ERC sets higher capex for Meralco this year

Manila Bulletin

By MYRNA M. VELASCO

January 16, 2011, 12:20pm

MANILA, Philippines – Even as it prodded the power utility giant to extract more efficiencies in its operations, the Energy Regulatory Commission (ERC) is likely to allow slightly higher capital expenditure (capex) for Manila Electric Company (Meralco) this year to P8.308 billion from what the latter has applied for at P7.955 billion.

The power distribution firm has divided its capex program into various components, namely: Distribution plant; non-network plant; connection plant; retail plant; materials and supplies and sub-transmission.

In the 91-page draft determination on Meralco’s third regulatory reset under performance-based regulation (PBR) though, it can be gleaned that there is probability that its approved capex program will continuously go down from 2012 to 2015.

Next year, the regulator indicated that the utility firm may be allowed a capital outlay of P9.444 billion; but this will be pared to P8.412 billion in 2013.

In the succeeding years of 2014 and 2015, the company’s capex allotments could be at P8.722 billion and P8.193 billion, respectively.

It can be culled further that the company’s application for capex allocations are higher than what have been set for approval by the regulator. By 2012, Meralco’s proposed capex was placed at P11.114 billion; the 2013 amount was at P9.753 billion; 2014 was supposed to be at P9.235 billion; and P8.506 billion by 2015.

Within the five-year stretch, Meralco’s proposed capex allocation totaled P46.563 billion but the estimates of ERC slashed it by approximately P3.5 billion to P43.079 billion.

Since the figures are still part of the draft determination or preliminary approval of the ERC on the utility firm’s onward regulated tariffs, these still may change depending on how Meralco justifies its capex program in the coming years.