ERC allows Meralco to collect P8.7B more, including P595M for system loss

Meralco customers will collectively pay an additional P595 million in system loss underrecoveries, even as President Ferdinand Marcos Jr. calls for the charge to be removed from their bills MANILA, Philippines – The Energy Regulatory Commission (ERC) has allowed the Manila Electric Company (Meralco) to collect a net P8.709 billion in previously unrecovered pass-through costs, including P595.05 million related to system loss, over roughly three years. In a decision released Sunday, August 2, the regulator authorized the collection of P7.30 billion in generation costs, P615.93 million in transmission costs, P595.05 million in system loss costs, and P228.88 million in real property taxes. The four main undderrecoveries will generally be collected over 36 months beginning in the next billing cycle. For residential customers, the four main recurring adjustments total P0.0803 per kWh, equivalent to about P16.06 for a household consuming 200 kWh. The actual bill impact may be slightly higher or lower depending on the customer’s location and the separate lifeline, senior-citizen and local-franchise-tax adjustments. The P8.709-billion figure is already a net amount, after larger underrecoveries were offset by small refunds for lifeline and senior-citizen subsidies and local franchise taxes. The decision follows a separate ERC order requiring Meralco to refund P9.51 billion in excess distribution rate collections over six months. Comparing the two orders leaves customers with an aggregate net refund of about P798 million. Customers, however, should not expect a single net refund entry. For the P9.51-billion distribution refund, customers will see a separate line item in their bill called “AWAT (Refund)/Collect.” Meanwhile, the additional collections for generation, transmission, and system loss will be reflected under their respective bill components. Real property tax and local franchise tax adjustments will appear as separate line items labeled “RPT Adj.” and “LFT Adj.” The two orders also run on different timelines as the refund is spread over six months while the collection is over 36 months. Most of the collections would continue after the six-month refund ends. Meralco’s challenges Such reconciliations are part of the ERC’s regular true-up process and are not unique to Meralco. Distribution utilities periodically compare allowable pass-through costs with what they actually billed; differences can result in either refunds or additional collections. But this approval is particularly sensitive because part of the collection covers system loss underrecoveries, even as Meralco faces renewed scrutiny over the charge. President Ferdinand Marcos Jr. has called for consumers to stop shouldering system loss and the value-added tax imposed on it. System loss refers to electricity lost while passing through wires, transformers, and other equipment, as well as losses caused by power theft, illegal connections, defective meters, and billing errors. The charge currently accounts for around 5% of the average Meralco bill. (READ: EXPLAINER: What is system loss, and how does it affect your power bill?) Meralco chairman Manuel V. Pangilinan has warned that the power industry “may not survive” if utilities are required to absorb the entire cost, which he said could reach tens of billions of pesos. – Rappler.com How does this make you feel? Loading