Manila Electric Co. (Meralco), the country’s largest power distributor, has filed for regulatory approval of its annual revenue requirement (ARR) and performance incentive scheme for the fifth regulatory period (2026-2029). The proposed ARR, which starts at P81.8 billion in 2026 and increases to P114.6 billion by 2029, is intended to finance crucial infrastructure upgrades, expand network capacity, modernize assets, and enhance service reliability for its millions of customers.
The annual revenue requirement (ARR) represents the total amount a utility is allowed to recover from consumers to fund operating expenses, capital investments, return on capital, and taxes. This ensures the continuous maintenance and expansion of the distribution network while keeping services efficient and reliable.
Meralco’s application follows the Energy Regulatory Commission’s (ERC) directive issued on December 17, 2024, which required the company to submit a revised filing for the fifth regulatory period (July 1, 2025 – June 30, 2029).
According to Meralco’s proposal, the distribution rates it intends to charge consumers will start at P1.6871 per kWh in 2026. The rates are projected to slightly increase to P1.6899 per kWh in 2027, followed by a marginal decrease to P1.6894 per kWh in 2028 and then further to P1.6872 per kWh in 2029. These rates, which are subject to ERC approval, are designed to balance cost recovery and consumer affordability while ensuring continued investments in power infrastructure.
Meralco is also seeking approval for significant capital expenditures (capex) and operating expenditures (opex) as part of its infrastructure development plans. For capital expenditures, which fund network expansion and modernization, the company has proposed an investment of P34.39 billion in 2026. This will increase to P58.50 billion in 2027, followed by a slight decrease to P57.91 billion in 2028, before rising again to P64.56 billion in 2029.
Meralco explained that these funds will be used to increase network capacity, replace aging infrastructure, relocate assets, and roll out advanced metering infrastructure for over three million customers. Meanwhile, its operating and maintenance expenditures (opex), which ensure day-to-day operations and service reliability, are projected to reach P31.30 billion in 2026. This will increase to P33.85 billion in 2027, then to P36.21 billion in 2028, and finally to P39.30 billion in 2029.
Meralco emphasized that these funds will be used to maintain the safety, efficiency, and reliability of its power distribution network, covering preventive maintenance, emergency repairs, and system upgrades.
Meralco’s proposed investments are aimed at addressing growing electricity demand and improving grid stability in its franchise area, which covers Metro Manila and nearby provinces. With increasing power consumption and the need for grid resilience against outages, the company sees this as a critical step toward ensuring uninterrupted power supply and service improvements.
Industry experts note that distribution network upgrades will be crucial in supporting the integration of renewable energy sources, as well as digital grid technologies that improve efficiency and reduce losses.
Meralco’s application will now undergo public consultations and ERC hearings, where stakeholders—including consumer groups and regulatory bodies—will evaluate whether the proposed rates and investments are justified. If approved, these tariff adjustments and infrastructure investments will shape the country’s power distribution landscape for the next four years.
The ERC’s decision will ultimately determine whether Meralco’s proposed projects align with consumer protection policies, affordability, and the long-term reliability of the Philippine power grid.
How do you feel about Meralco’s proposed revenue adjustment and infrastructure investments? Share your thoughts in the comments below, and follow Power Philippines for the latest updates on energy developments!
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