Cepalco spending P2B in next 4 years

Capex higher than previous level

By: Amy R. Remo
Philippine Daily Inquirer

9:28 pm | Wednesday, June 22nd, 2011

Cagayan Electric Power and Light Co. (Cepalco), the third-largest power distributor in the country, is investing about P2 billion over the next four years in further improving the distribution system within its franchise area.

According to the Energy Regulatory Commission, the approved capital expenditure spending of Cepalco for the third regulatory period (July 2011 to June 2015) was slightly lower than the P2.14 billion it had sought. The ERC disallowed some of its proposed projects.

Still, this period’s capex is higher than the P1.118 billion in the second regulatory period, according to the final determination issued by the ERC.

The reduced budget, the ERC said, would result in lower distribution charges for Cepalco customers over the next four years, under the performance-based regulation (PBR) scheme.

The ERC-approved distribution charges for regulatory year 2012 (July 2011 to June 2012) averaged P1.2491 per kilowatt-hour, lower than its current average charges of P1.5705 per kWh.

Cepalco’s original application, however, sought higher distribution charges ranging from P1.6296 per kWh to as high as P1.8138 per kWh.

“The decreasing price trend on the third regulatory period for Cepalco is a good signal that the benefit of adopting the PRB rate-setting methodology is now taking effect. The PBR has put pressure on the utilities to improve their systems and be more efficient in their operations,” said ERC chairperson Zenaida G. Cruz-Ducut.

With the ERC decision, Cepalco can now translate the approved charges of P1.2491 per kWh for 2012 into rate schedules for its different customer classes and file its application with the ERC for approval.

Upon approval of these revised rate schedules, Cepalco can then start charging the lower rates to its customers.

Cepalco has more than 100,000 residential, commercial and industrial customers in its franchise area covering Cagayan de Oro and the municipalities of Tagoloan, Villanueva and Jasaan, all in Misamis Oriental.