THE Manila Electric Company (Meralco) has told the House committee on legislative franchises that the allegations of conflict of interest and the utility firm’s alleged overcharging of some P200 billion to its 7.7 million consumers were rehashed and unfounded.

Stressing the allegations were not just inaccurate but also a repetition of previously debunked assertions, Lawrence “Larry” Fernandez, Meralco head of utility economics, reiterated that its rates undergo a rigorous review and approval process being a highly regulated entity before they are implemented to make sure these are fair and reasonable.

He pointed out that the company operates with the highest transparency, integrity, and compliance with all applicable regulations.

“’Yung sa pagbili naman po ng distribution utilities (DU) katulad ng Meralco ng kuryente from generators, ‘yun naman po ay very strictly regulated,” Lawrence Fernandez, Meralco head of utility economics, said in stressing that the company refutes any insinuations of improper practices as Caloocan 3rd Ditrict Rep. Dean Asistio accused Meralco of conflict of interest.

Asistio raised the issue of alleged conflict of interest by saying that Meralco has been selling power to its own through its involvement in power generation.

Fernandez also denied the allegations of Sta. Rosa Lone District Rep. Dan Fernandez that Meralco allegedly overcharged its consumers by P200 billion.

The House inquiry was an offshoot of two lawmakers’ calls, including Dan Fernandez, to break up Meralco’s franchise into three due to its alleged “monopolistic” practices that the utility firm denied as baseless.

The country’s largest power distribution utility firm official also said all rates in the bill have prior lawful and regulatory approval, as Meralco cannot unilaterally set its rates.

He said these regular reviews may result in adjustments like the recent Energy Regulatory Commission (ERC)-directed refunds, which Meralco complied with promptly.

“Sa ngayon sumusunod kami sa CSP (competitive selection process) policy po ng Department of Energy (DOE) na sinasabing lahat po ng power supply agreements (PSA) na papasukin ng isang [DU] ay dapat dumaan po ng competitive selection process,” Fernandez said.

Lawrence Fernandez also clarified that setting the weighted average cost of capital (WACC) is up to the regulator. Meralco has not had a determined WACC since July 2015 because there was no rate reset during the lapsed regulatory period.

“Dati po, mayroong sariling implementing guidelines ang DoE para sa pag-procure po ng [PSA], sumunod po kami doon. Ngayon po na binago ng DOE ang kanyang policy, ang implementing guidelines ay galing ngayon sa [ERC]. So kami po ay susunod sa implementing guidelines ng ERC,” Lawrence Fernandez said.

A requirement of bidding is required with Meralco’s affiliates from the power supply side, Lawrence Fernandez said.

“Hindi po kailangan manggaling sa affiliated company ang supply; kailangan nilang sumali sa bidding. Noong nagkaroon po kami ng bidding noong 2020, sumali po ‘yung affiliate, natalo po siya,” according to Lawrence Fernandez.

The alleged Meralco’s overcharging, Dan Fernandez said, started in 2012.

The congressman made the statement even as he reiterated his call for the subdivision of Meralco’s “super franchise” to make it more efficient to manage.

“Based on our computations, (Meralco) has overcharged its customers by some P160 billion starting 2012,” Dan Fernandez alleged.

“Plus interests, this could add to P200 billion due to overcharging and the extremely high weighted average cost of capital, which amounted to 14.97 percent, and remains unchanged until now,” Dan Fernandez said at the House committee hearing on legislative franchises.

Based on Dan Fernandez’s computation, Meralco needs to refund all of its 7.7 million subscribers around P26,000 to P30,000 each for the overcharging.