Meralco poised to collect less power charges under performance-based scheme

MANILA, Philippines—Manila Electric Co., or Meralco, the country’s largest power distributor, is expected to collect much less distribution, supply and metering charges of P1.6012 per kilowatt-hour (kWh) for regulatory year 2012, under the performance-based regulation (PBR) scheme.

The amount, which is less than the current charges of P1.6464 per kWh, will only be effective as soon as the Energy Regulatory Commission (ERC) approves Meralco’s application for the rate translation of its approved maximum revenue requirement, or MAR.

The MAR for the third regulatory period (covering July 2011 up to end-June 2015) was already approved by the ERC last June. It is only after Meralco secures this approval can the distribution utility file another application to translate the MAR into actual distribution, supply and metering charges that it can collect over the next several years.

The P1.6012 per kWh, if approved, will only cover regulatory year 2012 (July 2011 to end-June 2012).

“To enable it to immediately implement the lower distribution rates for regulatory year 2012, the first year of the third regulatory period, and for the benefit of its customers, it requests that provisional authority be immediately issued, authorizing it to implement the new rates pending hearing on the merit of the application,” Meralco said in a filing with the ERC.

A hearing has been set on September 19. The number of hearings will depend on the proceedings and the number of witnesses, according to ERC executive director Francis Saturnino Juan.

The less charges to be collected, however, meant that Meralco would be forced to reduce its capital expenditure budget over the next four regulatory years to only P37.2 billion from the P45 billion it had initially intended to spend.

For this year alone, Meralco already cut its capex by 22 percent to only P8.5 billion this year, from the original amount of P10.9 billion.

Oscar S. Reyes, chief operating officer for Meralco, however, assured the public that the reduced budget for the utility’s electrical projects would not affect the company’s distribution performance for 2011.

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