By Alena Mae S. Flores

The Energy Regulatory Commission has ordered Manila Electric Co. to refund P3.924 billion to customers starting next month for over-billing foreign exchange adjustment charges from June 2003 to December 2006.

The power regulator, in a Feb. 16 ruling, directed Meralco to refund consumers P0.04 per kilowatt-hour a month starting the March billing cycle for the excess currency exchange rate adjustment charges it billed until the full amount is given back. The refund may run up to three years.

?The commission is cognizant of the fact that requiring Meralco to refund the P3.924 billion would result in substantial and tremendous impact on financial resources. Thus, the commission deems it reasonable to recalculate the amount and the period of Cera refund in order to cushion its impact on Meralco?s financial viability,? the ERC said in a decision.

Meralco?s Cera, a component of the electric bill, aims to recover changes in payment of foreign currency loans due to fluctuations in the exchange rate.

The ERC earlier directed Meralco to implement the refund of P3.924 billion at P0.1416 per kilowatt-hour, but the regulator decided to impose a lower monthly refund due to several issues raised by Meralco in its Dec. 4 appeal.

?The issue on hand is whether Meralco?s foregoing under-recoveries and existing obligations to refund certain amounts indeed render it incapable of complying with the Commission?s directive in its order dated Sept. 26, 2008,? ERC said. The agency, however, noted that Meralco had already collected the charges and was required to return the excess charges to consumers.

Meralco, in its appeal to defer the implementation of the refund said that its cash flow was very tight. It added that even without the Cera refund, its calculations showed that it would have a negative cash flow situation fin December 2008 and January 2009.

Meralco reported a net income of P3.13 billion last year, down 22.37 percent from P4.04 billion in 2007, due to lower revenues. It said revenues declined 4.44 percent to P191.79 billion from P200.69 billion.

Meralco said financial obligations to lenders and suppliers, such as a notes facility with Metrobank and other debt falling due, ?severely limit its capacity to implement the Cera refund.?

?To address this matter, it is hoping to refinance and roll over these maturing obligations to remove significant cash deficits. It is expected that the refinancing will be completed by January 2009,? the power distributor had said.

Meralco said it had ?no intention to shrink from its responsibility to implement the Cera refund? but urged the commission to act on its pending under-recoveries amounting to over P7 billion.