Manila Times.net
MANILA Electric Co. (Meralco) said it may cut back on its investments after regulators slashed the rate increase the company had sought.
Manuel Pangilinan, Meralco president and chief executive, said the Energy Regulatory Commission's (ERC) decision to reduce the utility's rate hike may impair the company's ability to fund its capital expenditure projects.
"We have to cut back if the tariff is lower, which is not good in my view, in terms of improving the infrastructure, the delivery system, which would eventually improve service levels," he said.
As the country's biggest electricity distributor, Meralco serves over 4.8 million customers in its franchise area in Metro Manila and its environs.
The utility earlier asked the ERC for an increase its distribution charge to P2.65 per kilowatt-hour from P1.49 per kilowatt-hour.
The proposed adjustment is in line with Meralco's performance-based regulation, a rate setting scheme that allows the utility to adjust its rates based on its spending requirements and service quality.
The ERC, however, allowed Meralco to raise its maximum average price to only P1.65 per kilowatt-hour, or an increase of P0.15 per kilowatt-hour, for this year.
Because of this, Pangilinan said the company's proposed P11-billion capital expenditure for 2011 may have to be lowered accordingly.
"Why would you want to hold back someone who wants to invest in this country? Why do that? I mean, within reason. Somebody wishes to invest more, improve the service, why hold it back?" he said.
Francis Saturnino Juan, ERC executive director, had said the regulator decided to cap Meralco's rate hike petition to "temper any upward price adjustments and thus prevent customers from experiencing price shocks."
The regulator is conducting public consultations on the translation of the approved average Meralco rate for different customer classes.
Meralco expects to post a consolidated net income of around P12 billion in 2010, nearly double its 2009 figure of P6.36 billion because of the 10-percent average growth in electricity sales.
Meralco shares dipped to P266.2 on Thursday from its previous close of P274 per share.
Euan Paulo C. Añonuevo
"We have to cut back if the tariff is lower, which is not good in my view, in terms of improving the infrastructure, the delivery system, which would eventually improve service levels," he said.
As the country's biggest electricity distributor, Meralco serves over 4.8 million customers in its franchise area in Metro Manila and its environs.
The utility earlier asked the ERC for an increase its distribution charge to P2.65 per kilowatt-hour from P1.49 per kilowatt-hour.
The proposed adjustment is in line with Meralco's performance-based regulation, a rate setting scheme that allows the utility to adjust its rates based on its spending requirements and service quality.
The ERC, however, allowed Meralco to raise its maximum average price to only P1.65 per kilowatt-hour, or an increase of P0.15 per kilowatt-hour, for this year.
Because of this, Pangilinan said the company's proposed P11-billion capital expenditure for 2011 may have to be lowered accordingly.
"Why would you want to hold back someone who wants to invest in this country? Why do that? I mean, within reason. Somebody wishes to invest more, improve the service, why hold it back?" he said.
Francis Saturnino Juan, ERC executive director, had said the regulator decided to cap Meralco's rate hike petition to "temper any upward price adjustments and thus prevent customers from experiencing price shocks."
The regulator is conducting public consultations on the translation of the approved average Meralco rate for different customer classes.
Meralco expects to post a consolidated net income of around P12 billion in 2010, nearly double its 2009 figure of P6.36 billion because of the 10-percent average growth in electricity sales.
Meralco shares dipped to P266.2 on Thursday from its previous close of P274 per share.
Euan Paulo C. Añonuevo
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