(The Philippine Star) | Updated August 29, 2017 - 12:00am
MANILA, Philippines -
Manila Electric Co. (Meralco), the listed power distributor chaired by business
tycoon Manuel V. Pangilinan, sees the growing retail electricity business in
the country as a risk to the company, which for decades has been the main power
distributor in Luzon.
In a recent briefing,
Pangilinan said that to some extent, the shift of big power users to other
suppliers, “is a risk for Meralco.”
“We have our own
strengths (but) it is a risk for Meralco because Meralco buys electricity from
the market. It is a trader...We have a trading margin for that,” he said.
The liberalization of
the power industry as mandated by the Electric Power Industry Reform Act of
2001 has paved the way for the entry of retail electricity suppliers or RES in
the sector.
Introduced in June
2013, RES are entities authorized by the Energy Regulatory Commission (ERC),
the power regulator, to sell, broker or market electricity to big power users
or those with an average peak demand of one megawatt for 12 months.
Prior to June 2013, all
these big customers were captive customers of Meralco, said Betty Siy-Yap,
Meralco chief finance officer.
Under the present
set-up, Meralco earns from sourcing power and from distributing this power
although the actual generation and transmission charges are passed-through
charges.
“Prior to June 26,
2013, all the customers are captive customers which means we supply the energy
to all the customers but it’s a pass-through which means we don’t make a margin
on generation or transmission for that matter. It’s only distribution that we
make money,” Siy-Yap said.
She said Meralco could
still earn because the RES entities would still use Meralco’s distribution
lines, but revenues would be affected because the company would no longer earn
from sourcing the power supply for customers.
“If it’s full
contestability and everybody can choose their supplier, we still make money
because distribution is our main business. So if everybody chooses somebody
else, our bottom-line is still the same but topline would shrink because the
supply part is not with us (anymore),” she said.
To mitigate the
impact of competition brought about by the RES regime, Meralco has also
introduced its own RES entity.
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