Meralco cuts capex to P8B, down 22%

Manila Electric Co. (Meralco), the country’s biggest power distributor, was forced to cut its capital expenditure budget this year by almost 22 percent to only P8.5 billion, due to a regulator’s decision to limit the increase in its distribution, supply metering charges over the next four years.

Meralco chief operating officer Oscar S. Reyes said, however, that the decision to cut its capex budget this year from the original P10.9 billion would not affect the company’s distribution performance for 2011.

“(Our projects will be) geared to service the increasing customer base and to enhance reliability and robustness of the electric distribution system and to contain system loss,” Reyes said, noting that Meralco will prioritize capital projects that are meant specifically for distribution service.

As of end-June 2011, Meralco has already spent P3.9 billion for substations, transformers and other electrical projects that will improve the distribution utility’s system.

For the rest of the year, the company has a little over P4.5 billion to spend for other electrical projects that will enhance the reliability of its service to close to 5 million customers within its franchise area, Reyes said.

Earlier this year, the Energy Regulatory Commission issued a decision that lowered the distribution, supply and metering charges that Meralco would be allowed to collect over the next four years, from the current level of P1.6464 per kilowatt-hour (kWh).

For the regulatory year beginning July 2011 and ending 2012, Meralco will have to lower these charges to P1.5828 per kWh and reduce these even further to P1.5817 per kWh by 2015.