Meralco sees 50% drop in net income this year

The Manila Electric Co. (Meralco) is expecting a 40-percent to 50-percent drop in net earning this year due to the Energy Regulatory Commission’s (ERC) decision to suspend hearings on rate hike petitions.

Meralco Assistant Vice President and Treasurer Rafael Andrada, in an interview, said the company’s income will likely go down to P1.2 billion from P2.49 billion last year.

ERC Chairman Fe B. Barin earlier said they would suspend hearings on Meralco’s rate hike petition for three months to give the new ERC Board time to study the application.

Andrada said the delay would result to a less than four-percent return-on-rate base (RORB). The RORB measures a company’s profitability.

"We understand the situation of the ERC. We had a courtesy call with them. They have informed us of such plan," Andrada said. "In fairness to them, we are already expecting that they would request for this since the Power Reform Law had just been passed," he added.

The Meralco official said that since they have anticipated such a move, they have taken into account the impact of the "no rate increase" in their financial performance this year.

"We have to adjust our operating expenses in the remaining months of the year taking into consideration the possibility that the ERC might not be able to pass judgment on our rate application within this year," he said.

But Andrada said they are still hoping that the ERC would be able to decide on the application for rate hike. "We always welcome the possibility that they would approve it this year since we will be able to upgrade our distribution services," he said.

Since it is impossible for the company to revise its capital expenditure program because they are already in the second half of the year, he said they would probably just limit their expenses.