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The Energy Regulatory Commission will review Meralco’s
performance-based rate-setting (PBR) in light of a Supreme Court
ruling disallowing the inclusion of corporate income tax in the
company’s rate structure.
Rodolfo B. Albano Jr., ERC chairman, said
the regulatory body would review the rate- setting methodology of
the Manila Electric Co. as “it includes corporate income tax as
one of its building blocks because in other jurisdictions it is
included; but the Supreme Court has decided against this.”
Republic Act 9136 or the Electric Power Industry
Reform Act gave ERC the authority to “adopt alternative forms of
internationally accepted rate-setting methodology” such as the PBR,
which has been employed in other jurisdictions, including Australia
and the United States.
The exclusion of corporate income tax in the
costs Meralco can recoup from consumers’ electricity bills was
earlier decided upon by the Supreme Court on Meralco’s return on
rate base (RORB) mechanism, which preceded the PBR.
As a result, the Lopez-controlled
distribution utility, the Philippines’ largest, had to refund its
customers P30 billion a couple of years ago.
A Meralco official, however, said the
company expects a positive decision if and when the ERC decides on
the inclusion of its corporate income tax in determining its rates
as this has been part of the internationally accepted PBR.
The official added that the ERC has
completed public consultations on Meralco’s PBR, a precursor to
its implementation, which will redound to an increase in its
distribution charge by P0.08 per kilowatthour in 2008 and by P0.10
per kilowatthour annually from 2009 to 2011.
-- Euan Paolo C. Añonuevo
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