The Philippine Energy Regulatory Commission (ERC) has approved a P2.64-billion refund for customers of Manila Electric Co. (Meralco), covering excess amounts collected through distribution charges during the first half of 2026.

The refund will be implemented over approximately six months at an average of P0.1020 per kilowatt-hour (kWh), the regulator said in a statement on Monday. More than eight million Meralco customers are expected to benefit from the payout, which covers the period from January to June 2026.

Provisional Authority Following True-Up Review

The directive is contained in an order approved by the ERC on Oct. 9, granting Meralco provisional authority to implement the refund after a review of its distribution charges.

That review, known as a "true-up," compares the utility's actual weighted average tariff (AWAT) — calculated using actual revenues and electricity sales — with the distribution rate approved by the regulator. The exercise relies on actual figures, so the review follows the covered period — January to June 2026 in this case, examined through the Oct. 9 order — and when the comparison shows collections running above the approved rate, as it did here, the excess is ordered returned to consumers.

According to the ERC, Meralco's AWAT reached P1.5537 per kWh from January to June, exceeding the approved distribution rate of P1.3522 per kWh by about P0.20 per kWh. The gap resulted in excess collections of approximately P5.36 billion. After accounting for adjustments arising from previous refund and true-up decisions, the regulator determined that the net amount to be returned to consumers stood at P2.64 billion.

Faster Relief for Consumers

The ERC shortened refund period to six months from the 12 months proposed by Meralco in order to accelerate the return of the excess collections.

"By shortening the refund period to six months, we are giving consumers faster relief at a time when electricity prices remain elevated," ERC Chairperson and Chief Executive Officer Francis Saturnino C. Juan said.

Residential customers will receive a refund of P0.1733 per kWh — above the P0.1020-per-kWh overall average — which will appear as a separate line item on their electricity bills.

"[The refund will take effect] in the next billing cycle from Meralco's receipt of our order. We'll include that together with the decision on the rate reset so there will be almost no movement in Meralco's current rates," Mr. Juan said in a Viber message.

The refund remains provisional and is subject to further review and verification by the ERC, with any necessary adjustments to be made following the regulator's final evaluation.

Lead-In to Meralco's First Regulatory Period

The refund covers the remaining "lapsed period" before the start of Meralco's first regulatory period under the ERC's revised rate-setting framework. That period runs from July 2026 to June 2030, during which the regulator reviews the utility's costs, investments, and performance to determine allowable distribution rates.

The ERC earlier approved an average distribution rate of P1.48 per kWh for the first regulatory year, compared with the existing average rate of about P1.35 per kWh. The adjustment followed the regulator's approval of approximately P342 billion in total revenue requirements for Meralco over four years — 36% lower than the P532 billion the company had sought.

With the transition window's collections addressed by the refund order, the approved P1.48-per-kWh average takes effect for the first regulatory year beginning July 2026.

Company Background

Meralco is the country's largest private electric distribution utility, serving more than 8.1 million customers in Metro Manila and nearby provinces, including Bulacan, Cavite, Rizal, and parts of Laguna, Batangas, Pampanga, and Quezon.

For September, Meralco reduced electricity rates by P0.0409 per kWh, bringing the overall rate for a typical household to P14.7424 per kWh from P14.7833 per kWh in August. For context, the P0.1733-per-kWh residential refund works out to a little over 1% of that overall household rate.

Meralco's controlling shareholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.

— Sheldeen Joy Talavera, BusinessWorld