MANILA, Philippines — Customers of Manila Electric Company (Meralco) may see higher electricity bills following the Energy Regulatory Commission’s (ERC) approval of new distribution rates, marking the utility’s first rate reset in 15 years.
In a press release on Saturday, October 10, the ERC announced that it had approved approximately P342 billion in distribution revenues for Meralco covering July 2026 to June 2030. The amount is P190 billion lower than the P532 billion sought by the country’s largest power distributor, representing a reduction of about 36 percent.
For the first regulatory year in 2027, the commission set Meralco’s average distribution rate at P1.48 per kilowatt-hour (kWh), below the company’s proposed P2.34 per kWh. The approved rate was also lower than the P1.60 to P1.98 per kWh range proposed by some intervenors during the regulatory proceedings.
Despite the reduction in Meralco’s requested rates, consumers could still face higher distribution charges compared with current levels. The actual impact on electricity bills will depend on how the approved rates are implemented and changes in other components of the monthly bill.
As of Sunday, October 11, the ERC had not announced when consumers would begin paying the adjusted rates or how much the changes would affect different customer categories.
In a statement, Meralco Senior Vice President and Head of Regulatory Management Jose Ronald Valles said the company would examine the regulator’s decision once it receives the complete ruling.
“While we have yet to receive a copy of the ERC’s decision on our 1RP [first regulatory period] rate reset application, we’ve seen the official statement and news reports indicating that the approved rates are lower than what Meralco had applied for,” Valles said.
The ERC approved the rate reset on Friday, October 9, and made the decision public the following day.
The first regulatory period, or 1RP, covers four years from July 2026 to June 2030. It determines the amount Meralco is permitted to collect to finance the operation, maintenance and improvement of its electricity distribution network.
The adjustment applies exclusively to distribution charges, which cover the delivery of electricity through power lines, poles, substations and other distribution facilities. It does not cover generation costs, transmission fees, taxes and other charges included in consumers’ electricity bills.
According to the ERC, Meralco’s distribution rates were last reset in 2011. Regulatory delays had prevented a comprehensive review of the company’s rates for more than a decade.
The commission resumed the process under its revised rules for determining distribution wheeling rates, issued in November 2025.
From March to May 2026, the ERC conducted hearings and evaluated Meralco’s proposed capital expenditures, operating expenses, asset base and return on capital. The assessment involved the commission’s technical personnel and an independent expert specializing in regulatory rate resets.
Following the review, the regulator reduced Meralco’s proposed revenue requirement after identifying expenditures it considered excessive, inadequately justified or unnecessary at the time.
The disallowed items included questionable capital projects, excessive operating expenses, bad debt provisions, contingency allocations, duplicated assets and a proposed return on capital that exceeded the commission’s assessment of an appropriate level.
ERC Chairperson and Chief Executive Officer Francis Saturnino C. Juan said the review was intended to protect consumers from paying for unjustified costs.
“Every peso allowed has to be prudent, efficient and necessary, because consumers pay for it,” Juan said.
Despite the cuts, the commission approved substantial investments in new and upgraded substations, power lines, replacement of aging equipment and advanced metering infrastructure.
These projects are intended to strengthen the reliability of electricity distribution, reduce system losses and modernize Meralco’s network.
The ERC also introduced measures to soften the impact of the rate adjustment, taking into account the lengthy period since the company’s last reset.
Juan said the decision restores regulatory oversight and reinforces accountability in the management of distribution utilities.
“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 (DUs) 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 delivering these results,” Juan said.
For Meralco, the approved revenue provides a framework for financing network improvements over the next four years. However, the company must comply with the lower spending limits and revenue caps established by the regulator.
Valles said the company intends to continue investing in advanced metering infrastructure, cybersecurity and network improvements to strengthen reliability and improve customer service.
“We believe that this will allow Meralco to move forward with greater clarity as we pursue investments and initiatives to modernize our distribution network and enhance service delivery,” Valles added.
Throughout the four-year regulatory period, the ERC will monitor Meralco’s performance through an incentive system that can reward or penalize the utility based on reliability, power quality and customer service.
The mechanism is designed to ensure that the company delivers improved service in exchange for the distribution revenues it is authorized to collect.
The commission said the complete terms of its ruling would be detailed in a decision and final determination to be released soon.
The ERC is also preparing separate rate reset decisions for other distribution utilities included in the first entry group, whose regulatory periods likewise began on July 1.