The Energy Regulatory Commission's (ERC) decision to approve Manila Electric Company's (Meralco) refund scheme in 2022 alleviated the effects of the pandemic on its consumers.
Marciano G. Delson, dean of San Beda University’s College of Law, said that by granting Meralco’s actual weighted average tariff application (AWAT), consumers were able to relieve themselves from the impact of lockdowns.
“It is always better to have an actual refund, although not as big as others would have expected, than to expect a big refund that will not actually happen,” he added.
He also stated that the ERC could resolve the issues arising from its failure to establish new rate-setting rules during the lapsed period.
For context, the ERC approved the application and directed Meralco to refund around P21.8 billion to its customers from July 2015 to June 2022. Overall, the decision favored Meralco consumers with a refund of more than P40 billion.
However, consumer groups filed motions arguing that the regulator's decisions were contrary to the aims and purposes of rules for setting distribution wheeling rates (RDWR) and the intent of the Electric Power Industry Reform Act (Epira).
The ERC, in a majority vote, denied these motions, saying it exercised its general rate-setting authority and power to act on applications under the law to approve Meralco's AWAT application.
Meanwhile, the dissenters, which included ERC Chairperson Monalisa C. Dimalanta, argued that the ERC’s rate-setting authority “must flow from a set of rules by which the regulated entity can formulate its proposed rates.”
Delson, on the other hand, said this would be the case if only the situation was normal, noting that it was more logical for the ERC to resort to its regulatory powers under the Electric Power Industry Reform Act.
“In other jurisdictions, agencies are even allowed to apply, to an extent necessary and appropriate, a similar or most relevant rule in the absence of a specific governing rule. The ERC would have failed miserably as a regulatory body, if it did not act on the AWAT application,” he said.
Delson added that the dissenters' suggestion for the ERC to govern the regulatory period that already lapsed will conflict with its rate-setting methodology and affect the interest of stakeholders in the industry.
“This could adversely affect regulatory stability, efficiency, and the broader interests of stakeholders in the electric power industry,” Delson said, citing the importance of the ERC's rate-setting methodology in ensuring that the regulatory environment is conducive to investments.
The lawyer also said that it will disrupt the expectations of investors, utility companies, and consumers, which may deter investment in the sector that is “crucial to ensure affordable electricity.”