Meralco sees 3.5% sales growth

business mirror

SUNDAY, 13 FEBRUARY 2011 18:51 PAUL ANTHONY A. ISLA / REPORTER

POWER retailier Manila Electric Co. (Meralco) is looking at an average sales growth of 3.5 percent to 3.6 percent this year and in the next few years, Oscar Reyes, chief operating officer, told reporters.

The Meralco official said if they consider previous years’ records, they will be looking at growth in electricity sales within the range of 3 percent. “This is also why we’ve rated our investments at about P45 billion in the next five years. That amount will enable us to deliver service,” he added.

From 2001 to 2009, he pointed out that the average growth rate has been at 2.5 percent. “We also can’t target because in electricity, we have no influence on demand. But we are hoping that with this growth rate, it will be higher than what we’ve seen during the last decade except for 2010. We were surprised. During the first half of 2010 electricity sales grew by 14.5 percent,” he said.

Reyes added that last year was an exceptional year and a very good year for the entire power industry, generators, transmission company and distributors. “Mainly because, for instance, our electricity sales in kilowatt-hours were at 9.9 percent, and we’ve never seen growth to the extent of 9.9 percent in electricity sales over the past 5 to 10 years,” Reyes said.

He added that the strong sales last year was due to the very warm weather that resulted in high air-conditioning systems’ user in the first half of the year as well as election spending. “So I think these two events may not be here this year,” he said.

Meralco earlier said it is imperative for them to be on par with international performance standards in line with the economy’s record growth of 7.3 percent per year in 2010 and the government’s thrust to entice foreign and local investors and create more jobs.

Reyes said while investors had in the past expressed concerns about the state of peace and order in the country, nowadays investors are voicing concerns about the adequacy and quality of electric service.

“Meralco wants to send the signal to investors that the company is committed to supporting them, by lining up P45 billion in investments in its network and customer service infrastructure from 2012 to 2015,” he said.

The company reported that its electricity sales grew by 10 percent last year, the highest growth rate in 13 years compared to 2.2 percent per annum over the past five years.

“Expectations for 2011 are not as robust. However, growth in electricity consumption will still be healthy and while this has been forecasted to grow in the medium-term by around 3.6 percent annually, we may expect a pleasant surprise if the economy continues to outperform,” Reyes said.

Meralco expressed concern that regulatory appreciation of the more challenging needs of its franchise area and of its customers is critical if the company is to adequately address forecasted customer requirements over the third regulatory period under the performance-based regulation scheme.

Meralco noted that despite the higher forecasted demand, the regulatory body’s initial evaluation as contained in the draft determination indicated capital expenditures for the third regulatory period that are even lower than what the ERC approved for the second regulatory period.

Reyes added that the need for continued major capital investments and for operating expenditures at levels that will enable them to render the performance expected from it.

“Meralco’s franchise is considered the prime area for attracting and retaining investments. Our customers, particularly those in manufacturing and service industries, operate in a regional or global stage and, therefore, expect us to provide service that would allow them to compete in the world arena,” Reyes added.

He cited as examples the shared services centers of multinational corporations such as Procter & Gamble, Johnson & Johnson, J.P. Morgan & Co., Deutsche  Bank,  Shell,  IBM, Chevron in the various IT parks and the semiconductor companies that are situated in the 33 manufacturing economic zones in  the  Meralco  area.

Reyes pointed out that these customers expect the kind of electric service from Meralco that they are accustomed to receive in their home countries and in other areas where they operate, and it is Meralco’s aim to meet performance standards aligned with those of world-class distribution utilities.

Reyes said that the expectations of its residential consumers for better power quality and enhanced customer service are increasingly becoming more evident.

“Our residential customers are demanding minimized power outages or brownouts, increased capacity to meet their load requirements, faster energization, and a more efficient customer service response. These are consistent with their aspirations for a higher quality of life and better living standards. We are sensitive to the demands of our growing market which are increasingly becoming sophisticated. We are here for our customers and are determined to meet their requirements, now and in the future,” Reyes said.