In addition to the demand of the Freedom from Debt Coalition that Meralco should immediately refund consumers of at least P30.32 billion through conversion into shares of ownership, FDC also asserts that interest payments should be included as part of the refund.

Thus, before the Energy Regulatory Commission implements the refund scheme in June, it should first ascertain the true amount of the refund to include the interest accruing from February 1994 to May 2003. Without an accurate accounting of what is really due to 3.8 million Meralco consumers, the ERC should put in abeyance the implementation of the partial refund scheme in June while working on a complete refund implementation scheme.

Consumers as Creditors

Consumers involuntarily became creditors of Meralco starting 1994, when the power distributor started to overcharge consumers. And like any other creditor, consumers are entitled to just compensation with a fair return on their money.

The amount that consumers “lent” to Meralco is relatively insignificant on an individual basis. However, this becomes considerable on an aggregate basis, amounting at least P30.32 billion—practically Meralco’s entire capital stock or about 30 percent of its total asset base. Using the average annual 91-day Treasury bill rates, the interest earned from this amount comes up to P11 billion or 30 percent of the refund, which means that consumers are not only entitled to P30.32 billion, but P41.3 billion.

Meralco has obviously benefited from this money for the past nine years, while depriving consumers much-needed resources to buy more food, access health care, pay rent, or procure medicines. As such, consumers are entitled to compensation of that opportunity cost in the form of interest earned.

While consumers were robbed of these opportunities, Meralco had at its disposal various ways of making handsome profits from money that was patently unjust to collect in the first place.

Assuming that Meralco deposited the money in a savings and time deposit account, it would have earned around P7 billion. It could also have invested the money for expansion or upgrade and saved around P10 billion, borrowing at prime rates.

Just Due to Consumers

Meralco should execute the refund to all consumers immediately. It is, however, too cash-strapped to award a full outright cash refund. It will have to borrow part of the funds, interest payments of which will be borne by consumers through higher electricity rates.

On the other hand, the government – the majority shareholder in Meralco – is neither in any position to infuse new capital in Meralco and bail it out. This it can do only by resorting to additional borrowings, which means incurring new loans that will eventually be passed on to taxpayers.

In this light, conversion into consumer shares remains the most viable option for both the government and Meralco, as this does not require any cash outlay.

Further, conversion into shares could redound to a significant shareholding interest for consumers – clearly a decisive move towards democratizing the ownership structure of a sector as critical to society as the power industry. With shares in hand, consumers can make significant interventions on decisions that would greatly affect their lives.

Meralco Refund By Customer Sector In Millions of Pesos

AccountResidentialCommercialIndustrial Others Total
Refund Due
10,595.34 10,250.06 9,277.74 199.82 30,322.95
Interest Due
3,730.79 3,633.02 3,546.89 75.77 10,986.27
Total 14,326.13 13,883.08 12,824.63 275.39 41,309.24

No. of Customers 3.460 0.3300.010 0.004 3.804
Ave. Refund 3,062.24 3,062.24 927,774.25 49,954.55 7,971.34
Ave. Interest Due
1,078.26 11,009.16 354,689.15 18,892.16 2,888.08
Total 4,140.50 42,069.95 1,282,463.40 68,846.71 10,859.42


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