The recently-concluded re-evaluation undertaken by the Commission on Audit (CoA) on the books of Manila Electric Company (Meralco) has uncovered some P1.682 billion excess in revenue requirements that have already been passed on via the unbundled rates of the utility firm.

ERC executive director Francis Saturnino Juan disclosed to media that some of the items indicated by CoA that should not have been included in Meralco’s rate base computation are on employee compensation, including pensions and its creek appraised at P526.2 million and parking lot valued at P156 million.

The COA questioned operating expenses amounting to P3.479 billion and P2.916 billion, noting that such “were not considered recoverable from the consumers as these were not reasonable and necessary in the delivery of distribution services.” It was further noted that the major expense disallowed had been Meralco’s pension and other costs amounting to P2.356 billion.

Given the contentions raised, Juan noted that they are inviting all parties-of-interest to file their respective comments and/or intervention in the subject Meralco unbundling case, so these can be considered in deliberations prior to their handing down of a final decision.

The unbundled rates of Meralco, implemented in 2003, had adjusted its rates by incremental P0.25 per kilowatt hour. Meralco’s rate base had been re-evaluated by COA employing both return on rate base (RORB) and weighted average cost of capital (WACC) formulas.

“What is incumbent upon ERC now is to make final decision on this case,” he said, hence they are already giving parties-in-interest to start submitting comments.

When asked on the possibility of refund, the ERC official noted that they have yet to assess the basis of COA’s disallowance of the costs and the final ruling will depend on justification and evidence to be submitted by Meralco; and/or by the opposition interposed by relevant parties.

In a matrix provided to media by the industry regulator, it was indicated that “certain property and equipment amounting to P3.701 billion and P3.586 billion for calendar years 2004 and 2007, respectively, were not considered as part of the rate base as these were not used and useful in the distribution operation during the test period.”