ERC mandates power utilities to update capex plans for 2020

Published June 17, 2020, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2020/06/17/erc-mandates-power-utilities-to-update-capex-plans-for-2020/

The Energy Regulatory Commission (ERC) has directed the regulated power utilities – mainly the distribution utilities (DUs) and transmission firm National Grid Corporation of the Philippines (NGCP) – to review and re-assess their respective applications for capital expenditures (capex) given the snag on project implementations caused by the coronavirus pandemic.

In the order of the regulatory body, it emphasized that the DUs and the transmission company must be able integrate changes in the demand profile of consumers as well as the full impact of the lingering health crisis into the overall functioning of the country’s power system.

The ERC said it sent directives to the Manila Electric Company (Meralco); NGCP; the Philippine Electric Plant Owners Association (PEPOA) which is the organization of the private DUs; the Philippine Rural Electric Cooperatives Association Inc. (PHILRECA) and the National Association of General Managers of Electric Cooperative Inc. (NAGMEC) for the country’s electric cooperatives.

In that mandate, the ERC asked the regulated power firms to consider the following factors in their capex re-calculation: 1) demand forecast of the areas where the proposed projects will be implemented; 2) timetable on the implementation of the proposed projects; and 3) possible course of action of DUs to address concerns relating to programmed capex projects.

ERC Chairperson Agnes T. Devanadera said “the Commission noted that the assumptions and forecasts used by the DUs and the NGCP for their proposed projects may need to be adjusted.”

She stressed that even the timelines of project implementations or the projects themselves may require re-calibration “as the same may no longer be realistic under the current demand and supply scenario.”

The ERC chief emphasized that the period set for DUs and NGCP to comply with this directive is “within 30 days from the receipt of the subject letter through email.”

In earlier online press briefings of NGCP and Meralco, the two companies indicated separately that they are still assessing the full impact of the coronavirus pandemic on their overall operations as well as on projects to be undertaken – and that they intend to incorporate adjustments in their capex spending.

The ERC qualified it is requiring this capex plan updating because of its targets to set measures “that will mitigate the impact of the Covid-19 pandemic for all stakeholders, especially the consumers.”

Re-working of the capex plans of the power utilities, the ERC said, would be able to assist the Commission “in determining the necessity and timelines of these projects and its possible impact to the electricity consumers given the unprecedented situation brought about by the global pandemic.”