Meralco exec calls 鈥榦vercharging鈥� accusation 鈥榖aseless鈥�
MANILA, Philippines — The Manila Electric Co. (Meralco) denied on Sunday that it had been overcharging its customers since 2012, calling the accusation, which Santa Rosa City Rep. Dan Fernandez made in a privilege speech at the House, “baseless.”
In a statement, Meralco First Vice President Jose Ronald Valles, who’s in charge of the power distributor’s regulatory management, said the company “has no power to unilaterally set its rates.”
“I would like to reiterate that as a highly regulated entity, Meralco strictly adheres to the rules governing its operations and franchise, and the rates we implement always have prior approval from the regulator. A testament to the strict review, these rates are still subject to periodic confirmation process by the ERC [],” Valles said.
“The proper venue for discussing the refund claims is the ERC, which has the rate-setting power, and the regulator has already decided on a refund totaling P48 billion, which Meralco implemented in a timely manner.”
Meralco emphasized that the ERC determines the weighted average cost of capital (WACC), which Fernandez said in his privilege speech was “extremely high” and that the firm passed on to customers.
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Article continues after this advertisementMeralco explained that the last approved WACC was the lowest given by the regulator, which it said applied to all private distribution utilities.
It added that it had not had “a determined WACC since July 2015 because there was no completed rate reset during that regulatory period up until now.”
Citing a recent study conducted by the International Energy Consultants, Meralco said that its rates “are fair and reasonable since they reflect the true cost of electricity” compared to other countries’ power costs, which it said “are heavily subsidized by their governments.”
“This was the result of the company’s constant efforts to source the least cost available supply through, among others, the conduct of a transparent, competitive selection process (CSP),” Meralco said.
Prior to the conduct of CSP, Meralco said that it needed to get approval from the Department of Energy (DOE) for its Power Supply Procurement Plan and the Terms of Reference (TOR) “to make sure that these are aligned with the requirements and standards set by the government.”
“This is contrary to the baseless and malicious claims that Meralco’s TOR is tailor-fitted to favor select generation companies,” Valles said.
“Our past CSPs conducted are proof that no such tailor-fitting is happening, precisely because the TOR and other bidding documents are required to comply with existing policies of DOE and regulations of ERC, and the resulting Power Supply Agreement needs to be approved by regulator,” he added.
