DEPUTY Minority Leader Risa Hontiveros is demanding a significantly larger refund from Manila Electric Company (Meralco) for its consumers, arguing that the P40 billion already slated for return is insufficient.
Hontiveros’s assertion, made during Tuesday’s interpellation on House Bill No. 10926 – a bill renewing Meralco’s franchise for another 25 years – centers on Meralco’s use of a higher-than-mandated weighted average cost of capital (WACC).
Hontiveros contends that Meralco’s utilization of a 14.97% WACC, instead of the Energy Regulatory Commission (ERC)’s recommended 8.27% to 9%, resulted in excessive profits for the company. She alleges that Meralco benefited from its non-compliance with the ERC order, effectively avoiding the imposition of a lower WACC and prolonging the collection of higher rates.
“In effect, Meralco benefited from its failure to comply with the ERC order,” Hontiveros stated, adding that the provisional rate collected since 2011 was based on an inflated WACC.
However, Senator Joel Villanueva defended Meralco’s position, stating that the 14.97% WACC aligns with the ERC-approved methodology and is crucial for ensuring the company’s sustainable operations. He argued that the lower WACC proposed by Hontiveros lacks both regulatory and economic viability.
Hontiveros strongly refuted this claim, emphasizing that the ERC’s consultants had recommended the lower WACC of 8.27% to 9%.
“I really can’t agree with Meralco’s inputs that the lower WACC… lacked regulatory sense and lacked economic sense,” she stressed. The debate highlights a significant disagreement over the appropriate WACC and its impact on consumer bills. The outcome will likely have substantial implications for Meralco’s future operations and the financial relief provided to its millions of customers. The disagreement underscores the need for greater transparency and accountability in the setting of utility rates.
