Manila Electric Co. (Meralco) is urging the Energy Regulatory Commission (ERC) to expedite the resolution of pending rate cases affecting all distribution utilities (DUs).
Jose Ronald Valles, Meralco’s senior vice president and head of the regulatory management office, emphasized that delays in these regulatory cases are detrimental to both DUs and power consumers.
“These delays prevent all parties from delivering the benefits promised by performance-based regulation, such as more efficient service and reliable power supply,” Valles stated.
His comments follow the ERC’s recent order on Meralco’s actual average weighted tariff (AWAT) application. The order confirmed a previous decision by the ERC to reduce Meralco’s tariff from P1.3810 per kilowatt-hour to P1.3522 per kWh, resulting in a P48 billion refund for consumers.
However, Valles highlighted that the lack of rules governing the “lapsed period” for DUs places them at a disadvantage. While consumers have benefited from the refund, distribution utilities have not received any tariff adjustments despite significant investments.
“Since the PBR is based on a forecast of Annual Revenue Requirements, this rule cannot apply to the lapsed period without violating due process and the established principle against retroactive rate-making. Hence, the ERC correctly exercised its quasi-judicial rate-making power to fix the rate of Meralco, pursuant to the police power granted to it under the law,” Valles explained.
Performance-Based Regulation (PBR) is designed to incentivize utilities to improve efficiency and service reliability.
Under this system, utilities are allowed to earn a return based on their performance against regulatory benchmarks.
Delays in resolving rate cases disrupt the balance between ensuring fair returns for utilities and protecting consumer interests.
