MANILA, Philippines - Power distributor Manila Electric Co. (Meralco) has slightly surpassed its core income target for 2015, mainly due to higher electricity sales.
In a briefing yesterday, Meralco chief finance officer Betty Siy-Yap said core net income rose four percent to P18.89 billion.
This is slightly ahead of the management’s core profit guidance of P18.5 billion.
Consolidated revenues, on the other hand, fell three percent to P258.4 billion as a result of lower fuel prices, switching of customers to retail electricity suppliers (RES) and lower distribution rate.
Meralco officials said the better-than-expected energy sales is seen to continue this year, which will offset the lower distribution charge implemented.
Energy sales went up 5.6 percent to 37,124 gigawatt-hours (GWh) from 35,160 GWh.
Meralco president Oscar Reyes attributed the jump in sales to warmer temperature starting July 2015 as a result of El Nino phenomenon, positive economic conditions and lower electricity rates which enabled higher consumption.
“We were pleasantly surprised that energy sales grew at hefty pace of 5.6 percent and this exceeded our expectations,” he added.
The rise in core earnings was also attributed to “income carrying charge of the GRAM (generation rate adjustment mechanism) 2, under-recoveries approved by the Energy Regulatory Commission, higher financing income with the deployment of cash from longer tenure instruments, gain from partial divestment in INDRA Philippines, and improved contributions from operating subsidiaries, Siy-Yap added.
These subsidiaries include Meralco Industrial Engineering Services Corp., Radius Telecoms Inc., CIS Bayad Center Inc. and Meralco Mserv.
Last July, Meralco applied for a lower distribution charge, which was approved by the ERC in the same month.
For this year, Meralco chairman Manuel Pangilinan expects core income to hit P18.9 billion or same level as last year’s.
This is because the lower distribution charge is expected to temper income for this year.
However, Pangilinan said there would be some compensating factors for the anticipated decline in revenues in the distribution side of the business.”
“Principally, the increase in volume in January to February, which is between 10 to 12 percent, are pretty strong for the first two months,” he said.
He also highlighted the continued increase in contribution of subsidiaries as well as improved operating efficiencies of Meralco.