Manila Electric Co., the biggest electricity retailer, plans to spend more than P150 billion from 2023 to 2026 to augment the capacity of its network and replace aging assets, documents showed Monday.
Meralco filed an application for the fifth regulatory period with the Energy Regulatory Commission to allocate P152 billion in capital expenditures over the four-year period, including the budget for projects under construction.
The company said it was planning to allocate capex of P37.534 billion in 2023, P43.49 billion in 2024, P36.374 billion in 2025 and P32.249 billion in 2026.
It said if the capex included construction work in progress, the capex would be slightly higher at P38.237 billion in 2023, P44.378 billion in 2024, P37.052 billion in 2025 and P32.82 billion in 2026.
The company said the expenditures were necessary to augment the capacity of the network to meet demand growth or new customer requirements, and replace or refurbish aging and obsolete assets.
The budget will also be spent to relocate assets for the implementation of government infrastructure and third-party initiated projects and to purchase and construct non-network assets required for the normal efficient operation of the electric distribution system.
It will also be used to deploy automation and technology projects and innovative solutions for various electrification projects and to comply with regulatory requirements and other relevant rules and regulations with emphasis on maintaining the integrity, reliability and efficiency of the electric system. It will also support the continuous improvement in service quality and performance measurement for the benefit of the consumers.
Meralco said that because of delays in project implementation, several major capex projects were tagged as “carryover.” Such projects, while essential for the improvement of Meralco’s operations, were pushed back over difficulties such as the pandemic restrictions.
These projects are slated to be commissioned by 2023 and 2024 and will be part of the 5RP regulatory asset base computations.
Meralco sought approval for the carryover projects amounting P12.358 billion to P12.606 billion in 2024 and P3.553 billion to P3.633 billion in 2024.
Meralco also proposed the implementation of Advanced Metering Infrastructure program for more than 2 million customers aligned with the objective of deploying a reliable, efficient and intelligent distribution grid.
Meanwhile, Meralco proposed operational expenditures of P27.824 billion in 2023, P28.946 billion in 2024, P31.007 billion in 2025 and P33.164 billion in 2026.
The opex will allow it to deliver services to customers and support business operations including the use of automation and digital technologies; meet the requirements of the government and meet its performance targets.
“The proposed OPEX will support strong growth prospects for the economy with sustained moderate growth in kWh sales throughout the 5RP,” it said.
Meralco said the additional OPEX is needed, not only to meet service performance levels, but also to ensure that reliability standards are kept at par with other power distribution utilities serving other countries in the Asian region.
The 5RP under the performance-based regulation scheme will start on July 1, 2022 and end on June 30, 2026.