ERC adjusts Meralco’s power distribution rate

After 15-year wait

MANILA, Philippines — The Energy Regulatory Commission (ERC) has approved Manila Electric Co.’s (Meralco) first rate reset in over a decade, but at a level roughly 37 percent lower than what the power giant had proposed.

For the first regulatory period (1RP) covering July 2026 to June 2030, the ERC set an average distribution rate of P1.48 per kilowatt-hour, well below Meralco’s proposed P2.34 per kWh.

The approved rate is also lower than the P1.60 to P1.98 per kWh proposed by some intervenors in the case.

Despite trimming Meralco’s proposal, the new distribution charge is still about 10 percent higher than the current rate of P1.35 per kWh.

Over the four-year period, meanwhile, the ERC capped Meralco’s revenue requirement at around P342 billion, 36 percent below the P532 billion the power utility had sought.

The regulator reduced the company’s proposed capital expenditures, operating expenses, asset base and return on capital, disallowing costs it deemed excessive or unnecessary.

“This final determination shows that the ERC did not simply accept what was applied for. Every peso allowed has to be prudent, efficient and necessary because consumers pay for it,” ERC chairman and CEO Francis Saturnino Juan said.

Asked when the new rate would be reflected in Meralco bills, Juan told reporters over the weekend that it would take effect in the next billing cycle after the utility receives a copy of the decision.

Meralco’s distribution rate was last reset in 2011, with subsequent reviews delayed for more than a decade due to unresolved RPs.

The rate reset determines how much Meralco can charge consumers for delivering electricity through its poles, wires and substations. It covers only distribution costs and excludes generation and transmission charges, taxes and other pass-through costs.

Ideally, the process is forward-looking and should begin before each RP starts. But long delays have prompted the ERC to overhaul the system with a new set of rules designed to finally resolve the rate resets.

Sought for comment on the 1RP decision, Meralco senior vice president and regulatory management head Jose Ronald Valles said they had yet to receive a copy and still needed to review it thoroughly to assess its impact on customers.

“Nonetheless, we believe that this will allow Meralco to move forward with greater clarity as we pursue investments and initiatives to modernize our distribution network and enhance service delivery,” Valles said.