Meralco seeks ERC nod for P272-B capex, P532-B revenue requirement

By Sheldeen Joy Talavera, Reporter

MANILA ELECTRIC CO. (Meralco) has proposed a capital expenditure (capex) program worth about P272 billion and a total revenue requirement of roughly P532.13 billion for the 2027-2030 regulatory period, as part of its rate reset application with the Energy Regulatory Commission (ERC).

In its application before the ERC, Meralco proposed an annual revenue requirement (ARR) of P116.04 billion for 2027, P126.86 billion for 2028, P138.75 billion for 2029, and P150.47 billion for 2030.

This covers operating and maintenance expenditure; taxes, levies and other duties; regulatory depreciation, and return on capital.

Meralco said the ARR — or the amount the utility seeks to recover to cover its costs and expenses — is partly based on a proposed weighted average cost of capital (WACC) of 14.6%.

Alongside the proposed revenue requirement, Meralco outlined a P272-billion capital spending plan for the four-year period covering various network and non-network programs.

Meralco has earmarked P50.80 billion for 2027, P59.87 billion for 2028, P59.67 billion for 2029, and P71.17 billion for 2030. The planned capex budget also includes more than P30 billion in carry-over projects.

The power distributor said the capex budget is allocated for programs that will support customer growth, improve system reliability and power quality, and address emerging network requirements.

For the four-year period, Meralco said a significant portion of the proposed capex will fund network expansion and related infrastructure. These include the construction of 28 substations, as well as the building and expansion of eight operating centers and 10 business centers.

The distribution utility also plans to pursue underground cabling projects in select parts of its franchise area.

Meralco has also proposed a significant investment for the rollout of smart meters to more than three million customers under its Advanced Metering Infrastructure program. Smart meters will allow both the distribution utility and customers to monitor energy consumption in real time and help detect power outages.

Meralco recently partnered with US-based Aclara Meters Philippines, Inc. for the supply of more than 72,000 smart meters to be deployed across its franchise area starting this year.

The four-year investment plan also includes programs related to distributed energy resources, such as rooftop solar solutions, which the company said could help manage demand and support the country’s clean energy transition.

The power distributor also plans to deploy electric vehicle (EV) chargers in selected facilities in line with targets under the Electric Vehicle Industry Development Act and the Comprehensive Roadmap for the Electric Vehicle Industry.

“These investments are critical to Meralco’s mandate to deliver high quality, reliable, and stable electricity service, enabling us to meet growing and evolving power requirements and support the country’s economic progress,” Meralco Senior Vice-President and Head of Regulatory Management Office Jose Ronald V. Valles said.

Aligned with the proposed revenue requirement and to help fund its capex program, Meralco is applying for an average distribution tariff of P2.34 per kilowatt-hour (kWh), higher than its current rate of P1.35 per kWh.

“Even as we continue our aggressive efforts to invest in strengthening our distribution network and implementing significant customer service improvement initiatives over the past decade, our rates have not increased in the past decade,” Mr. Valles said.

Since no rate reset was completed from 2015 to 2025 due to regulatory and legal delays in the ERC’s rate reset process, the distribution rate was adjusted to account for the lapsed regulatory period, the company said.

“This rate reset will enable Meralco to pour in massive investments for storm-hardening, upgrading, and expansion of our facilities, as well as technological advancements that are necessary for us to future-proof our distribution network. These go alongside our efforts to ensure fewer interruptions and faster service restoration, promote consumer empowerment and support government-mandated customer choice programs,” Mr. Valles said.

Meralco is among the first group of utilities to undergo the transition to the first regulatory period (1RP), marking the restart of the rate reset cycle under the ERC’s updated framework.

A rate reset process is a periodic regulatory review in which the ERC examines a utility’s costs, investments, and performance, and sets revenue limits intended to support reliable service while protecting consumers from excessive charges.

Meralco is the country’s largest private electric distribution utility, serving more than 8.1 million customers in Metro Manila and nearby provinces, including Bulacan, Cavite, Rizal, and parts of Laguna, Batangas, Pampanga, and Quezon.

Meralco’s controlling shareholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.