NASECORE FILES CONSOLIDATED MOTION

Consumer Group Demands Full Disclosure of CAPEX, RAB, OPEX, and Rate Calculations in MERALCO’s Proposed Power Rate Increase

The National Association of Electricity Consumers for Reforms, Inc. (NASECORE) has formally filed a Consolidated Motion before the Energy Regulatory Commission (ERC) in ERC Case No. 2026-016 RC, seeking strict compliance with regulatory rules and full transparency in the evaluation of the proposed electricity rate adjustments filed by the Manila Electric Company (MERALCO).

Receipt Consolidated Motion

The motion was filed to ensure that the regulatory process protecting electricity consumers is faithfully implemented before any new electricity rates are approved.

Background of the Case

MERALCO has filed an application before the ERC seeking approval of its Annual Revenue Requirement (ARR) and Maximum Average Price (MAP) for the First Regulatory Period (2027–2030) under the Performance-Based Regulation (PBR) framework.

Receipt Consolidated Motion

According to the application, MERALCO proposes a MAP of approximately ₱2.3436 per kWh for Regulatory Year 2027, increasing further in succeeding years.

Receipt Consolidated Motion

For comparison, the ERC previously recomputed MERALCO’s average rate at ₱1.3522 per kWh under ERC Case No. 2015-112 RC, meaning the proposed MAP represents an increase of roughly ₱0.9914 per kWh, or about 73% in the first regulatory year alone.

Receipt Consolidated Motion

Given the magnitude of this potential increase, NASECORE emphasized that strict regulatory verification and transparency are necessary to protect captive electricity consumers.

Key Issues Raised by NASECORE

In its Consolidated Motion, NASECORE asks the ERC to compel MERALCO to fully disclose the financial and regulatory basis of its proposed rates, particularly the following components:

1. Verification of MAP vs Actual Tariff (AWAT)

NASECORE requests a full year-by-year reconciliation of the Maximum Average Price (MAP) and the Actual Weighted Average Tariff (AWAT) implemented during the previous regulatory periods to determine whether consumers were overcharged or undercharged.

2. Full Disclosure of the Regulatory Asset Base (RAB)

The motion seeks complete documentation of the Regulatory Asset Base, including:

• Opening and closing RAB values
• Capital expenditures (CAPEX) additions
• Depreciation schedules
• Asset retirements and disposals
• Project-level breakdowns of investments

This information is critical because growth in the RAB directly affects electricity rates charged to consumers.

Receipt Consolidated Motion

3. Disclosure of CAPEX Financing

NASECORE also requests MERALCO to provide documentation showing:

• Loan agreements and financing instruments
• Board approvals for capital projects
• Sources of capital funding
• Assumptions used in computing the Weighted Average Cost of Capital (WACC)

These disclosures are necessary to ensure that only prudent and efficient investments are passed on to consumers.

4. Transparency in Operating Expenses (OPEX)

The motion demands full disclosure of projected operating expenses, including:

• Personnel compensation
• Pension and employee benefits
• Administrative costs
• System operations and maintenance
• IT and digital infrastructure expenses
• Regulatory compliance costs

NASECORE stressed that consumers should not pay for expenses that are unnecessary, inefficient, or unrelated to distribution service.

5. Review of Refunds and Over-Recoveries

The motion also highlights previous refund orders issued by the ERC amounting to billions of pesos arising from the implementation of interim rates.

NASECORE requests a full accounting of these refunds and how they were reflected in MERALCO’s regulatory calculations.

6. Examination of Performance Incentives

MERALCO’s application includes a Performance Incentive Scheme (PIS) and Guaranteed Service Level (GSL) mechanism.

NASECORE asks the ERC to require full disclosure of:

• The computation of these mechanisms
• Any projected payouts embedded in the rate proposal
• Whether penalties for service failures will be passed on to consumers.

NASECORE emphasized that penalties for poor service must remain with the regulated utility and should not be shifted to consumers through higher rates.

Receipt Consolidated Motion

NASECORE’s Position

NASECORE stressed that before any rate increase is approved, the ERC must ensure strict compliance with the Rationalized Rules for Setting Distribution Wheeling Rates (RRDWR) and the consumer protection mandate under the Electric Power Industry Reform Act (EPIRA).

The organization emphasized that:

• electricity rates must be just, reasonable, and prudent
• regulatory mechanisms must prevent over-recovery of costs
• consumers must be protected through transparent and verifiable regulatory processes

Prayer of the Motion

In its filing, NASECORE respectfully asks the ERC to:

1. Grant the Consolidated Motion;
2. Direct MERALCO to submit the requested documents and supporting schedules related to its rate proposal;
3. Defer approval of the proposed Maximum Average Price (MAP) until full regulatory verification of the ARR components is completed; and
4. Grant such other reliefs as may be just and equitable.

Receipt Consolidated Motion

Consumer Impact

Electricity consumers within the MERALCO franchise area — including Metro Manila and several surrounding provinces — may be affected by the outcome of this case.

NASECORE reiterates that regulatory transparency is essential to ensure that consumers only pay for efficient, prudent, and properly verified electricity costs.