The Manila Electric Co. (Meralco) will be constrained to work with a lower capital expenditure budget of P37.2 billion over the next four years, which was approved by the Energy Regulatory Commission under the performance-based regulation (PBR) scheme.
The approved capex level for the third regulatory period covering July 2011 to June 2015 was lower than the planned capital spending of about P45 billion that Meralco had originally sought.
“We will have to work within the approved expenditure levels while maintaining our service commitments to our customers,” said Ivanna dela Peña, head for regulatory management of Meralco.
“The ERC disagreed with a number of our project proposals and imposed more stringent performance standards for the company,” Dela Peña said.
The ERC on Wednesday issued a decision that lowered the distribution, supply and metering charges that Meralco was allowed to collect over the next four years, from the current level of P1.6464 per kilowatt-hour.
For the regulatory year ending 2012, Meralco will have to lower these charges to P1.5828 per kWh and reduce these even further to P1.5817 per kWh in 2014 and 2015.
In its original application, Meralco wanted to increase these charges to P1.7056 per kWh in regulatory year 2012; P1.7686 per kWh, 2013; P1.8349 per kWh, 2014, and P1.9036 per kWh, 2015.
Meralco was directed to submit a rate translation proposal by June 13, which would convert the final determination rate into tariffs schedules for the various customer categories.
ERC executive director Francis Saturnino Juan said the ERC had disallowed projects that it felt were not deemed crucial and necessary. These included those concerning “enterprise asset management, energy trading and risk management and enterprise production support systems.”
Other proposed line projects were meanwhile deferred to the fourth regulatory period beginning July 2015.