THE Energy Regulatory Commission (ERC) ordered power distributor Manila Electric Co. (Meralco) on Friday to refund a total of P19.95 billion to its customers as a result of over-recovery of rates.

In an order issued also on Friday, March 14, the ERC granted provisional authority to Meralco to implement its proposed refund scheme over a period of approximately 36 months for a total of P19.95 billion, to account for Meralco's over-recovery of rates for the lapsed period from July 1, 2022 to Dec. 31, 2024.

Voting 3-2, the ERC resolved to grant the proposed refund scheme of Meralco but also disallowed its proposed offsetting of alleged under-recoveries from July 1, 2015 to June 30, 2020 in the amount of P862.034 million.

With those factors, the final decision resulted in a refund amount of P19.958 billion, higher than the distribution utility's proposed P19.096 billion.

The ERC said the provisionally approved refund amount is equivalent to an average refund rate P0.1189 per kilowatt-hour (kWh) for all of the distribution utility's customer classes.

The commission also ordered Meralco to immediately implement the refund in the next billing cycle upon receipt of the order, which will be in April 2025.

The ERC further directed Meralco to also reflect the refund rate as a separate line item in customer bills as "Actual Weighted Average Tariff (AWAT or Refund)/Collect," and added the distribution utility is also required to submit a report in the prescribed format until the amount of over-recovery has been fully refunded.

Dissenting from the majority's ruling, ERC Chairman and CEO Atty. Monalisa Dimalanta argued that directing a short refund period of 12 months, justified as it is under a provisional authority and thus limited to a one-year effectivity, would have yielded a more substantial refund amount for the consumers.

In addition, Commissioner Catherine Maceda, also dissenting, continued to question the validity of the true-up calculation and further said that consumers stand to lose more due to the protracted refund period, reiterating that the refund should be completed in the shortest time possible.

Back in December 2024, the ERC issued an order declaring the period from July 1, 2022 to June 30, 2025 pertaining to Meralco's original fifth regulatory period (5RP) as lapsed, and directed the company to file, within 30 days from receipt of the said order, an application for the true-up calculation of its Maximum Average Price (MAP) versus the AWAT covering the period declared as lapsed, subject to evaluation, confirmation, and approval of the commission.

Meralco then filed the said application on Jan. 28, 2025 covering the period from July 1, 2022 to Dec. 31, 2024. And in its application, the company manifested that it will also file a supplemental application for the remaining amount from Jan. 1, 2025 to June 30, 2025, after it determines its AWAT for the period.

With that in mind, the ERC noted this provisional order remains subject to further review and verification as part of the final evaluation of rates for the full lapsed period of July 1 2022 to June 31, 2025 and said that more refunds could be on the horizon.

In a statement, Meralco said that it welcomes this development and confirms that they will indeed file another application for refunds once they have finished computations.

"While we have yet to receive the official ERC Order, we were informed that the regulator will be granting a provisional authority on our refund application. We welcome this development as this will provide relief to our customers, especially as we approach the summer months when rates historically increase due to high demand for electricity," Meralco VP and Head of Corporate Communications Joe Zaldarriaga said.

"This refund was filed in compliance with ERC Order that declared July 2022-June 2025 as a lapsed period. This period was supposedly under the 5th Regulatory Period (5RP) but the reset process was not completed. The total approved amount covers the difference between Meralco's AWAT and the power distributor's approved distribution tariff from July 2022 to December 2024. Moving forward, another application will be filed after Meralco has incurred, completed, and determined the AWAT for the remaining period from January to June 2025," he added.