Meralco withdraws 5RP application

Richmond Mercurio - The Philippine Star
Meralco withdraws 5RP application
Meralco linemen check the electric meter base at a post along Barangay Commonwealth in Quezon City on May 9, 2023.
Jesse Bustos

MANILA, Philippines — The Manila Electric Co. (Meralco) has withdrawn its application with the Energy Regulatory Commission (ERC) for a proposed annual revenue requirement and performance incentive scheme for the fifth regulatory period (5RP) due to the delays in its resolution.

Meralco first vice president and head of regulatory management Jose Ronald Valles said the company has filed an urgent omnibus motion to withdraw the 5RP application it filed in March 2022.

The 5RP application covers regulatory years (RY) 2023 to 2026 which begins on July 1, 2022 and ends on June 30, 2026.

Meralco said the last hearing conducted in the case was on Sept. 16, 2022.

The company said that while the pre-trial conference has been completed, the ERC has not issued the pre-trial order and has also not set the case for hearing or presentation of evidence since then.

“More than a year after the last hearing, Meralco filed an urgent omnibus motion to withdraw the 5RP application filed in March 2022 to allow Meralco to refile its 5RP application covering the period from RY2025 to RY2028,” Valles said.

Valles said the company’s omnibus motion also seeks to consider RY2023 and RY2024 as lapsed period and use P1.3522 per kilowatt hour (kWh) as the final rate during this period.

According to the Meralco executive, the omnibus motion is premised on several factors, one of which is that resolving the application would violate the express provision of the Rules for Setting Distribution Wheeling Rates, wherein the annual revenue requirement must be based on forward looking analysis of forecast cash flow requirements and must represent the optimal forecast revenue requirement.

Due to delays, he said the resolution of the application is no longer based on forecasts.

“The first regulatory year of the 5RP ended on June 30, 2023, while the second regulatory year of the 5RP is almost at its midway,” Valles said.

“So with the additional activities to be completed, it is likely that the final resolution of the case will not be completed even before the end of RY2024,” he said.

Meralco likewise cited supervening factors like additional operating expenses (opex) and capital expenditures (capex) due to new regulatory and legal impositions that need to be considered in the new 5RP application.

“It is to the best interest of the consumers that RY2023 and RY2024 be treated similarly to the lapsed period with the final rate of P1.3522 per kWh, which is much lower than the average rate of P1.57 per kWh originally applied for in Meralco’s application,” Valles said.

Valles said new 5RP forecasts are now being prepared by the company in anticipation of the ERC’s approval of its proposed withdrawal and refiling of the application.

He said Meralco intends to refile the application no later than Feb. 15, 2024, before the start of RY2025.

The total annual revenue requirement which Meralco initially applied for 5RP is P320.4 billion and the average price is P1.5702 per kWh.

Valles said “there is big chance that it is not going to be the same amount” once the company refiled its application.

“Because we are covering a different period, we are proposing a different period. We’d like to start RY2025 up to RY2028 so the annual revenue requirements for each of these years would change,” Valles said.

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