The Energy Regulatory Commission (ERC) approved its Final Determination on the regulatory reset of the Manila Electric Company (Meralco) for the First Regulatory Period (July 2026 to June 2030) in ERC Case No. 2026-016 RC.
The ERC approved a total revenue requirement of around P342 billion for Meralco over the four-year period, P190 billion or 36% lower than the P532 billion Meralco applied for.
The ERC-approved average distribution rate for RY2027 is P1.48/kWh, below Meralco’s P2.34/kWh application and lower than the rates proposed by some of the intervenors in the case at P1.60/kWh to P1.98/kWh.
A “rate reset” is the regular review of how much Meralco may charge for delivering electricity through its poles, wires and substations for the next Regulatory Period. It covers only Meralco’s distribution charge for its own cost of service, not the cost of generation, transmission, taxes and other pass-through charges. Meralco’s distribution rates were last reset in 2011, and, due to unresolved regulatory periods, were not reviewed again for more than a decade.
The ERC restarted the process under the Rationalized Rules for Setting Distribution Wheeling Rates (RRDWR) issued in November 2025 and, after hearings from March to May 2026, evaluated every major component of Meralco’s application, assisted by its technical staff and its independent regulatory reset expert.
To arrive at the approved lower revenue, the ERC made downward adjustments or exclusions to Meralco’s proposed capital expenditures, operating expenses, asset base and return on capital, disallowing or reducing costs it found to be excessive, not adequately supported, or not yet needed, so that consumers pay only for prudent and efficient expenditures. The ERC nonetheless approved substantial capital spending for new and upgraded substations and lines, replacement of aging equipment, and the rollout of advanced metering, to support a more reliable network and lower system loss.
The approved rate for the first regulatory year (RY2027) is an average of P1.48 per kWh as compared to what Meralco applied for at P2.34 per kWh. The Commission also considered the rates proposed by the intervenors in the case, with the lowest being that of former ERC Commissioner Alfredo J. Non at P1.60 to 1.72 per kWh.
To cushion the impact on consumers after more than a decade without a reset, the ERC applied price-shock mitigation allowed by its rules.
“Meralco asked for P532 billion in revenue over four years. We approved P342 billion — P190 billion, or 36 percent, less.”
“This Final Determination shows that the ERC did not simply accept what was applied for. Meralco asked for P532 billion in revenue over four years. We approved P342 billion — P190 billion, or 36 percent, less. We trimmed capital projects that were not yet justified, disallowed excessive operating costs and bad debt provisions, removed contingencies and duplicated assets from the asset base, and used a lower return on capital than what Meralco proposed. Every peso allowed has to be prudent, efficient and necessary, because consumers pay for it,” ERC Chairperson and CEO Atty. Francis Saturnino Juan explained.
“After a decade and a half of delay, the current ERC has finally restarted the reset process. This is not only about rates. This brings back discipline and accountability to how distribution utilities operate. The approved revenue gives Meralco a clear path to operate more efficiently and to roll out the capital projects needed for a more reliable network, including new substations and lines, modernized metering, and measures to bring down system loss. Meralco will be held to deliver these results,” Juan added.
“The approved revenue gives Meralco a clear path to operate more efficiently and to roll out the capital projects needed for a more reliable network.”
The ERC will monitor Meralco’s performance during the First Regulatory Period through its Performance Incentive Scheme, which rewards or penalizes the utility based on reliability, power quality and customer service indicators.
The details of the ERC decision on Meralco’s rate reset are embodied in the Commission’s Decision and Final Determination to be promulgated shortly.
The reset decisions for the other utilities in the First Entry Group, which also begin on July 1, 2026, are being issued separately.
