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Napocor told to refund Meralco customers

/ 11:43 PM April 12, 2013

The Energy Regulatory Commission has ordered cash-strapped National Power Corp. to start refunding P5.18 billion worth of transmission line costs that customers of Manila Electric Co. (Meralco) were forced to shoulder.

In its order, the ERC said Napocor would have to pay Meralco P73.94 million every month until it fully refunds its P5-billion obligation. Based on estimates, it will take a little over five years to complete the refund.

Meralco, in turn, has been directed to turn over the amount to its over 5 million customers by way of “automatic deduction of the amount of refund to the computed monthly generation rate.”


Napocor’s refund to Meralco will start next month, ERC executive director Francis Saturnino Juan said on Friday in a telephone interview.

Although the ERC directed its orders to Napocor, the payments would be settled by state-run Power Sector Assets and Liabilities Management Corp., which already took over the management of Napocor’s finances, Juan added.

The P5.18 billion to be refunded represented the transmission line costs that were overcharged by Napocor from November 2006 to August 2012.

This amount, however, was only half of the roughly P10 billion that Meralco had initially sought to recover.

Meralco earlier complained of being double-charged because of the 2.98-percent transmission loss recovery (or line losses) included in the transition supply contract (TSC) between Napocor and the distribution utility, and in the line rental charges, which comprised congestion cost and line losses, being collected by Philippine Electricity Market Corp. since the wholesale electricity spot market (WESM) started operating in June 2006.

In a decision dated March 10, 2010, ERC established that there had been “double charging in transmission line costs.”

But compliance by various parties involved was incomplete as some of the data needed for the computation were no longer available. This was why it took so long to start the P5.18-billion refund.

PSALM earlier contested the allegations of double charging, saying that there was no other effective “segregation mechanism” to prevent the charging of line losses under Napocor’s transition supply contract and PEMC.


The state agency also earlier disputed Meralco’s computation of the P10-billion refund, as it noted that the distribution utility’s methodology did not take into consideration the increases and decreases in the actual transmission line costs between 2006 and 2012.

PSALM’s own methodologies in computing the refund, however, were thumbed down by the ERC. The commission said that the state agency did “not address the double charging” issue.  Amy R. Remo



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TAGS: Business, Meralco, napocor, refund, transmission line costs
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