Transcript www.erc.gov.ph

Operating & Maintenance
Expenditure Forecasts
Annaliza Bitantes
Energy Regulatory Officer I
Operating & Maintenance
Expenditure Forecasts
9,000.00
8,000.00
in Mn PhP Nominal
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
-
TRANSCO ERC DD
2005
Non-netw ork
546.00
546.00
TRANSCO ERC DD
2006
653.00
488.00
TRANSCO ERC DD
2007
614.00
512.00
TRANSCO ERC DD
2008
653.00
535.00
TRANSCO ERC DD
2009
690.00
558.00
TRANSCO ERC DD
2010
732.00
581.00
Netw ork
1,996.00
1,532.00 2,441.00
1,167.00
2,454.00 1,248.00
2,562.00
1,322.00 2,673.00
1,398.00
2,781.00 1,458.00
Payroll
1,895.00
1,600.00 2,308.00
1,656.00
2,866.00 1,785.00
3,562.00
1,917.00 3,926.00
2,050.00
4,346.00 2,183.00
Regulatory Year
Payroll Forecasts
5,000.00
4,500.00
in Mn PhP Nominal
4,000.00
3,500.00
3,000.00
2,500.00
2,000.00
1,500.00
1,000.00
500.00
-
TRANSCOERC DD
2005
TRANSCOERC DD
2006
TRANSCOERC DD
2007
TRANSCOERC DD
2008
TRANSCO ERC DD
2009
TRANSCO ERC DD
2010
Non-netw ork
Netw ork
Payroll
1,895.00
2,308.00
2,866.00
3,562.00
Regulatory Year
3,926.00
4,346.00
Payroll Forecasts
Payroll
Network Operations Supervision
& Eng'g Staff
CPI less 2%
reduction of 5% representing an estimate of the OPEX related to Sub T/L
Network Operations Other Staff
5,000.00
4,500.00
4,000.00
in Mn PhP Nominal
3,500.00
3,000.00
2,500.00
2,000.00
1,500.00
1,000.00
500.00
-
TRANSCO ERC DD
2005
TRANSCO ERC DD
2006
TRANSCO ERC DD
2007
TRANSCO ERC DD
2008
TRANSCO ERC DD
2009
TRANSCO ERC DD
2010
Non-netw ork
Netw ork
Payroll
1,895.00
1,600.00 2,308.00
1,656.00
2,866.00 1,785.00
3,562.00
Regulatory Year
1,917.00 3,926.00
2,050.00
4,346.00 2,183.00
Network Operating & Maintenance
Expenditure Forecasts
8,000.00
7,000.00
in Mn PhP Nominal
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
-
TRANSCO ERC DD
2005
TRANSCO ERC DD
2006
TRANSCO ERC DD
2007
TRANSCO ERC DD
2008
TRANSCO ERC DD
2009
TRANSCO ERC DD
2010
Non-netw ork
Netw ork
1,996.00
2,441.00
2,454.00
2,562.00
2,673.00
2,781.00
Payroll
1,895.00
2,308.00
2,866.00
3,562.00
3,926.00
4,346.00
Regulatory Year
Network Operating & Maintenance
Expenditure Forecasts
Network
gradual annual reduction of 5% from 2006-2008 and 2% from 2009-2010, reduction of 5% representing an
estimate of the OPEX related to sub T/L
gradual annual reduction of 5% from 2006-2008 and 2% from 2009-2010 due to expected decrease
Network Operations
System Operations
WESM Compliance
in the cost of network operations as some of the network assets may have been sold and fully depreciated
reduction of 25% for 2006 due to a big jump from 2005
gradual annual increase from 2006-2010 of 7%, 6%, 4% and 2% respectively due to expected
increase in the cost of network maintenance as the network gets older
reduction of 5% representing an estimate of the OPEX related to Sub T/L
unchanged in consideration of the risk which may affect the WACC
Network Maintenance
Insurance
8,000.00
7,000.00
in Mn PhP Nominal
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
-
TRANSCO ERC DD
2005
TRANSCO ERC DD
2006
TRANSCO ERC DD
2007
TRANSCO ERC DD
2008
TRANSCO ERC DD
2009
TRANSCO ERC DD
2010
Non-netw ork
Netw ork
1,996.00
1,532.00 2,441.00
1,167.00
2,454.00 1,248.00
2,562.00
1,322.00 2,673.00
1,398.00
2,781.00 1,458.00
Payroll
1,895.00
1,600.00 2,308.00
1,656.00
2,866.00 1,785.00
3,562.00
1,917.00 3,926.00
2,050.00
4,346.00 2,183.00
Regulatory Year
Operating & Maintenance
Expenditure Forecasts
9,000.00
8,000.00
in Mn PhP Nominal
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
-
TRANSCOERC DD
2005
TRANSCOERC DD
2006
TRANSCOERC DD
2007
TRANSCOERC DD
2008
TRANSCO ERC DD
2009
TRANSCO ERC DD
2010
546.00
653.00
614.00
653.00
690.00
732.00
Netw ork
1,996.00
2,441.00
2,454.00
2,562.00
2,673.00
2,781.00
Payroll
1,895.00
2,308.00
2,866.00
3,562.00
3,926.00
4,346.00
Non-netw ork
Regulatory Year
Operating & Maintenance
Expenditure Forecasts
restrict at 95% for smoothing efficiency
unchanged in consideration of the risk which may affect the WACC
Non-network
Insurance
9,000.00
8,000.00
in Mn PhP Nominal
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
-
TRANSCO ERC DD
2005
Non-netw ork
546.00
546.00
TRANSCO ERC DD
2006
653.00
488.00
TRANSCO ERC DD
2007
614.00
512.00
TRANSCO ERC DD
2008
653.00
535.00
TRANSCO ERC DD
2009
690.00
558.00
TRANSCO ERC DD
2010
732.00
581.00
Netw ork
1,996.00
1,532.00 2,441.00
1,167.00
2,454.00 1,248.00
2,562.00
1,322.00 2,673.00
1,398.00
2,781.00 1,458.00
Payroll
1,895.00
1,600.00 2,308.00
1,656.00
2,866.00 1,785.00
3,562.00
1,917.00 3,926.00
2,050.00
4,346.00 2,183.00
Regulatory Year
Non-network
Insurance
restrict at 95% for smoothing efficiency
unchanged in consideration of the risk which may affect the WACC
Regulatory Asset Base
& Valuation
David Dawson
ERC’s Regulatory Expert
Optimization RAB
• ERC checked on-going projects
against RAB and did not identify any
overlap in claim of value
• Otherwise, ERC has relied on SKM
et. al optimization of the RAB
• DD adjusts for:
– Windfall
– Connection assets
– Sub-transmission assets via disposals
RAB - Windfall
• s.4.8.1 of TWRG indicates that asset
lives may differ from those used for
financial reporting
• s.4.8.3 of TWRG indicates the ERC is
interested in treatment of windfall
gains and losses
• These could arise from valuation or a
change in asset lives
RAB – Windfall Potential
Changes in Economic Life
Changes in Asset Value
P1.1m
P0.8m
P0.8m
ODRC
ODRC
Windfall Gain
10
20
30
Asset Life (years)
40
50
10
20
30
Asset Life (years)
40
50
RAB – Windfall Treatment
• For DD only history known from 1996
appraisal using 30y uniform life
Changes in Asset Value & Life
P1.1m
Change Asset Life to 30 Year
P0.8m
Change Asset Life to 50 Year
Delta ODRC
ODRC with windfall
Windfall for Review
ODRC without windfall
1990
1995
2005
2010
Time (years)
2015
2020
RAB – Windfall DD Review
• Windfall applicable for ODRC and
appraisal to the extent asset lives now
recommended to differ from 30y
• DD only looks at substations, lines,
interconnectors, meters &
communications
• Other assets (appraisal) not yet
examined in detail
RAB – Subtran & Connection (a)
• Focus for DD on plant & equipment
• Use SKM data on T/ST & N/C
definitions
• Resultant outcome is four groupings
– Transmission divided by network &
connection
– Sub-transmission divided by network &
connection
RAB – Subtran & Connection (b)
• Summary for substations
Remove Windfall
(PhP k)
Transmission
Network
Connection
Sub-transmissionNetwork
Connection
TOTAL
RC
DRC
ODRC
51,947,381
31,850,787
31,224,055
4,676,022
2,339,635
2,299,865
4,115,644
2,262,987
2,126,576
4,928,207
2,321,889
2,256,838
65,667,254
38,775,297
37,907,334
Retain Windfall
(PhP k)
Transmission
Network
Connection
Sub-transmissionNetwork
Connection
TOTAL
RC
DRC
ODRC
51,947,381
35,548,721
34,825,712
4,676,022
2,805,680
2,746,616
4,115,644
2,535,220
2,392,466
4,928,207
2,454,869
2,359,158
65,667,254
43,344,490
42,323,951
RAB – Subtran & Connection (c)
• Summary % for substations
Windfall
(PhP k)
Transmission
RC
DRC
ODRC
Network
-
3,697,934
3,601,656
Connection
-
466,045
446,751
-
272,234
265,890
Connection
-
132,980
102,319
TOTAL
-
4,569,193
4,416,617
(PhP k)
RC
Sub-transmissionNetwork
% Windfall
Transmission
DRC
ODRC
Network
0.0%
10.4%
10.3%
Connection
0.0%
16.6%
16.3%
0.0%
10.7%
11.1%
Connection
0.0%
5.4%
4.3%
TOTAL
0.0%
10.5%
10.4%
Sub-transmissionNetwork