Meralco awaits ERC decision on P8-B cost recovery

POWER DISTRIBUTOR Manila Electric Co. (Meralco) said it is awaiting a decision from the Energy Regulatory Commission (ERC) on its application to collect P7.98 billion in under-recoveries filed nearly three years ago.

“Since [the decision] on the P31-billion [pass-through charges] has already been released, we’re hoping the ERC will soon decide on that because those costs have already been paid to the generators, transmission provider, government, etc.,” Jose Ronald V. Valles, Meralco’s first vice-president and head of its regulatory management, said on the sidelines of an event last week.

In 2023, Meralco filed an application seeking to recover P8.01 billion for the costs incurred in generation, transmission, system loss, and pass-through taxes from January 2022 to December 2022.

The costs translate to an increase of around 21.91 centavos per kilowatt-hour (kWh), which is proposed to be collected over a 12-month period.

At the same time, the power distributor saw over-recoveries amounting to a total of P30.62 million from lifeline subsidy, senior citizen discounts and subsidy and local franchise tax, equivalent to a refund of around 0.09 centavos per kWh to consumers.

The company cited time lag between when costs are incurred and when they are billed to consumers, as well as the discrepancies between actual costs and taxes paid and the revenues collected.

After offsetting the refunds against the recoveries, Meralco proposes to collect P7.98 billion or an equivalent increase of 21.81 centavos per kWh in the consumers’ electricity bills.

The company filed its second urgent omnibus motion last month to resume proceedings in the case and grant provisional authority and/or interim relief.

In January, the ERC approved the fuel cost recovery claims sought by power generators, allowing to collect P31 billion from Meralco customers up to three years starting March.

While waiting for a decision on its under-recovery claim, Meralco is also looking ahead to its rate reset application for the first regulatory period covering the years 2027-2030.

“Around June to July we expect a decision from the ERC,” Mr. Valles said.

Under its filing, the company seeks a tariff adjustment of P2.34 per kWh to help fund its proposed capital expenditure program amounting to P247.14 billion and attain its revenue requirement over the four-year period.

POWER SUPPLY PROCUREMENT
Alongside pending decisions on rate adjustments, Meralco is also awaiting the go signal from the Department of Energy (DoE) to pursue its bidding process for the procurement of nearly 2 gigawatts for its power supply requirements.

“My concern right now is because of the delay and the timing of the filing of our revised power supply procurement plan, there might be some changes already,” Mr. Valles said.

Meralco intends to carry out a competitive selection process (CSP) for its power supply needs, including a 900-megawatt (MW) baseload, 600-MW baseload, and 450-MW mid-merit, all of which were scheduled last year.

Mr. Valles said that the DoE is still waiting for the comments from the Philippine Competition Commission (PCC) on the CSPs.

“We were supposed to have concluded the CSP for those three last year. So we’re almost a year delayed already. So that means the COD (commercial operations date) will also have to be adjusted by at least a year,” he said.

Meralco is the country’s largest private electric distribution utility, serving more than 8.2 million customers in Metro Manila and nearby provinces, including Bulacan, Cavite, Rizal, and parts of Laguna, Batangas, Pampanga, and Quezon.

The company reported a 14% year-on-year increase in its consolidated core net income to P50.6 billion for 2025, driven by power generation growth and contributions from its distribution business.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera