ERC sets Meralco capex at P15.5B

The Manila Electric Co. (Meralco) would have more room for investments this year as regulators approved a capital expenditure (capex) program of P15.5 billion.

In a decision, the Energy Regulatory Commission (ERC) said the capex approved was 13.8 percent lower than the P18 billion the power retailer had originally asked for.  The budget would be used for the establishment of new substations, expansion of advanced metering infrastructure to support prepaid retail electricity services and the installation of connection and metering facilities to serve new customers.

Meralco president Oscar S. Reyes said the firm had asked for P18 billion to improve network resiliency amid an expected growth in demand.

In its application, Meralco estimated around 4 percent growth in demand for 2016. Power demand growth in its franchise area has always averaged 3 to 3.2 percent per year but 2015 saw a record growth of 5.6 percent to 37,124 gigawatt-hours (GWh), leading to better than expected net income and core profit (which takes out one-time or extraordinary gains or losses) targets.

Since January, Meralco has been operating on an emergency capex program, spending only on urgent projects to maintain service levels and cope with growing demand for electricity in its franchise area while waiting for regulators to approve its 2016 capex application that was submitted in February 2015.

Reyes earlier said the company set an emergency capex of P9 billion to P10 billion. In 2015, Meralco spent P11 billion for its operations.

Increasing peak power demand and additional customer connections would require Meralco to increase the capacity of the electric distribution system in order to accommodate new clients while keeping its power retail system reliable, the company said in its application.