THE MERALCO REFUND MERRY-GO-ROUND

Manila, July 7, 2003 by Rey Gamboa (Star) Guess who's losing in the Meralco refund merry-go-round?

The worst is not over yet for Meralco in its "overcharging" refund case.

When Meralco announced that it would implement a one-time cash refund in June (which is by the way the season of the year when parents scramble to raise cash to pay their children’s schooling), many no doubt were mollified.

Meralco’s readiness to comply with the Supreme Court decision, after almost four years of slugging it out in the courts, ended the tension created by what was seen by many as the reluctance of a behemoth monopoly to give back to the public what it had overcharged.

About 1.4 million Meralco customers whose electricity consumption ranged from within one to 100 kilowatt-hours a month will be reimbursed an average of P1,000 each. Already, roughly 33 percent of the power firm’s client base has been made happy, although this only accounts for 3.5 percent of Meralco’s sales profile.

By Meralco’s reckoning, the one-time refund would amount to between P1.6 billion and P2.2 billion, a paltry sum compared to the estimated P30.5 billion that needs to be returned to customers as per the Supreme Court’s last order.

Now that a big chunk of customers (perceived by some as the source of noisy and placard-bearing bodies) have gotten back what they overpaid, the angst begins on how and when the remaining amount – estimated at P28 billion to P29 billion – will be returned.

Merry-go-round refund starts

Meralco fired the first interesting salvo when it claimed from the Bureau of Internal Revenue (BIR) a refund it paid for the taxes on the "overstated" earnings from the "overcharging" since 1994. This was estimated at about P9 billion.

Meralco’s tax refund claim sounds logical. Which is why BIR has formed a special body to study how much the power firm would be refunded and – most importantly – how the refund would be made.

With the critical budget deficit situation, the government cannot afford this tax refund claim. Therefore, any refund to Meralco will, at the very least, be revenue neutral for the national coffers.

The simple logic goes something like this: whatever the government will refund to Meralco should be paid for by electricity customers – mostly commercial and industrial establishments – that will have to pay additional income taxes for the "windfall" earnings from Meralco’s reimbursement of the overcharged electricity costs.

So companies that already are counting their eggs, better make tax provisions for what the BIR thinks will be extraordinary profits that they will realize from the Meralco refund.

Who rides on whom

The next interesting question is: Who will start paying whom? Definitely, government will not have the resources even if it is willing and agreeable.

On the other hand, Meralco would argue that it lacks the funds to repay customers especially since government has the P9 billion in tax money had been paid over the years. The tax refund that Meralco is asking back represents about 30 percent of what the company should return to its customers.

Meralco already has declared it is only prepared to refund up to as much as P3 billion this year. After already spending close to P2 billion for the one-time cash refund last month, it is committed to spend no more than P1 billion for the next round of payments of refunds.

Thus, the second wave of customers with monthly electricity billings from 101 to 300 kilowatt-hours will have to wait in 2004 or even later for the return of their money.

End-consumers don’t get to ride

While industrial and commercial customers are already summing up the estimated substantial refund due them from Meralco – less windfall taxes, of course – the consumer public who paid higher prices for manufactured goods or services because of the "overpriced" electricity rates appears to have been left out in the cold.

You and me, for almost a decade now, have been buying from these industrial and commercial establishments who have already passed on the higher electricity costs in their prices of merchandise and services. So, why should they be entitled to any refund?

If these companies do get a refund, how do we, who bought and paid for their products and services at "overcharged" prices, get our due refund?

As this only-in-the-Philippine charade unfolds, Meralco gets billions in tax refund, the commercial and industrial companies get billions in refund of previous expenses, but those who are at the end of the economic chain who paid billions during the past years for products and services loaded with the "overcharged" electricity rates get back nothing.

Is there anyone willing to champion this? I wonder if Raul Concepcion, self-appointed defender of the consumer, would take this on?


Reported by: Sol Jose Vanzi

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