Thursday, November 13, 2008 ERC's help sought on Cera refund
CONSUMER groups on Wednesday asked the Energy Regulatory Commission (ERC) to order Manila Electric Company (Meralco) to refund the P3.9 billion currency exchange rate adjustment (Cera) it collected from its four million customers.
In a petition lodged before the ERC, the National Association of Electricity Consumers for Reforms (Nasecore) said the P3.9 billion Cera, which were overcharged by Meralco to its customers from June 2003 to December 2006, must be immediately returned.
Nasecore made the appeal after the government denied the petition filed by the distribution utility asking for the deferment of the implementation of the Cera refund.
"The P3.9 billion represents overcharges by Meralco, which it must promptly return to us, consumers. In the first place, these overcharges were unauthorized collection. Meralco did not have the right to collect more than what it was allowed to collect from its customers. We expect the ERC to penalize Meralco for this," said Nasecore president Pete Ilagan.
Ilagan disputed Meralco's claim that it was not a position financially to refund the Cera collections because its operational costs had increased due to inflation and its supposed efforts "to improve the quality of service to its customers."
But Ivanna dela Pena, Meralco vice president for utility economics, explained that at the moment, the company could not afford to fund the Cera refund because "it is in no position to implement the refund."
"We have stated in our Motion for Deferment that we are not in a position to implement the refund since all our internally generated cash is already committed. This includes our covenant to implement projects in compliance with our PBR commitments, to service other mandated refunds, and to meet our scheduled debt maturities, including a P5.24 billion payment due in December," dela Pena said.
According to her, Meralco is financially incapable of refunding the Cera since they have started the meter deposit refund of P2.8 billion as well as the P30 billion refund which was ordered by the Supreme Court to return to its customers that were illegally collected.
She said they need to borrow to be able to fund the refund.
"We had to incur loans to finance our under-recoveries, and we still have over P10 billion in under-recoveries pending resolution at the commission. The under-recoveries have stretched our credit limits with many financial institutions and we need time to re-configure our financing program and possibly incur additional financing to implement the Cera refund," added the Meralco official.
However, Ilagan disputed Meralco's claim saying that it has been so profitable that San Miguel Corporation just recently purchased its shares of stock at double the market value.
He said Meralco could not lose money because it is guaranteed a rate of return of 12 percent.
"This is one of the main factors why this monopoly was audited to be worth to be more than a P50 billion venture last 2007, given its relatively modest beginnings in 1986 when the Lopezes (whose family controls Meralco) recommenced Meralco's operations with assets only worth P50 billion," said Ilagan.
The ERC in its ruling issued early this week denied Meralco's request for deferment of Cera refund implementation after the company failed to convince the agency that "it is just and warranted." (MSN/Sunnex)
