Press Release - Gatchalian warns ERC move could raise Meralco rates, burden consumers

Senator Win Gatchalian flagged a decision made by the Energy Regulatory Commission (ERC) to forgo the fifth regulatory reset of Meralco's distribution rate, covering the period 2022-2026, warning that the move could lead to higher electricity bills for consumers.

Gatchalian expressed concern that without the rate reset, Meralco's charges may not reflect the current economic conditions, potentially resulting in increased costs for households and businesses.

"As consumers, we are expressing our opposition to the ERC's decision to forego the fifth regulatory reset of Meralco's distribution rate. The rate must go through the resetting process," Gatchalian told ERC officials at a recent Senate hearing on the proposed 2025 budget of the Department of Energy and its attached agencies, including the ERC.

A rate reset is a periodic process conducted by the ERC to review and adjust distribution rates charged by utilities like Meralco. It ensures rates reflect the actual costs of delivering electricity, considering factors such as inflation, operational expenses, and the Weighted Average Cost of Capital (WACC). Meralco's current WACC is 14.97%, and it has not been updated since 2015.

"Ginawa natin ito sa National Grid Corporation of the Philippines, so we must apply the same rules to Meralco. Given its market power and status as a natural monopoly in NCR and nearby areas, Meralco has to undergo a rate reset as well," Gatchalian said.

"That is not fair for consumers. Hindi puwedeng magmi-maintain ng 14 percent ang Meralco for the next four years. Historically ang reset ay puro extension. Wala naman on time na reset, hindi ba? Siguro noong 2001 lang pero after that, puro delayed na," he pointed out.

The vice-chair of the Senate Committee on Energy, Gatchalian urged the ERC to come up with a study that would enable the regulatory body to catch up with its review of rates of various stakeholders in the power sector.

"Why require a rate reset if the ERC isn't even conducting it? The regulator itself is not keeping up with the pace," said Gatchalian, who has filed a bill that would establish the ERC's charter and strengthen its authority to regulate energy stakeholders.

Gatchal