Aleco readies P1.87-b capex

Albay Electric Cooperative and concessionaire Albay Power and Energy Corp., controlled by San Miguel Corp., has asked the Energy Regulatory Board to approve capital expenditures amounting to P1.87 billion until 2010.

Aleco and APEC filed an application with the regulator to clear capex projects “intended to improve the safety and reliability of the power system, power quality and system efficiency.”

The companies said the capex would be initially funded through advances from APEC’s parent company, SMC Global Power Holdings Corp., which are payable at an interest equivalent to the prevailing Philippine Dealing System rate,

It said the amortizations would be taken from the cooperative’s Reinvestment Fund for Sustainable Capital Expenditures after approval of the capex.

All assets acquired by APEC, meanwhile, will be transferred to Aleco in good condition at the end of the concession period.

“Implementation of the project is expected to have an indicative rate impact of P0.6095 per kilowatt-hour for a total of P0.8273 per kWh over the period of its implementation,” the parties said.

Aleco and APEC sought ERC’s approval to implement the rate impact over a seven-year period.

The parties noted that Aleco had no approved capital expenditure program since 2010, which negatively impacted on its aging substation transformers and other distribution utilities.

“Under the circumstances, Aleco could not implement big ticket capex projects such as replacement or upgrading of its aging substation transformers and other distribution facilities,” Aleco and APEC said.

They said without the substation upgrade, there was a risk of overloading and breaking down of transformers that would result in power supply interruptions in the substation area,
“An early approval will enable APEC to proceed with the urgent network projects to ensure continuous and reliable power supply to the customers in the Aleco franchise area,” it said.

SMC Global Power signed a concession agreement with Alecoin October 2013. SMC Global Power assigned all its rights and obligations under the concession agreement to APEC in January 2014.

APEC formally assumed the operations and management of the ALECO franchise area on February 26, 2014.