Meralco petition for rate increase may be stalled
March 1, 2001 | 12:00am
Meralco’s petition for a P0.30 per kilowatt hour (pkwh) rate increase could be stalled for good as oppositors represented by Solicitor Fidel Thaddeus I. Borja filed an urgent motion to suspend proceedings of the Energy Regulatory Board (ERB) on the petition as "the issues (involved) are still pending with the Supreme Court (SC)."
The National Association of Electricity Consumers for Reforms (Nasecore), Lawyers Against Monopoly (LAMP), and Genaro Lualhati, in his individual capacity, among others, have opposed the rate hike petition, which was filed on Aug. 14, 2000 and docketed as ERB case 2000-57.
Meralco claimed in that petition "it would be unable to fund projects planned for the year 2000," citing an expected cash deficit of P6.5 billion without the rate increase. Meralco also claimed a rate of return of 5.5 percent in 1999 and 6.6 percent in 2000 without the increase.
According to Meralco, its loan covenants set a return on rate base (RORB), benchmarks of at least eight percent, and the increase sought would have raised its RORB to 11 percent.
RORB is the amount of money a utility is allowed to make to pay interest, dividends and profits or income to the investors.
Meralco’s first witness, senior vice president Daniel D. Tagaza, in the ERB hearing on Feb. 20, 2001, however, admitted that they (Meralco) treated income tax as operating expense in the computation of RORB. He also admitted that they used the average investment method and not the net average investment method in the computation of the asset or rate base.
"Since these two issues pending in the Supreme Court are now raised again before ERB, the proper action for the board is to suspend proceedings until after the SC has ruled with finality on those two issues," the solicitor said.
The National Association of Electricity Consumers for Reforms (Nasecore), Lawyers Against Monopoly (LAMP), and Genaro Lualhati, in his individual capacity, among others, have opposed the rate hike petition, which was filed on Aug. 14, 2000 and docketed as ERB case 2000-57.
Meralco claimed in that petition "it would be unable to fund projects planned for the year 2000," citing an expected cash deficit of P6.5 billion without the rate increase. Meralco also claimed a rate of return of 5.5 percent in 1999 and 6.6 percent in 2000 without the increase.
According to Meralco, its loan covenants set a return on rate base (RORB), benchmarks of at least eight percent, and the increase sought would have raised its RORB to 11 percent.
RORB is the amount of money a utility is allowed to make to pay interest, dividends and profits or income to the investors.
Meralco’s first witness, senior vice president Daniel D. Tagaza, in the ERB hearing on Feb. 20, 2001, however, admitted that they (Meralco) treated income tax as operating expense in the computation of RORB. He also admitted that they used the average investment method and not the net average investment method in the computation of the asset or rate base.
"Since these two issues pending in the Supreme Court are now raised again before ERB, the proper action for the board is to suspend proceedings until after the SC has ruled with finality on those two issues," the solicitor said.
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