SC orders Meralco to answer petition against bill deposits
Published Aug 6, 2019 02:58 pm
By Rey Panaligan
The Supreme Court (SC) has ordered the Manila Electric Company (Meralco) to answer the petition which sought a stop to the power distributor’s imposition and collection of bill deposits from its customers.
Supreme Court (MANILA BULLETIN)
In a full-court resolution dated last June 4 but released only on Tuesday (August 6), Meralco should file its answer in 10 days to the petition filed by several Party-List groups.
The petition also asked the SC to order the Energy Regulatory Commission (ERC) to implement the refund of the bill deposits which already amounted to P29 billion as of 2018.
The petitioners claimed that the collection of bill deposits by Meralco, a public utility, from its customers as a captive market is illegal and contradicts its duty under its franchise to promote consumer interest.
It was filed last April by Bayan Muna Chair Neri J. Colmenares and Rep. Carlos Isagani T. Zarate; Anakpawis Rep. Ariel B. Casilao; Gabriela Reps. Emerenciana A. De Jesus and Arlene D. Brosas; Act Teachers Reps. Antonio L. Tinio and Francesca L. Castro; Kabataan Rep. Sarah Jane I. Elago; and Bagong Alyansang Makabayan Secretary General Renato M. Reyes, Jr.
Aside from Meralco and the ERC, also named in the petition as respondent was the Commission on Audit (COA).
The petitioners asked the SC to declare as illegal the bill deposit provision in the Magna Carta for Residential Electricity Consumers promulgated by the ERC on June 17, 2004.
Bill deposit is defined in the Magna Carta as the deposit required from customers by distribution utilities for new and/or additional service equivalent to the estimated billing for one month to guarantee bills payment.
The petitioners said the bill deposit provision in the Magna Carta was not allowed under the Electric Power Industry Reform Act (EPIRA) of 2001 and the Meralco franchise.
They pointed out that as a power distributor, Meralco can collect from its customers only wheeling charges, connection fees, and retail rate.
“Bill deposit, defined in the Magna Carta and elsewhere, as a mere guarantee for the payment of bills, obviously does not form part of retail rate. It is not charged for any electric service, but rather an amount posted by consumers for future or anticipated electric service that is not paid,” they said.
At the same time, the petitioners told the SC that the bill deposits from customers are being comingled with Meralco’s general fund and being used for other purposes, including investments in financial instruments and operations-related taxes.
The use of bill deposits in investments would make the funds vulnerable to wrong business decisions and investments, mismanagement, miscalculation or risks, legal cases which would deplete the funds, and could affect Meralco’s capacity to refund the deposited money to consumers, they said.
They also claimed that Meralco has not been giving back to its customers the interest rates earned on the bill deposits.
From what was originally a 10 percent interest rate per year, the ERC and Meralco have reduced the interest rate to just 0.25 percent per year, allowing Meralco to profit tremendously from the bill deposits, with a return of at least 14.97 percent, they alleged.
“The interest rates that are refunded to the consumers for their bill deposits should be equal to whatever interest rates actually earned by Meralco from the said deposits,” they stressed.
Supreme Court (MANILA BULLETIN)
In a full-court resolution dated last June 4 but released only on Tuesday (August 6), Meralco should file its answer in 10 days to the petition filed by several Party-List groups.
The petition also asked the SC to order the Energy Regulatory Commission (ERC) to implement the refund of the bill deposits which already amounted to P29 billion as of 2018.
The petitioners claimed that the collection of bill deposits by Meralco, a public utility, from its customers as a captive market is illegal and contradicts its duty under its franchise to promote consumer interest.
It was filed last April by Bayan Muna Chair Neri J. Colmenares and Rep. Carlos Isagani T. Zarate; Anakpawis Rep. Ariel B. Casilao; Gabriela Reps. Emerenciana A. De Jesus and Arlene D. Brosas; Act Teachers Reps. Antonio L. Tinio and Francesca L. Castro; Kabataan Rep. Sarah Jane I. Elago; and Bagong Alyansang Makabayan Secretary General Renato M. Reyes, Jr.
Aside from Meralco and the ERC, also named in the petition as respondent was the Commission on Audit (COA).
The petitioners asked the SC to declare as illegal the bill deposit provision in the Magna Carta for Residential Electricity Consumers promulgated by the ERC on June 17, 2004.
Bill deposit is defined in the Magna Carta as the deposit required from customers by distribution utilities for new and/or additional service equivalent to the estimated billing for one month to guarantee bills payment.
The petitioners said the bill deposit provision in the Magna Carta was not allowed under the Electric Power Industry Reform Act (EPIRA) of 2001 and the Meralco franchise.
They pointed out that as a power distributor, Meralco can collect from its customers only wheeling charges, connection fees, and retail rate.
“Bill deposit, defined in the Magna Carta and elsewhere, as a mere guarantee for the payment of bills, obviously does not form part of retail rate. It is not charged for any electric service, but rather an amount posted by consumers for future or anticipated electric service that is not paid,” they said.
At the same time, the petitioners told the SC that the bill deposits from customers are being comingled with Meralco’s general fund and being used for other purposes, including investments in financial instruments and operations-related taxes.
The use of bill deposits in investments would make the funds vulnerable to wrong business decisions and investments, mismanagement, miscalculation or risks, legal cases which would deplete the funds, and could affect Meralco’s capacity to refund the deposited money to consumers, they said.
They also claimed that Meralco has not been giving back to its customers the interest rates earned on the bill deposits.
From what was originally a 10 percent interest rate per year, the ERC and Meralco have reduced the interest rate to just 0.25 percent per year, allowing Meralco to profit tremendously from the bill deposits, with a return of at least 14.97 percent, they alleged.
“The interest rates that are refunded to the consumers for their bill deposits should be equal to whatever interest rates actually earned by Meralco from the said deposits,” they stressed.