Manila Electric Co. (Meralco) will refund residential customers at a rate of P0.59 per kilowatt-hour (kWh) in their August electricity bills, following approval by the Energy Regulatory Commission (ERC).

The refund forms part of a P9.5-billion amount that the regulator approved after Meralco over-recovered distribution charges stemming from delays in the rate-setting process. Under the Philippines' performance-based regulation framework, the ERC periodically resets the maximum allowable revenues that distribution utilities can collect; when that reset is delayed, utilities may continue charging interim rates that later prove higher than warranted.

“We expect that the latest refund will be enough to offset other upward adjustments in the August bills,” said Joe R. Zaldarriaga, Meralco’s vice-president and head of corporate communications, in a statement issued on Sunday.

Those upward adjustments include higher reserve market prices, an increase in the feed-in tariff allowance (FIT-All), and the recovery of pass-through costs.

The ERC approved a P0.1348-per-kWh increase in the FIT-All collected by the National Transmission Corp. beginning August. This will be added to the existing FIT-All rate of P0.2011 per kWh, bringing the total to P0.3359 per kWh. FIT-All is a uniform charge collected from on-grid electricity consumers to compensate renewable energy developers that have secured fixed rates for the electricity generated by their projects.

Separately, the ERC authorized Meralco to collect P8.7 billion from customers over a three-year period to recover unrecovered generation, transmission, and system loss charges, as well as real property taxes.

“We are hoping that the downward adjustment will bring relief to Meralco customers, especially with the lower overall demand observed in the Luzon grid as earlier reported by IEMOP (Independent Electricity Market Operator of the Philippines),” Mr. Zaldarriaga said.

Electricity prices in the Wholesale Electricity Spot Market (WESM) in Luzon fell 8.2% to P7.95 per kWh as both demand and supply softened. WESM serves as the country's wholesale trading platform where generation companies sell electricity not covered by bilateral contracts, and its price movements flow through to residential bills via Meralco's generation charge.

Meralco is the Philippines' largest private electricity distribution utility, serving more than 8.2 million customers across Metro Manila and nearby provinces, including Bulacan, Cavite, and Rizal, as well as parts of Laguna, Batangas, Pampanga, and Quezon.

Recovery in energy sales

Meralco expects electricity sales within its distribution network to grow this year after recording a recovery in July.

Ronnie L. Aperocho, executive vice-president and chief operating officer of Meralco, said the company expects energy sales volume to rise by 2% to 2.5% this year after remaining relatively flat in 2025.

“At present, our sales are relatively flat, but in the second half of the year, with the onset of El Niño, we expect a recovery,” he told reporters last week.

Energy sales volume increased by 6.9% in July, with Meralco expecting the growth to be sustained. In the first six months, energy sales in its distribution utility segment declined by 0.5%, which the company attributed to the increasing adoption of rooftop solar systems.

“Some of these new residential customers that we’re energizing also have their own rooftop solar, so that’s really the challenge,” Mr. Aperocho said.

Meralco is also seeking to capture part of the rooftop solar market through its subsidiary MSpectrum, Inc., which provides solar systems to residential and commercial customers.

Meralco’s controlling stakeholder, 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