ERC Fines MERALCO with PhP19 Million

In its recently-issued Decision dated 20 August 2020, the Energy Regulatory Commission (ERC) imposed a PhP19 Million fine on Manila Electric Company (MERALCO) for violating the regulatory agency’s Advisories that it issued during the community quarantine period starting in March until July 2020.  MERALCO, in particular, violated the following ERC directives: (1) Failure to clearly indicate that the bills were estimated; and (2) Failure to comply with the mandated installment payment arrangement.

“MERALCO’s neglect to provide accurate and timely information especially during this time of pandemic has created chaos and confusion to most of the electricity consuming public.  The Commission issued the relevant Advisories with the intention of alleviating the financial burden of the electricity consumers who were mostly adversely affected by the community quarantine measures implemented by the government.  This serious neglect by MERALCO resulted to a multitude of complaints filed by its consumers to this Commission”, ERC Chairperson and CEO Agnes VST Devanadera explained.

The ERC Decision maintained that under the circumstances, prudence dictates that MERALCO, in the presentation of information to the consumers should always account the normal behavior of consumers.  As information is being communicated to the consumers with the specific intention of apprising the latter on certain matters, the manner on how consumers appreciate and perceive information should have been considered.  It is a fact that information is processed not from the point of view of the Distribution Utility but from the point of view of consumers.

The ERC, in its evaluation considered the following: (1) Billing Statements from the consumer complaints filed with its Consumer Affairs Division; (2) Billing Statements from its employees; (3) Billing Statements forwarded to it by the Office of Senator Sherwin T. Gatchalian; and (4) Billing Statements sent by the National Association of Electricity Consumers for Reforms, Inc. (NASECORE).  Based on the Commission’s evaluation, MERALCO incurred a total number of 190 days of violation.

According to the Commission’s Guidelines to Govern the Imposition of Administrative Sanctions in the Form of Fines and Penalties Pursuant to Section 46 of Republic Act No. 9136, as amended, for any violation of the provisions of EPIRA, its IRR, Rules and Regulations, and any other orders or directives of the Commission, a basic penalty of One Hundred Thousand Pesos (PhPx100,000.00) shall be imposed. Thus, the said basic penalty of PhP100,000.00 is multiplied by the number of infractions committed by MERALCO which resulted to a total administrative fine of NINETEEN MILLION PESOS (PhP 19,000,000.00).  Considering the number of Advisories that were violated by MERALCO and the number of days that lapsed before serious efforts were undertaken to comply to the Commission’s directives, the Commission computed as number of violations the number of days lapsed reckoned from the date of issuance of each Advisory violated up to the date of MERALCO’s latest personalized billing statement released last 9 July 2020. 

In addition, the ERC also directed MERALCO to set to zero the Distribution, Supply, and Metering (DSM) charges of lifeline consumers whose monthly energy consumption does not exceed 100 kWh for one (1) month billing cycle effective in the next billing cycle immediately upon receipt of the subject ERC Decision.  The said retail rate discount will provide temporary economic relief to more than two million lifeline consumers and their family members at least for a month.  The DSM comprised of 22.4% of the total retail rate.   The total discount to be provided to all lifeline consumers is estimated to be around Two Hundred Million plus (PhP200M+).  The cost of the discount shall not be charged to the non-lifeline consumers. 

Corollary thereto, MERALCO was also directed to submit a Compliance Report within fifteen (15) days after its implementation of the Commission’s directives.  The subject report must contain the following information: (1) total number of customers benefitted; and (2) total amount of discount extended. 

“We urge the Distribution Utilities to take our Advisories very seriously.  Our Advisories were issued to aid the electricity consumers in light of the on-going pandemic.  It was supposed to provide a respite from the various financial woes of the consumers. In real time response to the changes brought forth by the pandemic, the Commission hereby intervenes and provides relief to the most affected consumers in the form of discount to the applicable retail rate”, ERC Chair Devanadera concluded.