Meralco seeks ERC provisional approval of P21-B capex program

MANILA Electric Co. (Meralco) is asking provisional approval from the Energy Regulatory Commission (ERC) for its P21billion capital expenditure program for 2019, the biggest component of which is the spending for the expansion of its advanced metering infrastructure.

In its application, the country’s largest power distribution utility enumerated more a hundred capital spending projects with the metering system accounting for P2.38 billion, followed by P1.78 billion for its distribution transformers.

The third-biggest expenditure item for next year is P1.31 billion for overhead conductors and devices, and nearly P1.1 billion for poles, towers and fixtures. The rest of the items are valued less than a P1 billion each.

The ERC has set the hearing for Meralco’s capex application on Sept. 25, finding it sufficient in substance along with the payment of the required fees.

“Pending hearing, it is likewise prayed that a provisional authority be immediately issued authorizing [applicant Meralco) to implement its RY [regulatory year] 2019 [capital expenditure program],” the listed company said.

ERC regulates the power distribution utility within a so-called “reset period” consisting of four regulatory years. The company’s regulatory year begins on July 1 and ends on June 30 of the following year. Its fourth reset period began on July 1, 2015 and ends on June 30, 2019.

In May, Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, said that for the fourth regulatory period the company had not been able to obtain a “rate-setting” from the regulator.

For the years 2015 to 2019, Ms. Siy-Yap said the corresponding capex applied for by Meralco was at P17.7 billion, P15.4 billion, P18.8 billion and P21 billion, for a total of P72.9 billion. She said the last one was applied by the company only in April this year.

Meralco’s capex for the coming years follows the steady growth of its customer base at a compounded annual growth rate of 4.2% from 2013 to 2017. The company ended last year with a customer count of 6.327 million, up 4.8% from 6.038 million in 2016.

Peak demand within Meralco’s franchise area hit 6,973 megawatts (MW) in June 2017, up 3.3% from the previous year’s peak. Growth from 2013 to 2017 had been a compounded annual rate of 4.1%.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. —