The Energy Regulatory Commission (ERC) approved Manila Electric Co. (Meralco)’s rate reset for the first regulatory period running from July 2026 to June 2030, cutting the power distributor’s proposed revenue requirement by 36 percent.
In an official statement released October 10, the regulator announced an approved total revenue requirement of around P342 billion across four years, which sits P190 billion lower than Meralco’s initial P532-billion petition.
The approved average distribution rate for the first regulatory year, RY2027, was set at P1.48 per kilowatt-hour (kWh), coming in below Meralco’s requested P2.34 per kWh and below proposals from intervenors that spanned P1.60 to P1.98 per kWh.
A rate reset functions as a periodic regulatory evaluation determining what a distribution utility can charge consumers for delivering electricity across its substations, poles, and power lines. The review applies strictly to Meralco’s distribution charge and omits generation, transmission, taxes, and other pass-through fees.
The commission noted that Meralco’s distribution rates were last reset in 2011, leaving the utility without an updated review for over a decade because of unresolved regulatory periods.
The ERC reopened the process using its Rationalized Rules for Setting Distribution Wheeling Rates, which were issued in November 2025. Following public hearings held from March to May 2026, the commission audited Meralco’s application alongside technical staff and an independent regulatory reset expert.
To arrive at the lower revenue requirement, the regulator scaled down or disallowed proposed operating expenses, capital expenditures, asset valuations, and returns on capital that were deemed excessive, duplicated, or lacking immediate operational necessity.
At the same time, the commission authorized capital funding for modernizing aging equipment, constructing upgraded substations, expanding power lines, and deploying advanced metering systems aimed at lowering system losses and improving grid reliability.
The ERC also implemented price-shock mitigation protocols permitted under regulatory rules to protect electricity consumers after years without a formal rate reset.
“This Final Determination shows that the ERC did not simply accept what was applied for. Meralco asked for PhP532 billion in revenue over four years. We approved PhP342 billion — PhP190 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 C. Juan said.
Juan also said the ruling reestablishes regulatory accountability for power distributors while establishing a clear system for Meralco to boost efficiency and implement necessary network upgrades.
Throughout the four-year regulatory cycle, the ERC will track Meralco’s operations via a Performance Incentive Scheme that awards bonuses or assesses penalties based on customer service indicators, power quality, and system reliability.
The regulator confirmed that the complete details will be published in its forthcoming Decision and Final Determination. Separate rate reset rulings for other distribution utilities in the first entry group whose regulatory cycles started July 1, 2026, will be released individually.