Manila Electric Company (Meralco) chairman and chief executive officer Manuel V. Pangilinan expressed confidence in proceeding with the complete feasibility study on adopting nuclear energy in the country in partnership with the government and its partners.
In addition, Pangilinan is optimistic the distribution utility will end the year with P40 billion in core net income and sustain its strong performance in the first quarter while supporting "economic development and contributing to uplifting the lives and welfare of more Filipinos."
"Meralco has set the pace in the first quarter of the year with the strong performance of our businesses, which we will strive to sustain throughout the year. Our growth prospects go beyond creating value for our shareholders," Pangilinan said.
On Monday, Meralco reported that its consolidated core net income rose 11% to P10.1 billion in the first three months of 2024 from P9.0 billion in the same quarter last year, driven by higher sales volumes in the distribution business and continuing contributions from power generation, retail electricity supply, and non-power-related businesses.
Of the total CCNI, the distribution business accounted for 58% or Pesos 5.8 billion, power generation brought in Pesos 2.7 billion or 27%, RES and the non-power businesses took the remaining Pesos 1.5 billion or 15%.
Consolidated reported net income increased 19% to P9.6 billion from P8.1 billion. The gap between CCNI and Consolidated Reported Net Income represents the accounting amortization of the "Day 1" gain adjustment, net of foreign exchange, and other non-recurring gains.
Core EPS amounted to P8.946, up 11% versus last year, while the reported EPS increased by 19% to P8.514. Consolidated revenues amounted to P104.5 billion, slightly lower from P105.6 billion in 2023, mainly due to lower pass-through charges and energy fees. This came as a result of the decline in prices at the Wholesale Electricity Spot Market (WESM) of Malampaya gas and international coal prices; as well as lower plant availability of Global Business Power Corporation's (GBP) Cebu Energy Development Corporation (CEDC) power plant.
Meralco's average retail rate increased by less than 4% to Pesos 10.78 per kWh from Pesos 10.41 per kWh, mainly due to the completion of the distribution rate true-up refund in May 2023. Meralco's average distribution charge was at Pesos 1.47 per kWh, 58% higher than the distribution charge net of the DRTU refund 2023. Without the effect of the DRTU refund, the distribution charge was less than one percent higher.
The generation charge, which accounted for about 63% of the total retail rate, decreased by 4%; the transmission charge, which comprised 8% of the retail rate, decreased by 3%—with a combined 11% share in the total. Subsidies and taxes climbed by 14% due to higher effective taxes and universal charges. Purchased power costs ("PPC") decreased by 3% to Pesos 76.5 billion from Pesos 78.6 billion, consistent with the decline in pass-through revenues, reflecting lower fuel input costs.
Average WESM prices in the Meralco franchise area dropped to Pesos 4.65 per kWh from P6.57 per kWh following an improved supply situation in the grid
during the quarter. However, peak demand during the first quarter was higher by 112 MW compared with a year ago due to decidedly warmer temperatures.
The average Malampaya natural gas price decreased to US$ 9.94 per GJ as of the end of March 2024 versus $10.08 per GJ a year ago due to lower oil indices. The Energy Regulatory Commission (ERC) issued a directive that prevented the implementation of higher Malampaya pricing under the new Gas Sale and Purchase Agreement ("GSPA") of First Gas' Sta. Rita plant with Prime Resources Development B.V., et.al., pending the relevant regulatory approvals. The new pricing would have increased the average Malampaya gas price by US$ 0.63 per GJ or an effective Peso 0.09 per kWh on consumers' average generation retail price.
Pangilinan added, "As we continue to deliver stable and reliable service to our customers, we reiterate our pursuit of bringing in projects of scale that will boost available generation capacity, which we direly need to ensure not just the immediate but the long-term energy security of the country."
Ensuring stable, reliable
and cost-competitive power
As part of its mandate to deliver sufficient, reliable, and stable electricity service at the least possible cost to customers, Meralco has proactively implemented strategic sourcing activities and distribution network upgrades.
Consistent with its approved Power Supply Procurement Plan ("PSPP"), Meralco completed the Competitive Selection Process (CSP) for 15-year Power Supply Agreements (PSAs) covering 3,000 MW baseload requirements in the first quarter of the year and a 400-MW baseload interim power supply agreement (IPSA) effective until February 2025.
Award notices have been issued to the winning bidders, and the resulting contracts have been submitted for review and approval by the ERC before implementation.
Beyond its sourcing initiatives, Meralco continued investing in expanding and upgrading its distribution network facilities to improve service reliability and operational flexibility.
Among the projects completed in the first quarter of 2024 are the replacement of a 100 MVA Power Transformer in Taguig City, the installation of an 83 MVA Power Transformer at Abubot Substation in Dasmariñas City in Cavite, the uprating of the Pamplona-San Pedro 115 kV Line that runs from Las Piñas City to San Pedro City in Laguna, and the reliability improvement of the Malinta 115 kV Substation in Valenzuela City. "The growth in our first quarter sales volume reflects the growing demand for power from across all customer segments and improving economic prospects. In April this year, we already reached record peak demand in the Meralco franchise area, which exceeded 9,000 MW.
With Red and Yellow Alerts hoisted over the Luzon grid several times this April, we anticipate a challenging power supply situation throughout this dry season, coincidental with the El Niño phenomenon," Meralco executive vice president and chief operating officer Ronnie Aperocho said.
"Nonetheless, we remain vigilant as we work with energy industry players in implementing demand-side management programs to help lessen the strain on the power grid and continuously deliver stable and reliable service to consumers. We also continue to encourage more proactively participants to join the Interruptible Load Program (ILP), which embodies bayanihan among private sector players, as this proves valuable during this critical season," he added.