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Public
wary about Meralco refund deals The saga about the Meralco refund to electricity users is far from over. Of the P30.5 billion in the total refundable amount, almost a third – between P18 to P20 billion – will have to be returned to big-ticket customers. This should mean a lot for consumers who ideally should enjoy the benefits of lower prices once the refund to industrial and commercial customers takes effect. Theoretically, a rollback in prices should be underway as electricity represents a major component of every business‚ production cost and is even a major determinant in the competitiveness of Philippine-made products However, lower prices of goods and services as a result of Meralco’s impending refund of overcharges to heavy electricity users could be wishful thinking on the general public’s part. As what often happens, when prices go up, very rarely will they go down. Given the huge sum of money involved, this phase of the refund is so crucial in determining the viability of the country’s largest power distributor. Which is why current talks with industrial and commercial customers are taking so long. Staggered Refund Option Several options seem to be taking shape, starting with the plan to have the amount paid through billing credits over a nine-year period. On an annualized basis, the proposed nine-year refund scheme would result in at least a P2-billion reduction in the power distributor’s yearly cash flow. A huge amount, perhaps. But for the country’s largest power distributor, this is merely equivalent to the annual additional revenues it is expected to generate from the recent P0.12 per kilowatthour rate increase it obtained from the Energy Regulatory Commission (ERC) just before its former commissioner resigned to run for public office. Of course, the High Court recently asked Meralco to stop the P0.12 per kwh provisional hike based on a petition by opposition groups. But many think the stoppage is only temporary, albeit a good move given the fact that it is election time. Should a go-ahead be obtained (most probably after the election results are tabulated), then it would only mean that Meralco need not get from its own pocket the amount needed to refund industrial and commercial customers. Promissory Notes Option Another option being considered is the issuance of IOUs or promissory notes to cover the amounts due to big clients. The IOUs would be made tradable, and could be sold or exchanged (at a discount, of course) in case a company would prefer to cash in the IOUs. The certificates could also be used as collateral to loans. This option seems to be an acceptable alternative to most big consumer clients who may want to cash in even at a steep discount. For them, this is already a bonanza since they had already passed on the cost of higher power rates to its customers from the period 1994 to 2003. Meralco Shares Option And then, there is also the proposal of issuing Meralco shares as refund payment. Issuing new shares is seen to make Meralco a more publicly-owned company – with industrial and commercial customers receiving as much as 70 to 80 percent of the new shares, and the residential clients some 15 percent. Some doubt, however, whether the resultant change in ownership profile will make Meralco – the country’s largest power distributor – more accountable to its public. Going After Earnings From Overcharging There are other issues raised on Meralco’s liability to pay interest for the P30.5 billion in overcharged amount, since technically Meralco had already made earnings from the collected money, which, according to the Supreme Court, does not rightfully belong to it. Of course the next big question is: Will big electricity users who have already passed on the cost of the higher-priced electricity to its own customers likewise reflect the refund by lowering its prices for goods or services? The cards have been laid down on the table, and a decision among the parties concerned – the big industrial and commercial customers, Meralco and government – should be underway in the next few weeks. The public, in the meantime, is wondering. Will they end up as beneficiaries of any refund deal? Or will this be another play between the big boys where they end up as losers again?
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