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The Manila Electric Co. building. ELMER DOMINGO (CC BY-SA 3.0)

MERALCO refunds subject to independent audit – ERC

The government announced it will find a way to ascertain the veracity of the Manila Electric Company (MERALCO) refund of billions of pesos to its consumers. So, the Energy Regulatory Commission (ERC) is contracting an independent audit team to investigate the refund.

However, based on the annual reporting of the ERC – which is a quasi-judicial body that regulates power rate increases – the contract cost for the independent audit has yet to be determined.

Upon checking by The Market Monitor (TMM) on the Transparency report of its website, previous years beginning 2014 have been empty in declaring contracts and bids awarded.

According to market watchers interviewed by the TMM, the contracting of independent audit should be the last option since the Commission on Audit (COA) has the power to lead in reviewing power related costs particularly on issues with national implication.

In a press statement, ERC head Agnes Devanedera reported that all refunds of Meralco will be the subject of an audit but did not elaborate on the total bid project awarded to the designated private team.

TMM reviewed the annual report of the ERC on its historical costs on awarded contracts and results from its Transparency website revealed that for the last six year the bids project has been “empty” which means no update of transparency report.

Meanwhile, Devandera who is a former justice of the Supreme Court, vowed to consumers that the audit of all refunds will be conducted by the winning bidder to ensure that all reported refunds of Meralco has been returned or credited to consumers.

The multi-billion-peso Meralco refund that will be subject of audit including electricity overfilling, meter and bill deposits, overbilling, and taxes and fees that ERC promulgated and resolved to be refunded to the consumer, she said.

It will be recalled that the biggest refund reported was the P42 billion Meralco refund which was still unaudited as of this writing.

The ERC has been proactive in regulating power rates with an order for Meralco to deposit “in an interest bearing bank account” unclaimed tax refunds that would bring down the cost of distribution charge. Meralco has yet to be reached for disclosure on the total deposited amount in compliance with the ERC directive issued in 2019.

The same ERC directive said that Meralco should reflect the gross and net amount of the refund on tax which the Supreme Court ordered Meralco to implement under Phase I to IV ending in June 2019.

Devanadera said the ERC was clear on its order for Meralco to devise a proposed scheme on unclaimed tax refund that would “purposely” reduce the distribution rates of customers.

As part of its transparency order, ERC has a standing order for Meralco to post in every of its business offices the names of customers that have claims for Meralco refunds according to Devanadera.

The ERC has been acting on its initiative to protect consumers in line with the legislation on “Murang Kuryente” and the directive of President Rodrigo Duterte on just and reasonable electricity rates.

ERC Engages Consultant to Audit MERALCO Refunds

The Energy Regulatory Commission (ERC) resolved to engage the services of an independent party to verify whether the Manila Electric Company’s (MERALCO) reported refunds have been fully accounted for, returned or credited to its customers’ accounts.  The ERC ordered MERALCO in previous years to refund the Bill Deposit, Meter Deposit, and Income Tax that it collected from its customers.  

“Our Bids and Awards Committee (BAC) has already completed its bidding process and has awarded the contract for the “Procurement of Consulting Services for the Audit and Verification of the MERALCO Refunds” to the bidder that submitted the Highest Rated and Responsive Bid and which has also complied with all the legal, technical, and financial requirements for the said procurement project,” ERC Chairperson and CEO Agnes VST Devanadera averred.

The ERC deemed it prudent to engage the services of a Consultant, who has the technical expertise and capability to conduct an independent audit and verification of all the refunds of MERALCO, considering the limitations of its existing organizational structure and manpower complement vis-à-vis its expanded mandates in regulating and transforming the electric power industry. Thus, the Commission approved the recommendation of its BAC to award the contract for the said MERALCO refund audit to Roxas Cruz Tagle and Co, which was found to have submitted the Highest Rated and Responsive Bid.  “The Commission is of the view that regulation must be borne by the government so we have allocated a budget for the engagement of an independent Consultant that will conduct the audit and verification of MERALCO’s refunds.  The impending audit of MERALCO refunds will ensure that what was due to consumers has been actually returned or credited to their accounts and truly benefited them,” Devanadera added. 

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