ERC still sitting on Meralco’s proposed P17.7-billion capex

by Lenie Lectura – February 29, 2016

from Business Mirror

The Manila Electric Co. (Meralco) warned the public of possible risks associated with weather- and storm-resiliency projects for improved resiliency, if its proposed 2016 capital expenditure (capex) involving 27 vital projects is not fully approved.

The utility firm’s P17.7-billion capex for the first year of the fourth regulatory period covering the period July 1, 2015 to June 30, 2016, is now awaiting approval by the Energy Regulatory Commission (ERC). This was filed in February 2015.

Meralco President Oscar Reyes said if the capex is not approved, the utility firm would have to “prioritize” its planned projects that are needed to meet growth in energy demand to ensure that it meets the requirements of its customers. At end-2015, Meralco recorded 5.8 million customers.

“Some capex that are intended for, maybe, resiliency…we may have to take a risk on resiliency such as in cases of a strong typhoon, and some projects will be put at risk. So, we are hopeful that an action will be forthcoming within a period of time,” Reyes said.

In 2015 Meralco continued to invest heavily in its distribution business to ensure its infrastructure and facilities are adequate and responsive to the needs of its franchise. It reported last week that consolidated capex reached P11.3 billion, including emergency capex for the fourth regulatory period.

In the meantime, Reyes said Meralco could tap an emergency capex of P10 billion.

Meralco Chairman Manuel V. Pangilinan said the situation may seem “tight,” but he added that the utility firm could cope up to make ends meet. “Still, kaya naman,” the Meralco executive assured.

Meralco continues to record strong energy sales after it posted 37,124 gigawatt hours at end-2015, 5.6 percent higher than in 2014.

Energy sales for January this year were up 12 percent; and for February, the trajectory is around 10 percent.

The company needs to closely monitor the power-supply situation if this trend continues. “A lot of verticals and horizontals being built; a lot of construction works have been completed, that’s why we saw a growth in the second half of last year. The good news is that the economy is growing. We have to make sure that we have the supply. It hinges on the capex, as well,” Pangilinan said.

In its list of major projects for regulatory year (RY) 2016, Meralco proposed, among others, a Retail Competition and Open Access Meter Conversion Program worth P1,278,045,286. This is its biggest project for 2016 so far.

The second-most expensive project is the expansion of the advanced metering infrastructure to support prepaid electric service worth P781,262,598; followed by the construction of San-Jose Delivery Point’s 115-kilovolt (kV) lines worth P580,394,526; the relocation of facilities affected by public-private partnership projects that will cost Meralco P516,477,546; and the development of Lucena 115-kV to 34.5-kV substation worth P478,911,544.

Other projects mentioned on the list include the development of Malacañang’s 115-kV to 34.5-kV GIS substation worth P435,788,536; construction of BF Parañaque-Naia 3-Malibay 115-kV line worth P336,277,849; expansion of Masinag 115-kV to 34.5k-kV substation worth P214,620,971; and advanced metering infrastructure to support postpaid worth P216,490,675.

Also part of its RY 2016 projects are the expansion of Bagbaguin 115-kV substation worth P162,580,219; installation of 34.5-kV Metaclad switchgear at Dasmariñas worth P68,161,085; installation of a similar switchgear worth P48,085,691; expansion of Tablang 69-kV substation worth P162,082,948; installation of 34.5-kV switchgear at National Grid Corp. of the Philippines San Jose power transformer worth P63,122,508; rebuilding of portion of Dasmariñas 115-kV line worth P75,913,229; rebuilding of Laguna International Industrial Park-Balibago 115-kV line worth P35,687,313; cut-in of Pinagbuhatan substation worth P58,635,873; replacement of power transformer worth P52,908,466; installation of spare transformer worth P46,443,027; customer outage portal worth P54,962,212; energy sourcing and risk management worth P97,381,494; acquisition of a next-generation firewall worth P63,097,401; acquisition of 115-kV line and switchyard at the Navotas fishport complex worth P118,478,179; replacement of call- center system worth P120,418,762; construction of a Meralco training facility worth P150 million; lot acquisition and new building worth P41 million; and lot acquisition and construction of a business center worth P41 million.

“Major renewal and refurbishment projects are lined up in RY 2016 to ensure that the distribution system will continue to provide secure, reliable and efficient electric service to our millions of customers amid climate and calamity risks. This will include electric capital projects that are intended to harden and strengthen the network for resiliency to storm and other calamities,” it said in its application.