46 billion windfall profits for that year alone. If we allow that 50 percent of that should cover increase in operating overhead, there is at least a P5.73 billion over recovery for 2018 alone,” Neri said.

MSK and Bayan Muna’s analysis of the utility’s annual financial reports show Meralco’s operating overhead increased from only P21.7 billion in 2009 to P26.699 billion in 2010 when the current owners took over from the Lopez group or a 22.61 percent increase. The following year 2011 their operating expense increased another 21.48 percent to P32.434 billion. This was followed by another 15 percent increase in 2013 to P36.111 billion. Despite these expense increases Meralco’s robust energy sales increases still caused undeserved profits in the billions per year.

“It appears that the current distribution charges per kwh for the third regulatory period used a projected sales for 2013 of only 30.61 billion kwh which is the “FQ” value in ERC approval 2013-056 RC. Meralco’s actual sales for that year was 36.11 billion resulting to windfall revenues of 5.5 billion kwh for that year alone. At a rate of P1.38 per kwh that was an over recovery from the divisor alone of P7.59 billion for 2013,” said Neri.

“The estimated total for 2013 to 2018 using only 50 percent of excess energy sales would total P29.669 billion and this should be refunded to consumers while at the same time the rates of Meralco should be reduced. The application of regulations has been onerous in favor of the electricity monopoly at the expense of consumers. This has to stop,” he said.