INQUIRER FILE PHOTO
After being ordered to refund P9.5 billion to over eight million consumers due to overcollections, power distributor Manila Electric Co. (Meralco) has been given approval to collect about P8.71 billion for unrecovered pass-through charges, including some costs linked to system loss, covering three years.
Based on the decision of the Energy Regulatory Commission (ERC), the Manuel V. Pangilinan-led company was allowed to recover P7.3 billion for generation, P615.93 million for transmission, P595.05 million for system loss, and P228.87 million for real property tax.
The collection period will run for 36 months, the ERC said although it stressed that Meralco, the country’s largest electricity distributor, will not earn from these charges. Instead, the P8.71 billion will be remitted to power generation firms, the National Grid Corp. of the Philippines for transmission, and government agencies for taxes and subsidies.
Article continues after this advertisement
“[These] are meant to be revenue-neutral for distribution utilities—these are not sources of profit, but merely costs that Meralco collects on behalf of generation companies, the transmission provider and government authorities, and simply passes on to consumers,” ERC Chair Francis Saturnino Juan said in a statement on Monday.
Pass-through charges are estimated using power sales from previous months. With the collection depending on how much households consume in a billing month, distribution utilities (DUs) such as Meralco may end up collecting more or less than the said amount.
Countercheck
To account for any differences, DUs are required to file applications so the ERC can assess their computations.
“Through this confirmation and verification process, the ERC closely scrutinizes every peso that Meralco charges under these components against its actual, allowable costs,” Juan said.
“This mechanism protects consumers from any unapproved or excessive charges, while ensuring that distribution utilities recover only what they are legitimately entitled to—no more, no less,” he added.
Article continues after this advertisement
At the same time, the ERC found that Meralco had over-collected charges linked to lifeline and senior citizen subsidies, which were already factored into the computation of its pass-through charges.
As a result, it directed the firm to refund affected customers P554,786.62 for lifeline subsidy and P2.24 million for senior citizen discount subsidy within one month. Meralco also owes about P27.337 million for local franchise tax over 36 months.
Article continues after this advertisement
Multibillion-peso refund
On July 31, the ERC ordered the power distributor to refund to over eight million consumers the equivalent rate of P0.3448 per kilowatt-hour (kWh) within six months, beginning in the next billing cycle, for a total of P9.5 billion.
Under a rate reset process, a regulated entity such as Meralco must submit to the ERC its spending and proposed projects over a period, usually five years, unless extended by the regulator. This will be used as the basis for the ERC-approved rate that will be passed on to consumers.
The P9.5-billion refund represents the price correction for the lapsed period from January to December 2025.
A lapsed period refers to the duration since the previous rate update. During this time, consumers are charged using outdated rates, which may no longer reflect the current costs of the service as the company awaits new tariff adjustments.
The ERC said that based on its review, Meralco’s actual weighted average tariff of P1.5224 per kWh—or the rate logged based on its actual revenues and energy sales— was higher than the final distribution rate of P1.3522 per kWh.
The ERC also added the interest costs totaling P496 million in computing the total refund. INQ
