MANILA, Philippines — The Energy Regulatory Commission (ERC) has directed utility giant Manila Electric Co. (Meralco) to refund P9.5 billion in overrecoveries to more than eight million customers.
In a 28-page decision dated July 31, the ERC approved with modifications Meralco’s refund application following a true-up calculation for the lapsed regulatory period last year.
The refund, equivalent to an average rate of P0.3448 per kilowatt-hour (kWh) across all customer classes, will be implemented over a six-month period or until the full amount has been returned.
Residential customers are expected to receive a larger refund of P0.5861 per kWh. This translates to a reduction of about P117.22 for a typical household consuming 200 kWh a month.
“Implementation starts in the next billing cycle upon their (Meralco) receipt of the decision,” ERC chairman and CEO Francis Saturnino Juan told The STAR yesterday.
The adjustment will be reflected as a separate line item – actual weighted average tariff or AWAT (Refund/Collect) – on Meralco customers’ electricity bills throughout the refund period.
The approved refund was higher than Meralco’s P9.01-billion application for the
January to December 2025 lapsed period after the ERC included around P496.07 million in interest costs in the computation.
The adjustment was warranted as Meralco had collected the overrecoveries during the regulatory years covered by the lapsed period, the commission noted.
The regulator also shortened the refund timeline, ordering the amount to be returned over six months instead of Meralco’s proposed 36-month period.
In a statement, Meralco said it would comply with the ERC’s latest refund order, noting that the company itself had initiated the applications for its implementation.
“Meralco supports initiatives of the government to provide relief to consumers and ensure that they benefit from any approved refund as quickly and transparently as possible,” Meralco senior vice president and regulatory management head Jose Ronald Valles said.
The refund was the result of the true-up calculation, which reconciled the difference between Meralco’s AWAT of P1.5224 per kWh during the 2025 lapsed period and the ERC-approved final distribution rate of P1.3522 per kWh for the same period.
A lapsed period represents the time that has passed since the last rate adjustment, affecting the pricing and revenue structures of a regulated entity like Meralco.
During a lapsed period, consumers pay charges that are no longer reflective of the current cost of the service while awaiting the approval of a new rate.
“The AWAT of Meralco was higher than the approved tariff at those times because of much higher consumption from residential customers compared to other customer classes, which drove Meralco’s AWAT to increase,” Valles said.
The true-up mechanism is part of the ERC-approved regulatory process that ensures distribution utilities refund any excess tariffs unintentionally collected through the true-up process.
Other power utilities also have similar true-up applications pending before the ERC.
“In the case of Meralco, it filed the two applications for refund and not for additional collection, in strict compliance with the directive of the ERC,” Valles said.
Meanwhile, Senate President Sherwin Gatchalian said the ERC must strictly monitor distribution utilities and electric cooperatives to ensure they do not secretly rename or embed systems loss charges into other items on consumers’ unbundled electricity bills once proposals to abolish the controversial fee take effect. — Neil Jayson Servallos