The Energy Regulatory Commission (ERC) has approved the first distribution rate reset for Manila Electric Co. (Meralco) in 15 years, allowing a modest increase in the utility's own fees while sharply cutting what it had asked for.
In a decision dated October 9 and announced on October 10, the ERC raised Meralco's average distribution rate to P1.48 per kilowatt-hour from P1.35, an increase of 13 centavos or about 9.6%. Meralco had applied for P2.34 per kWh. Intervenors in the case had proposed rates between P1.60 and P1.98, and the approved figure came in below that range.
What the reset covers
The distribution charge pays for Meralco's poles, wires and substations. It is only one part of a customer's bill. Generation charges, which make up more than half of the typical bill, as well as transmission charges, taxes and other pass-through costs, are set separately.
Meralco's last rate reset was in 2011. Its allowable revenues had not been fully reviewed since then because previous regulatory periods were left unresolved. The new review covers a four-year period from July 2026 to June 2030 and was conducted under the ERC's rules for setting distribution wheeling rates, with public hearings held from March to May.
Where the regulator cut
The ERC set Meralco's revenue requirement for the period at about P342 billion, down from the P532 billion the company sought. That is a cut of P190 billion, or 36%.
According to the commission, it removed capital projects that had not been justified, excessive operating costs and bad-debt provisions, contingencies and duplicated assets. It also allowed a lower return on capital than Meralco had proposed. Investments it did approve include new substations and distribution lines, the replacement of aging equipment and advanced metering.
ERC Chairperson Francis Saturnino Juan said the commission did not simply accept what Meralco applied for, stressing that every peso allowed must be "prudent, efficient, and necessary." Meralco will also be covered by the ERC's Performance Incentive Scheme, which rewards or penalizes the utility based on reliability, power quality and customer service.
When consumers will feel it
Neither the ERC nor Meralco has announced when the new rate will appear on bills. The commission said its full decision will be promulgated shortly. Meralco Senior Vice President Jose Ronald Valles said the company has not yet received a copy and will review it before commenting on the impact on customers.
Consumer advocate Lester Nazarene Ople, who represented an intervenor in the case, welcomed the ruling as proof that consumer participation matters.
Power prices under watch
The decision comes as concerns grow over electricity costs during a strengthening El Niño. Energy Secretary Sharon Garin said earlier this month that higher power prices are possible and that the Department of Energy is coordinating with the ERC to prevent market abuse. Sen. Erwin Tulfo, who chairs the Senate energy committee, separately warned power companies against exploiting the dry spell with unjustified rate increases.
