Meralco sets franchise area expansion

Manila Bulletin

By MYRNA M. VELASCO

June 1, 2011, 1:19am

 MANILA, Philippines — Despite the dominance it is already wielding in the distribution segment of the power industry, Manila Electric Company (Meralco) is still aggressively expanding its franchise area with acquisition of utility assets proximate to its operating facilities.

Meralco President and Chief Executive Officer Manuel V. Pangilinan disclosed that they are setting sights on prospective asset acquisitions in Batangas, Quezon, Pampanga and Tarlac.

“We are looking at those adjacent to the existing franchise area of Meralco,” he stressed, noting that their primary consideration would be to ensure that its acquired facilities can be physically connected to its present distribution network.

On question whether Meralco needs to get legislative approvals for the franchise of each of the acquisition it will be making on other distribution utilities, Pangilinan opined that “each area might have different circumstances” and they are still studying what complexities they will have to go through in the policy domain.

Meralco Chief Operating Officer Oscar S. Reyes noted that they are only scouring for opportunities in areas where they are being welcomed to expand their business operations.

He stressed that even before they would start negotiations with a certain party or distribution utility, there are major concerns that they would want answered; such as: If they are “welcome” in the areas they are eyeing for acquisition; if the deal will bring value to consumers in these areas; if the venture would be bringing in business sense for the utility firm; and if their acquisitions would be getting support from the government.

Reyes further emphasized that their franchise area expansion is not only intended at widening their distribution network, but also for the company to share its experience in distribution, such as in bringing down system loss and in injecting efficiency in operations.

Onward, the utility firm is also looking at re-gaining its expertise in power generation with its planned investments, while also scouring options on supply sourcing from other providers.

Meralco cast on blueprint some 1,500 megawatts of power projects. The first batch would be a peaking facility of 150 megawatts; while the next one would be a baseload coal plant of 600 megawatts.

As the restructuring of the power industry moves notches forward, the giant utility firm is also working on strategies to keep its big-ticket customers’ patronage even with the advent of open access and retail competition.