Meralco awaits ERC okay for P15-billion 2017 capex

by Lenie Lectura – March 10, 2016

from Business Mirror

THE Manila Electric Co. (Meralco) is seeking the Energy Regulatory Commission’s (ERC) approval for its proposed capital expenditure (capex) program for regulatory year (RY) 2017 amounting to P15 billion.

The amount involves 23 major projects, worth P5.6 billion, and 82 residual projects, worth over P6 billion, aimed at servicing the projected 3.1-percent growth in its customer base for RY 2017. Its regulatory year covers the period July 1, 2016 to June 30, 2017.

“Major renewal and refurbishment projects are lined up in RY 2017 to ensure that the distribution system will continue to provide safe, secure, reliable and efficient service to our millions of customers amid climate and calamity risks. This will include electric capital projects intended to harden and strengthen the network for resiliency to storm and other calamities,” Meralco said.

Among Meralco’s major projects for RY 2017 are the expansion of the advanced metering infrastructure, worth P2.028 billion; development of the San Mateo 115-kilovolt (kV) to 34.5-kV substation, worth P475.80 million; and the P312.65-million installation of electric-power technologies for experiential training, research and development, among others. For its planned residual projects, it has allocated P1.36 billion, for distribution transformers; P962.45 million, for overhead conductors and devices; and P582.43 million, for meters, instruments and metering transformers, among others.

Meralco said its RY 2017 capex program is mainly driven by adequate infrastructure to meet growth in peak demand and customer connections; renewal or refurbishment projects to ensure sustained network efficiency, reliability and power quality; innovation; compliance to statutory and regulatory requirements; and support for government public-private partnership programs.

“Meralco is constrained to seek the commission’s approval for its capex program for RY 2017 in order to ensure the continued reliable operation of its distribution network and ensure continuous distribution service and connection to meet the growing and future needs of its more than 5.78 million customers,” Meralco said in its 11-page application.

Meralco’s RY 2017 capex program, it said, is a continuation of RY 2016, which has yet to be approved by the ERC. Meralco filed in February 2015 an application for the approval of its P17.7-billion capex program for RY 2016, covering the period July 1, 2015 to June 30, 2016. The application, Meralco said, is currently under review for decision by the ERC.

“Meralco has no approved capex projects by the start of the fourth regulatory period during RY 2016, and this will severely hamper its operations and affect its ability to deliver electricity service to its customers. It is imperative for Meralco to undertake expansion and rehabilitation of its network facilities through acquisition of new assets in order to ensure continuous compliance with safety, performance and other requirements to address the growing needs of its customers,” Meralco said.

When sought for comment, ERC Chairman Jose Vicente Salazar said in a text message that the “Meralco capex application is already in the final stage of evaluation,” and that a decision will be issued possibly next month.

Last month Meralco warned of possible risks associated with weather- and storm-hardening projects for improved resiliency if its proposed RY 2016 capex involving 27 vital projects is not fully approved.

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.

“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.