ERC Issues Rules to Enforce SC Decision in MERALCO Unbundling Case

The Energy Regulatory Commission (ERC) has issued a Resolution to implement the Supreme Court’s directives in NASECORE v. ERC concerning MERALCO’s unbundled rate application for the period June 2003 to June 2007. The Commission clarified that the ruling applies exclusively to MERALCO and cannot be extended to other distribution utilities or earlier or later regulatory periods, in line with due process and the principle of immutability of judgments.

To comply with the Supreme Court’s instructions, the ERC has adopted the Trending Method for valuing MERALCO’s Regulatory Asset Base (RAB). This approach updates historical asset costs using recognized price indices and was chosen for its transparency, simplicity, and alignment with the Least Cost Principle, avoiding the complexity and higher expense of replacement-cost methodologies.

The Resolution also outlines how the ERC will evaluate which expenses may be passed on to consumers, including those flagged by the Commission on Audit. A separate Order will require MERALCO to submit a revised RAB valuation using the approved methodology for the covered years.