Manila Electric Co. (Meralco), the largest power distributor in the country, assured full compliance with the Energy Regulatory Commission’s (ERC) order to credit ₱9.51 billion back to its customer base.

“Meralco supports initiatives of the government to provide relief to consumers and ensure that they benefit from any approved refund as quickly and transparently as possible,” the company said in a statement on Sunday, Aug. 2.

“As such, we will comply with the most recent directive of the ERC to implement the refund of ₱9.5 billion over a six-month period, equivalent to an average rate of ₱0.34 per kWh, with residential customers getting a refund of about ₱0.59 per kWh."

The ERC issued the order following a 28-page decision dated July 31, directing the utility to disburse the funds over a six-month window across all customer categories. Residential consumers will see an estimated monthly bill reduction of roughly ₱117 for a typical household consuming 200 kilowatt-hours.

Implementation will take effect during the upcoming billing cycle once the company officially receives the formal ruling, according to ERC Chairman Francis Saturnino Juan.

Under the mandate, Meralco is required to return an exact total of ₱9,506,566,556 over six months, or maintain the rebate mechanism until the full sum of over-recovered funds has been completely disbursed to consumers.

The multi-billion-peso payout stems from price corrections associated with a lapsed regulatory period running from January through December 2025. In utility oversight, a lapsed period refers to the duration between rate reset cycles during which regulated entities continue billing clients using legacy tariff structures while pending official review and approval of revised tariffs. Consequently, power rates charged during this interval failed to mirror actual service costs.

Because excess revenues accumulated throughout the covered period, the ERC mandated that the total payout include accrued interest costs to properly compensate rate-payers for the unauthorized collections during the 2025 regulatory year.

Addressing the cause of the discrepancy, Meralco clarified that the excess collections resulted from mandatory true-up calculations rather than arbitrary billing adjustments.

“The refund pertains to the difference between Meralco’s Actual Weighted Average Tariff (AWAT) and its approved distribution tariff during those periods,” the company stated.

“The AWAT of Meralco was higher than the approved tariff at those times because of much higher consumption from residential customers compared to other customer classes, which drove the Meralco’s AWAT to increase,” it added.

Meralco emphasized that it initiated the process itself by submitting two separate filings in 2025 and early 2026 covering the first and second halves of 2025, respectively. “This true-up mechanism is part of ERC-approved regulatory process that aims to ensure that a Distribution Utility (DU) will refund any excess tariff it may have unintentionally collected as a result of the True Up,” Meralco added, noting that the ERC’s recent decision approved these two applications.

Under the standard rate reset framework, distribution utilities must submit detailed multi-year projections of capital expenditure, operational costs, and proposed infrastructure developments for regulatory assessment.

The ERC’s evaluation of these submissions determines the final baseline tariff utilities may lawfully pass along to retail customers.

This latest adjustment follows previous clawbacks, including a ₱40.5 billion refund implemented between March 2021 and May 2023 covering July 2015 to June 2022, alongside an ongoing ₱20 billion refund covering July 2022 to December 2024 that began in April 2025. Meralco confirmed that “as with previous refunds, the approved adjustment will appear in a separate line item in customers’ electricity bills, allowing consumers to clearly see the amount being returned to them.”