When Mr. Ray called to offer pundit space in Opinyon Metro, I immediately jumped at the offer. There are many things brewing in the utilities front and issues will not run out. The political pot boils anew, with viciousness growing by the day. Government watch and government catch are becoming the new fashion. And social media being what it is, no curious eye will want for catchy angles. That’s materials galore so, go!
This is actually a homecoming for me. I wrote my first CROSSINGS piece for the maiden issue of OpinYon on August 23, 2010. I featured Mang Naro Lualhati, a retiree long in years but even longer in his litany of grievances against Meralco.
In June that year, Meralco had filed for approval of its Annual Revenue Requirement (ARR) and Maximum Average Price (MAP) for the 3rd Regulatory Period that would run from July 2011 to June 2015. That was their first rate reset under Performance Based Regulation (PBR), a relatively new rate-setting methodology adopted after years of Return on Rate Base (RORB).
Mang Naro would have none of that PBR nonsense which involved some P220B in rate charges over four years. He insisted that the Energy Regulatory Commission (ERC) resolve first Meralco’s overcharges of P39B from 2004 to 2007, a claim he filed with ERC in 2008. He lost that one but in 2002 Mang Naro and the Lawyers Against Monopoly in Power (LAMP) won at the Supreme Court a P32B Meralco refund. It was a landmark decision for consumers as it laid down the law for what utilities like Meralco could charge to its captive customers. It was a huge win for consumers.
Looking at the headlines today, however, it is clear consumers hardly benefited from the landmark decision won by Mang Naro and LAMP.
Several papers said: Meralco proposes to refund P19B to customers. Another reported: Meralco must refund P100B in overcharges before franchise renewal. If PBR was enforced and the jurisprudence laid down in the SC case was honored, there would be no talk of refunds.
The SC case of LAMP, Lualhati vs Meralco is clear. For cost to be chargeable to consumers, it must be reasonable, necessary, recurring and redounding to the benefit of the consumer. For an asset to be recoverable, it must be used or useful. Corporate income tax is not chargeable to consumers. Return must be reasonable and capped at 12%. When costs pass the criteria there is no need for refund.
As for PBR, when the rate is set at the start of the 4-year regulatory period based on the verified and validated Annual Revenue Requirement, the Capex, the revenue building blocks, and adjusted accordingly in the annual true-up, there is no foreseeable need for a refund.
On its face, a refund, whether volunteered by the utility or exacted by consumers in an apt case, is a confirmation that the criteria for recoverable cost was not observed or applied or the rate reset process was not followed. That seems to be the case here.
Obviously, there is so much work ahead for consumers. Painfully, it makes me wish Mang Naro was still around to win the fight for us.
In the maiden year of OpinYon practically all of CROSSINGS was about Meralco, PBR, ERC and electricity. I will pick up from where I left off but it will not really be that much different. Looking now at the stakes, the issues, the players and the play – the problems of 2010 are still the problems in 2025.
In OpinYon September 27-October 3, 2010, the title of my column was: Meralco kustomers, gising!!! Excerpts follow: Napagalaman natin ang petisyon ng Meralco na maningil ng P200B para sa kung anu-anung gamit nila sa pamamahagi ng kuryente xxx ang masaklap nito, tayo na ang mangangapital sa Meralco, babayaran pa rin natin ang kanilang kapitalista ng kita sa mga gamit na bibilhin ng Maeralco gamit ang ating pera. Ito ang tinatawag na return on rate base…
Sadly, hindi pa rin gising ang Meralco customers.
We are back. We will fight. Together, we will win!
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