-snip- Could this be related to ETH merge?
I doubt that their backend server is having issue after the merge since my ETH in Mycelium is showing just fine.
Have you updated the app to the latest version? Because the latest is released 2 days ago.
I am thinking of restoring a backup from a 12 word password. Is it good idea?
It's not a bad idea but usually not the best option in some cases.
Aside from SA accounts, your main BTC and ETH account are backed-up by the 12-word seed backup so it'll properly restore your accounts at least.
For the balance, it still depends on the underlying issue.