Meralco core earnings up 10% to P5.6 billion in 2021

MANILA, Philippines — Manila Electric Co. (Meralco) reported a 10 percent jump in core net earnings in the first quarter, underpinned by higher energy sales and contribution from power generating units.

In a virtual briefing yesterday, Meralco chief finance officer Betty Siy-Yap said the company ended the quarter with a core net income of P5.62 billion.

Reported net income grew 28 percent to P5.56 billion with the adjustments made in 2021 in relation to the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

Consolidated revenues went up by 33 percent to P85.9 billion, consisting of distribution, pass-through generation, transmission and other charges, and energy fees.

Electric revenues, which accounted for 97 percent of total revenues, surged by 33 percent to P83.3 billion mainly due to higher pass-through charges on higher cost of fuel, Siy-Yap said.

Meralco’s average retail rate increased by 14 percent to P8.89 per kWh as generation charges, which accounted for about 59 percent of total retail rate, rose by 21 percent while transmission charges, comprising nine percent of the retail rate, also increased by nine percent.

Energy sales volume increased by six percent to 11,069 GWh following the easing of pandemic-related restrictions and higher temperatures.

“Despite record breaking surge in infections by the highly transmissible Omicron variant, establishments and public transportation were gradually permitted to operate fully with the Alert Level 1 in March,” Meralco chief commercial officer and head of customer retail services Ferdinand Geluz said.

Last March, the National Capital Region (NCR) and parts of Cavite, Laguna, Batangas, Rizal and Quezon (CALABARZON) were placed under the least restrictive Alert Level 1.

Because of this, power demand in Luzon peaked at 11,654 MW on March 23, exceeding the actual peak demand last year. Meralco peak demand for the first quarter reached 7,816 MW, 10 percent higher than the previous year.

Compared to pre-pandemic levels, Meralco’s energy sales were 6.6 percent higher than the 10,380 GWh in 2019.

Geluz said the residential segment was up 26 percent from pre-pandemic levels “evidently due to shifting consumption pattern during the pandemic.”

The commercial segment still lags by eight percent from 2019 numbers, while the industrial sector improved by eight percent.

Residential sales accounted for 35 percent, while commercial and industrial sales accounted for 34 percent and 31 percent, respectively.

Meanwhile, consolidated customer count grew at a steady four percent to 7.46 million as of end-March, with the energization of new customers for both ordinary service and project-covered applications recovered as local government units and developers cleared backlogs and normalized operations.

Meralco president and CEO Ray Espinosa said the significant rise in fuel prices, as well as the persisting supply restrictions of the Malampaya natural gas field, continue to pose risks to the company’s electricity rates.

“We are proactive in implementing mitigating measures, including supply augmentation efforts through competitive selection process and coordination with our suppliers, to cushion the impact to our customers, while we continue to deliver stable, reliable, and quality electricity service to our customers,” he said.

Meralco, through its Third Party Bids and Awards Committee (TBPAC), sought new bids for the 180-MW baseload requirement for the interim and for the 850-MW renewable energy (RE) mid-merit capacity for 20 years.

In the second round of bidding for the 850-MW supply, the TPBAC has set the deadline for the expressions of interest (EOI) on May 18 and for the bids on May 25. The first round was declared a failed bidding due to lack of competing bids.

For the 180-MW baseload requirement, interested parties have until May 16 to submit their EOIs and their bids on May 23. For this CSP, the TPBAC did not receive expression of interest by the March 31 deadline.

“We remain vigilant over global geo-political developments, and remain cautious about their impact on the Philippine economy. We are working with industry players, including the government, regulators, and our suppliers, to agree on ways to mitigate the adverse impact of these challenging circumstances to our customers,” Meralco chairman Manuel Pangilinan said.

“We remain positive that we’ll be able to sustain Meralco’s operational and financial performance this year, as we bank on the further reopening of the economy, and traverse the road towards post-pandemic recovery,” Pangilinan said.