ERC okays P7-billion refund of Meralco over-recoveries from 2014 to 2016

From BusinessMirror – May 15, 2017

THE Energy Regulatory Commission (ERC) has given the Manila Electric Co. (Meralco) the green light to refund consumers nearly P7 billion worth of over-recoveries incurred from 2014 to 2016.

ERC Commissioner Alfredo J. Non said consumers will receive a refund of P0.75 per kilowatt-hour over a three-month period. It is up to Meralco, he said, if the adjustment can be reflected in next month’s billing.

The amount is broken down as follows: P4,919,162,892.94 in generation rate over/under recovery (GOUR); P632,210,115.96 in transmission rate over/under recovery (TOUR); P1,242,760,968.35 in system loss rate over/under recovery (SLOUR); P130,627,106.04 in lifeline subsidy over/under recovery (LSOUR); and P2,325,583.09 in senior citizen discounts and subsidy over/under recovery (SLOUR) for the period January 2014 to December 2016.

Meralco Utility Economics Head Lawrence Fernandez said the over recoveries stemmed from “timing issues”. He explained that over-recoveries related to GOUR, for instance, occurred due to lag in the recovery of generation costs from consumers.

Basically, the rate used to compute for the generation charge in a current billing month is based on the generation cost incurred during the previous billing month, which is the supply month. Given the recovery lag and the monthly changing generation costs, over/under recoveries are expected as the generation cost for the current month is compared to the recoveries of the same month.

Meralco asked the ERC to recover from consumers its real property tax (RPT) payments amounting P1,089,707,397.13.

“Applicant proposed that GOUR, TOUR, SLOUR and LSOUR be refunded to the customers for a period of 36 months; SrDSOR be refunded to the customers for a period or one month; RPT payments be recovered from customers for a period of 36 months,” Meralco’s 11-page application stated.