The Energy Regulatory Commission (ERC) is implementing reforms to address regulatory delays in setting rates for privately owned distribution utilities, starting with Manila Electric Company’s (MERALCO) fifth regulatory period (5th RP).

Through Resolution 17, Series of 2024, which amends ERC Resolution 10, Series of 2021, the ERC aims to recalibrate rules and expedite the reset process. 

Citing the urgency of the reform, ERC chairperson and CEO Monalisa C. Dimalanta said the modifications will close the gaps that have disrupted rate-setting timelines due to complex legal challenges and actions by various stakeholders.

“This reset is essential to align distribution rates with operational realities and regulatory efficiency.”

Shifting landscape

“By addressing these delays, we reaffirm our commitment to protecting consumers and ensuring that our distribution utilities direct their investments towards improved services in the changing energy landscape,” Dimalanta said over the weekend. 

The ERC acknowledged that certain years within Meralco’s original 5th RP had already lapsed due to complex legal challenges and previous actions by various stakeholders. As such, the changes will recalibrate rules to ensure timely resets while maintaining fairness and transparency.

A rate reset is a periodic process conducted by the ERC to review and adjust the distribution rates charged by utilities like Meralco to ensure rates reflect the true costs of delivering electricity, considering factors such as inflation, operational expenses, and the Weighted Average Cost of Capital (WACC). 

Meralco’s current WACC is 14.97 percent and has not been updated since 2015.