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Manila Bulletin devider Philippines devider National devider Refund P200B to your customers, solon tells Meralco in House panel hearing 

Refund P200B to your customers, solon tells Meralco in House panel hearing 

Published Nov 22, 2023 01:06 pm

At A Glance

  • Santa Rosa lone district Rep. Dan Fernandez has asked power distribution giant Manila Electric Company (Meralco) to refund some P200 billion in supposed overcharges to its 7.7 million customers amid allegations of monopolistic practices.

Screenshot_20231122-205738_Facebook.jpgSanta Rosa lone district Rep. Dan Fernandez (Facebook)

 

 

 

 

 

 

Santa Rosa lone district Rep. Dan Fernandez has asked power distribution giant Manila Electric Company (Meralco) to refund some P200 billion in supposed overcharges to its 7.7 million customers amid allegations of monopolistic practices.

 

Rep. Fernandez made the statement even as he reiterated his call to divide Meralco’s "super franchise" to make it more efficient to manage.

 

"Based on our computations, (Meralco) has overcharged its customers by some P160 billion starting 2012,” said the Laguna solon, who took part in a hearing of the House Committee on Legislative Franchises Wednesday, Nov. 22.

 

“Plus interests, this could add to P200 billion, due to overcharging and extremely high weighted average cost of capital, which amounted to 14.97 percent, and remains unchanged up to now," Rep. Fernandez said in the hearing, which explored the proposed break up of Meralco’s "mega-franchise". 

Attending the hearing were Meralco representatives led by Lawrence "Larry" Fernandez, head of utility economics. 

Based on Rep. Fernandez's computation, the power distributor needs to refund all of its 7.7 million customers around P26,000 to P30,000 each for the overcharging. He said Meralco was able to overcharge as it was allowed to become a "monopoly and monopsony". 

He said monopsony is defined as having one large corporation control the purchase of goods or services as the biggest buyer. 

"Meralco is the one controlling the prices of electricity because it is the biggest seller and biggest buyer (of electricity in the country)," said Rep. Fernandez, who recently delivered a privilege speech about Meralco. 

 

'Highly-regulated entity' 

Meralco's Fernandez--in reacting to "old and current allegations" of overcharging--reiterated in a statement after the hearing that "as a highly-regulated entity, its rates undergo a rigorous review and approval process before they are implemented to make sure these are fair and reasonable". 

He reckoned that "All rates that are in the bill have prior lawful and regulatory approval as it cannot unilaterally set its own rates." 

"These regular reviews may result on adjustments like the recent ERC (Energy Regulatory Commission)-directed refunds, to which Meralco complied in a timely manner," he said.

He also clarified that the setting of the weighted average cost of capital or WACC is up to the regulator, and that Meralco did not have a determined WACC since July 2015 because there was no rate reset during the lapsed regulatory period.

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dan fernandez overcharging Manila Electric Company monopoly
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