December 30, 2024 | 12:00am
MANILA, Philippines — The Energy Regulatory Commission (ERC) has moved the start of Manila Electric Co. (Meralco)’s fifth regulatory period (5RP) to July 2025, delaying it by six months from the earlier approved date.
The ERC has resolved to approve and adopt the rules amending the modified rules for setting distribution wheeling rates covering the reset process of private distribution utilities (DUs), starting with Meralco’s 5RP.
As a result, the power utility giant’s 5RP has been adjusted to July 2025-June 2029 from the previously approved January 2025-December 2028.
The rate reset process sets the rules and parameters for the investment, operations and pricing mechanisms of highly regulated entities like Meralco for a four-year period to determine how much should be charged to consumers.
Meralco is subject to a performance-based regulation, an internationally accepted rate-setting methodology that requires the submission of revenue requirements for the next four years.
The latest decision, the commission said, marks a crucial step forward in addressing regulatory gaps that “have impacted rate-setting timelines.”
“The ERC acknowledges that certain years within Meralco’s original 5RP have already lapsed given the need to address the complex legal challenges involved, along with prior actions of various stakeholders,” it said.
Following the recent resolution, Meralco’s lapsed period has been revised to July 2022–June 2025 instead of the previously set January 2022–December 2024.
A lapsed period represents the time that has passed since the last rate adjustment or the gap between two scheduled rate resets, potentially affecting the pricing and revenue structures of a regulated entity.
During a lapsed period, consumers pay charges that are no longer reflective of the current cost of the service while awaiting the approval of a new rate.
Upon approval of a new rate, the regulator may order DUs to implement necessary adjustments, such as a refund scheme, to account for any discrepancies during the period.
Highlighting the importance of a rate-setting process, ERC chairperson and CEO Monalisa Dimalanta said the move is crucial to “align distribution rates with operational realities and regulatory.”
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