Amend the EPIRA now

The Manila Electric Co. (Meralco) is reportedly seeking the go-signal from the Energy Regulatory Commission (ERC) to allow the power utility giant to implement the next round of refunds to its customers. In its application to the ERC, Meralco proposed an average refund rate of P0.0487 per kilowatt-hour (kWh) across all customer classes over 12 months or until the full amount is refunded.

This will amount to an additional P2.64 billion worth of electricity refund to more than eight million Meralco customers.

The country’s biggest power utility asked the ERC to confirm its proposed refund scheme for the lapsed period covering January to June 2026. The refund was by virtue of a regulatory process known as a “true-up calculation,” reconciling the rates Meralco actually charged its consumers – the Actual Weighted Average Tariff (AWAT) – against the approved distribution rate authorized by the Commission.

The refund stemmed from the ERC order dated July 31 this year directing Meralco to refund a total of P9.5 billion in “over-recoveries” to its customers. In its 28-page directive, the ERC approved with modifications Meralco’s refund application for the lapsed regulatory period last year. This was when the ERC computed Meralco’s “over-recoveries” during the regulatory years covered by the lapsed period.

A lapsed period represents the time that has passed since the last rate adjustment approved by the ERC, affecting the pricing and revenue structures of regulated entities like Meralco.

In a statement, Meralco said it would comply with the ERC’s latest refund order, noting that the company itself had initiated the applications for its implementation.

Residential customers will see in their next monthly Meralco bill a higher refund of P0.0828 per kWh. According to the ERC, this will translate to savings of about P16.56 for households consuming 200 kWh a month. This higher refund from the AWAT will be reflected as a separate line item on Meralco customers’ electricity bills throughout the refund period.

The latest refund relief comes after the ERC and subsequently by the Bureau of Internal Revenue (BIR) officially removed the 12 percent value added tax (VAT) on allowable system loss charges of Meralco and other power utilities. It was no less than President Ferdinand “Bongbong” Marcos Jr. (PBBM) who ordered its total removal, not just the VAT, in his penultimate State of the Nation Address (SONA) before the 20th Congress last July 27.

But to carry this out, Congress must amend the 2001 Electric Power Industry Reform Act (EPIRA). Since this is a tax measure, the House of Representatives initiated the proposed amendatory law to henceforth prohibit the passing of system loss charges and its corresponding 12 percent VAT. In our Kapihan sa Manila Bay news forum last week, Murang Kuryente party list Rep. Arthur Yap welcomed the executive action to immediately implement the removal of the 12 percent VAT on systems loss even while they in Congress have yet to approve the amendatory bill on the EPIRA.

The House committee on energy chaired by Palawan Rep. Jose “Pepito” Alvarez resumes this week its public hearing on the EPIRA, with specific focus to the worsening power supply situation in the Visayas grid. According to Yap, the House energy committee considers “more bothersome” the Visayas power supply situation because of the “rotating” blackouts in the island grids. As the House committee on energy vice chairman, Yap disclosed they will look into the proposed bills to amend and update the EPIRA.

At the same Kapihan forum last week, National Grid Corp. (NGCP) assistant vice president Cynthia Alabanza confirmed the power supply shortage in the Visayas grid has been the primary cause of the yellow and red alerts that their transmission company has been trying to cope with. As the official NGCP spokesperson, Alabanza warned of the looming power supply crisis recurring in the Philippines. Unless new development of power sources come into the electricity streams sooner rather than later, Alabanza echoed the NGCP warning on these “writings on the wall.”

Yap cited there are at least four major baseload power plants operating in the Visayas grid. “Here, the profile of all the power plants that have failed in the Visayas,” Yap noted. From the information so far gathered by the House committee on energy, he enumerated the following Visayas grid operating power plants:

• Therma Visayas Inc. (TVI) operates a 340-MW baseload coal-fired power plant located in Barangay Bato, Toledo City, Cebu. It is an 80-20 joint venture between Aboitiz Corp. and Vivant Corp.

• The Cebu Energy Development Corp. (CEDC) has three 82-megawatt (MW) coal units at the Toledo Power Complex. Abovant, also owned by Aboitiz, effectively holds 26.4 percent with 56 percent by Global Formosa that has joint venture with Global Business Power (GBP) with Formosa Heavy Industries.

• The Panay Energy Development Corp. (PEDC) operates a 164-MW and a 150-MW coal plant in La Paz, Iloilo City. In the GBP website, it identified PEDC as a GBP subsidiary as the owner and operator of both plants.

• Toledo Power Co. has two units of 150-MW also owned by GBP.

• KEPCO SPC Power Corp. (KSPC) that runs two units of 100-MW each coal plant in the City of Naga, Cebu. The KSPC is a joint venture of Kepco Philippines (60 percent) and SPC Power Corp. (40 percent). Kepco Philippines is a subsidiary of Korea Electric Power Corp.

“Two things stand out. The Aboitiz group sits in both TVI and CEDC. And the Meralco group, through GBP, controls CEDC and PEDC plus Toledo Power Corp. That means two conglomerates account for most of the Visayas baseload that has gone down this year,” Yap deplored.

The EPIRA in particular disallows “cross ownership” of power utilities.

“So much for segregating transmission, generation and distribution,” Yap rued.

It behooves Congress to plug these loopholes in the law. Yap vowed they will strive to pass the proposed amendments to the 25-year-old EPIRA before Congress adjourns for the Christmas break in December this year.