CA orders P5-B Meralco refund


CUSTOMERS of Manila Electric Co. (Meralco) can expect an automatic refund once the National Power Corp. (NPC) and Power Sector Assets and Liabilities Management (Psalm) paid back the more than P5 billion they overcharged the power distribution firm from 2006 to 2012.

The Court of Appeals (CA) has ordered Meralco to comply with the directive of the Energy Regulatory Commission (ERC) to return to its customers by way of automatic deduction the P5 billion it will recover from the NPC and Psalm.

In a 20-page decision penned by Associate Justice Danton Bueser and concurred in by Associate Justices Remedios Salazar-Fernando and Socorro Inting, the CA’s Special Second Decision dismissed a petition for certiorari filed by Psalm assailing the order of the ERC.

“Consequently this court cannot grant Psalm prayer for injunctive relief against the implementation of the subject ERC orders. The court notes that the undisputed transmission charges are mere Meralco’s pass-through charges,” the CA said.

“In truth, it is the public that has been doubly charged,” the court noted.

The CA found as baseless Psalm’s claim that the ERC gravely abused its discretion when it chose to reconsider its decision to implement the refund through segregated line rental amount for TSC [Transition Supply Contract] quantities and instead order[ed]a refund through a straight discount method.”

The ERC found that the retroactive segregation of line lost costs is impossible to achieve, it said.

Meralco has said that based on invoices issued by the NPC using a straight discount of 2.98 percent line loss factor, the computed double recovery on line loss amounted to P5.176 billion from November 2006 to August 2012. The power company added that Meralco customers were charged double and expressed its intention to refund its customers through automatic deduction of the amount of refund from the computed monthly generation rate.

When Republic Act 9136 or the Electricity Power Reform Act (Epira) was enacted in 2001, it caused restructuring of the electric power industry and paved the way for privatization of the assets of the NPC.

The Psalm was created principally to manage the orderly sale, disposition and privatization of the NPC assets with the objective of liquidating all NPC financial obligations and stranded contract costs in an optimal manner. Epira also created the ERC, an independent regulatory body with quasi-judicial authority.

On November 22, 2006, Meralco and NPC entered into a TSC with an initial term of five years from the date of its effectivity. The contract was extended several times until its termination on June 25, 2013.

On March 10, 2010, the ERC held among others that Meralco was indeed doubly-charged on transmission line loss costs, which should be refunded by the NPC and Psalm.

The commission also found double charging for TSC quantities for the preceding months up to the start of the Wholesale Electricity Spot Market (WESM) Luzon operation on June 26, 2006.

On March 4, 2013, the ERC issued an order adopting straight discount method of deducting the 2.98 percent line loss embedded in the NPC-TOU (Time of Use) rates instead of the line segregation method to determine the amount of double charging referred to in its March 10, 2010 decision.

The commission said the computed double charge amount to be recovered by Meralco from the NPC is P5,176,147,098.73 and such other additional payments received by the NPC from Meralco for the period subsequent to August 2012 “until the actual cessation of the collection of the 2.98 percent line loss charge in the NPC-TOU rates imposed on the [electricity company]as directed in the order.”

“NPC is hereby directed to refund to Meralco the aforesaid over-recoveries by remitting to Meralco per month the equivalent amount of P73,944,958.55, until the over-recoveries are fully refunded,” the ERC ruling said. “Meralco is hereby directed to refund to its customers the amount it received from NPC until such time that the aforesaid over-recoveries are fully refunded by way of automatic deduction of the amount of refund to the computed monthly generation rate.”

In its December 1, 2014 decision, the CA disagreed with Psalm’s contention that the ERC committed grave abuse of discretion when it issued the ruling.

“In its March 2010 decision, the ERC unequivocally found that Meralco was subjected to double recovery of transmission line losses cost,” the appellate court noted.

“This court cannot supplant the findings of the ERC on the propriety of the method to be used in implementing its decision. Courts as a policy should not interfere in matters which are addressed to the sound discretion of the government agency entrusted with the regulation of activities coming under the special and technical training and knowledge of such agency,” it said.


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  1. this is good news for all of us. another to look out for is the cost of separation pay granted by the courts to the employees of napocor. i heard joe taruc of dzrh saying that this cost amounting to several BILLIONS would be passed on by the gov’t to us consumers for up to 10 years. why is the gov’t charging us for the separation benefits of its former employees at napocor.