NASECORE DEMANDS CONSUMERS’ EQUITY FROM MERALCO

National Association of Electricity Consumers and Reforms (NASECORE) yesterday demanded that the Manila Electricity Company should declare as consumer’ equity additional revenues derived from its rate increases of 25 centavos per kilowatt hour.

In the letter to the Energy Regulation Commission, Nasecore President Pete Ilagan said that the additional revenues estimated at P500 million per month are not additional investments by Meralco’s stockholders and should therefore be entered into Meralco’s capital accounts as “consumers’ equity”.

Ilagan based his position on the Supreme Court decision under G.R. No. 141314, dated Nov. 15, 2002, defining the ‘rate base (as) the value of invested capital or property [to] which the utility is entitled to a return.”

Ilagan made the demand following a published report that Meralco planned to borrowing eight billion pesos for a syndicate of banks to refinance loans falling due this year until 2013.

The news item further stated that Meralco planned to finance the loans “from internally generated funds based on its estimated additional monthly revenues of Five Hundred Million Pesos (Php 500,000,000.00) a month.” These additional revenues are to be sourced from the rate increase of P0.25/kwh, which was approved for Meralco by the Energy Regulatory Commission (ERC) based on the newly-implemented Performance Based Regulation (PBR) rate setting methodology.

“The fact is very clear then that the financing of these capital expenditures does not come from the infusion of additional capital or investment from Meralco’s stockholders, but actually comes from the additional payments of the Meralco customers arising from the rate increase thus, these additional funds infused by the Meralco customers should be treated as equity of the Meralco customers being the real fund providers, “said Ilagan.

According to Ilagan, the new rate charged by Meralco to its customers was ostensibly for the purpose of allowing the utility to recover its actual investments in the business through the principle of Return on Rate Based (RORB). Ilagan declared that the new rate increase was “totally unjustified and unreasonable as this new rate increase in the amount of P0.25/kwh will allow Meralco to unduly recover capital and earn from capital which it did not provide, in the first place.”

He stressed that “to prevent further damage to the consumers, it is proper and appropriate that ERC should direct Meralco to consider these additional revenues generated from said rate increase as CONSUMERS” EQUITY in Meralco’s capital account.”

Ilagan also asked ERC to provide it with certified individual true copies of all existing loans contracts of Meralco, certified true copies of the ERC’s approval of these loans applications, a copy of each applications with the ERC for loan approval and certified true copies of the latest financial statements showing the outstanding balance of each Meralco loan.

Reference:
Pete Ilagan
Mobile - 09178461299

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