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The Energy Regulatory Commission (ERC) has ordered Manila Electric Co. (Meralco) to refund ₱2.64 billion to consumers over six months, providing temporary relief as the power distributor prepares to implement higher distribution charges following its first rate reset in about 15 years.
The refund, approved in an order dated Oct. 9 and made public the following day, covers the lapsed period from January to June 2026. It will translate to an average reduction of ₱0.102 per kilowatt-hour (kWh) across all customer classes, with residential consumers receiving a higher refund of ₱0.1733 per kWh.
For households consuming 200 kWh a month, the adjustment would mean savings of about ₱34.66, although the actual impact will depend on consumption.
The refund will appear as a separate line item on consumers’ electricity bills labeled “AWAT (Refund/Collect).” It will take effect in the next billing cycle after Meralco receives a copy of the ERC’s decision, according to the regulator.
“When Meralco collects more than it is entitled to, the ERC will make sure it is returned and that it is returned quickly,” ERC Chair and CEO Francis Saturnino Juan said.
The commission shortened the refund period to six months from Meralco’s proposed 12 months, which would have resulted in an average refund rate of ₱0.0487 per kWh. The faster implementation is intended to provide consumers with quicker relief amid elevated electricity prices.
The refund will coincide with the implementation of Meralco’s revised distribution rate, which the ERC approved over the weekend. Juan said combining the adjustments would help limit changes in customers’ current electricity bills.
“We’ll include that together with the decision on the rate reset, so there will be almost no movement in Meralco’s current rates,” he said.
Reconciling Overcollections
The ₱2.64-billion refund resulted from a true-up calculation comparing Meralco’s actual weighted average tariff (AWAT) with the distribution rate approved by the ERC for the six-month period.
Meralco’s actual weighted average tariff reached ₱1.5537 per kWh from January to June, higher than the approved final distribution rate of ₱1.3522 per kWh. The difference formed the basis for determining the amount that the utility must return to customers.
The true-up mechanism is designed to reconcile the charges collected by a regulated utility with the rates authorized by the regulator for a particular period.
A lapsed period refers to the time between rate adjustments, during which consumers continue paying charges while a new rate remains subject to regulatory review. Once the review is completed, the regulator calculates whether the utility collected more or less than the amount allowed under the applicable rates.
In July, the ERC ordered Meralco to refund ₱9.5 billion in overcollections based on a similar true-up calculation covering the previous lapsed period.
Meralco had sought a longer repayment schedule for the latest refund, but the ERC opted for a shorter period to return the money to consumers sooner.
Distribution Charges To Rise
The refund comes as Meralco prepares for a higher distribution rate under its first regulatory reset since 2011.
The ERC approved an average distribution rate of ₱1.48 per kWh for the utility’s first regulatory period covering July 2026 to June 2030. This is higher than the existing rate of ₱1.35 per kWh, but substantially below the ₱2.34 per kWh Meralco had sought.
The approved rate is about 37% lower than the utility’s proposal. It also falls below the ₱1.60 to ₱1.98 per kWh rates proposed by some intervenors in the regulatory proceedings.
A rate reset determines the amount a regulated utility may charge for delivering electricity through its distribution infrastructure, including poles, wires, and substations. Meralco’s review had been delayed for about 15 years, with the previous reset conducted in 2011.
The approved distribution rate covers only the cost of delivering electricity. It excludes generation and transmission charges, taxes, and other pass-through costs, which also contribute to consumers’ total electricity bills.
Under the regulatory process, utilities submit proposed spending plans and projects for a specified period. The ERC evaluates these submissions to determine the allowable rate that can be passed on to customers.
The timing of the refund and rate adjustment also comes as the energy sector faces concerns over possible supply constraints and higher demand.
Energy Secretary Sharon Garin warned last week that the developing super El Niño could strain the power system, potentially increasing electricity consumption and the risk of outages.
“It’s possible because demand-supply relationship always has an effect on the market,” Garin said.
She said the Department of Energy would coordinate closely with the ERC to ensure that electricity producers and distributors do not take advantage of the situation.
El Niño is associated with unusually warm Pacific Ocean surface temperatures and can bring drought, erratic rainfall and stronger heat waves. These conditions can increase cooling demand and put additional pressure on electricity supply.
The ERC’s decision to accelerate the refund offers consumers some relief as the new distribution rate takes effect, although the overall movement in electricity bills will also depend on other charges and prevailing power market conditions.
Source:
https://newsinfo.inquirer.net/2322431/erc-orders-meralco-to-refund-p2-64b-to-consumers