Author’s note: This article is based on a letter submitted by the National Association of Electricity Consumers for Reforms, Inc. (NASECORE) to the Energy Regulatory Commission (ERC) dated January 5, 2026.
Public confidence in the electricity sector depends heavily on transparency, regulatory vigilance, and independent verification of how consumer funds are handled. It is in this context that consumer groups, led by NASECORE, have renewed calls for a long-delayed special audit by the Commission on Audit (COA) of the Manila Electric Company (MERALCO).
NASECORE President Pete Ilagan has repeatedly urged the ERC to act on the conduct of a COA audit, emphasizing that consumers are entitled to assurance that the money they pay through regulated electricity rates is used strictly for lawful and electricity-related purposes. The request is grounded not in speculation, but in a pattern of regulatory refund orders and unresolved audit gaps that raise legitimate public-interest questions.
In 2020, MERALCO itself acknowledged refund obligations amounting to approximately ₱13.9 billion, to be returned to consumers over a period of 12 to 36 months. For consumer advocates, the central concern was not the refund schedule alone, but whether these consumer-owned funds were properly preserved, accounted for, and segregated pending their return.
Subsequent ERC refund orders further underscore the magnitude of consumer funds involved. These orders—amounting to tens of billions of pesos across multiple regulatory periods—were the result of rate recomputation and regulatory true-ups, not a comprehensive audit of MERALCO’s books of accounts. While refund orders do not imply wrongdoing, they do highlight the importance of independent verification of how such funds were handled.
From an audit perspective, the installment-based refund mechanism raises material questions. If consumer over-recoveries had remained intact and readily available, it is reasonable to ask why refunds had to be staggered over several years. Whether such funds were preserved, absorbed into cash flows, or utilized for operational purposes are factual matters that only an independent audit can conclusively establish.
Equally relevant is the sourcing of refunds from current monthly billings. MERALCO’s ability to return billions of pesos from ongoing revenues without apparent impairment invites scrutiny as to whether ERC-approved rates may have exceeded what is necessary to recover prudently incurred costs and a reasonable return—reinforcing the need for audit verification rather than reliance on regulatory assumptions alone.
While the January 5, 2026 letter to COA focuses on consumer over-recoveries, refunds, bill deposits, and other consumer-derived funds, these matters inevitably fall within the broader audit function of determining whether costs recovered through electricity rates were prudently incurred and consistent with regulatory standards. Independent audit verification is therefore essential to ensure that only lawful and electricity-related expenses are ultimately borne by consumers.
The call for an audit becomes even more compelling in light of MERALCO’s reported substantial investments in subsidiaries and affiliates during the same period. As a regulated monopoly whose revenues are overwhelmingly derived from captive consumers, MERALCO holds consumer-derived funds that do not constitute utility income. There is a clear public-interest need to determine whether such funds were fully insulated from corporate investments, whether directly or indirectly.
Public disclosures indicate that companies within the broader MVP Group, including Meralco PowerGen Corporation (MGen), undertook large-scale equity investments in recent years. The timing and scale of these investments highlight the importance of audit-level fund-flow tracing—something that rate recomputation alone cannot resolve.
The Supreme Court has consistently underscored the importance of such verification. In Meralco v. Lualhati (G.R. Nos. 166769 and 166818), the Court emphasized that electricity rates must be “just, reasonable, and fully supported by verified financial data,” recognizing COA audits as a necessary safeguard in the rate-setting process. This principle was further reinforced in later rulings affirming that regulatory approvals do not foreclose subsequent factual verification through audit.
From the consumer perspective, the call for a COA audit is neither an accusation nor an attack on any company. It is a demand for assurance. Even marginal rate adjustments, when applied to millions of consumers, translate into billions of pesos. Without independent and transparent verification, public trust in the regulatory system inevitably erodes.
NASECORE’s intervention reflects its mandate to protect consumers by insisting on accountability, transparency, and adherence to constitutional and regulatory standards. A timely COA audit would not only clarify how consumer funds were handled, but also strengthen confidence in the electricity regulatory framework itself.
Ultimately, the issue is simple: consumers deserve certainty that the money they paid was used solely for lawful, electricity-related purposes. An independent COA audit is the most effective way to provide that assurance—and to affirm that public utilities operate under a duty of public trust.