Customers, celebrate: Meralco to refund P5B

by Riza T. Olchondra, from Philippine Daily Inquirer

MANILA, Philippines–Customers of Manila Electric Co. (Meralco) have reason to celebrate a Court of Appeals ruling that upheld the refund of P5.176 billion in transmission-line loss charges coursed through the distribution utility.

Meralco said it would comply with the appellate court’s decision affirming regulators’ orders that Meralco be reimbursed overcharges by Power Sector Assets and Liabilities Management Corp. (PSALM)—which manages the finances and operations of National Power Corp. (Napocor)—and for Meralco to in turn refund overcharges passed on to customers.

“The decision of the Court of Appeals (CA) affirming the ruling of the Energy Regulatory Commission (ERC) on the refund of transmission-line loss charges is a welcome relief to Meralco’s consumers. Meralco shall abide and comply with any executable order from the court or the ERC in this regard,” Meralco first vice president and legal services chief William S. Pamintuan said in a text message.

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Meralco has 5.3 million customers. Its franchise area, which includes Metro Manila, is home to a quarter of the country’s population.

Pass-through charges

Line-loss charges are part of pass-through charges just like power generation, transmission, taxes, universal charges and other fees. Meralco collects such fees from customers and transmits these to power generators, suppliers and other parties involved.

The appellate court’s decision affirms ERC decisions in 2010 and in 2013 that ordered the refund.

“After the CA’s affirmation of its decision, ERC is looking into the implementation of its refund order directed at PSALM,” said ERC Executive Director Francis Saturnino Juan.

Juan said PSALM had to reimburse Meralco for the double charges so that the latter could refund its customers.

Consumer groups Power and Government Watch have not responded to requests for comment as of press time.

The case stemmed from system-loss charges (rates meant for power plant operators to recover the cost of electricity lost during transmission) bundled into contracts with Meralco and then again in rates paid to the energy spot market, which started in 2006.

From 2006 to 2012, there was simultaneous implementation of the Meralco-Napocor transition supply contract (TSC) and the Wholesale Electricity Spot Market (WESM) pricing mechanism.

The WESM is a trading platform where distribution utilities such as Meralco can get some of their electricity requirements whenever demand exceeds their supply deals with power generation firms.

Both the TSC and the WESM charges contained a transmission-line loss component of 2.98 percent. Such line item costs are shouldered by Meralco’s clients.

In September 2008, Meralco filed a petition against Napocor demanding the refund of its overpayments.

In March 2013, ERC ordered the reimbursement to Meralco but PSALM assailed the order, saying it could not distinguish its transmission-line costs from that of the WESM since its operator, Philippine Electricity Market Corp., does not segregate the transmission-line loss costs from its charges.

“The court notes that the undisputed transmission charges are mere Meralco’s pass-through charges. In truth, it is the public that has been doubly charged,” read the Dec. 1 ruling, penned by Associate Justice Danton Bueser.

Automatic deduction

“Meralco is enjoined to comply with the ERC March 4, 2013, order, which directs it to refund to its customers by way of automatic deduction of the amount of refund to computed monthly generation rate for the amount it will recover from [Napocor]/PSALM,” the decision said.

The appellate court said the ERC’s 2010 ruling that ordered the refund was “already final and executory,” and was thus “immutable.” –With reports from Tarra Quismundo and Inquirer Research

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