Wednesday, February 27, 2013

Pangilinan: Meralco may expand to Asean

Manila Standard Today  
By Alena Mae S. Flores  Posted on Feb. 27, 2013 at 12:01am
Manila Electric Co., the country’s largest electricity distributor, is exploring  opportunities in Myanmar, Thailand and Vietnam as part of the company’s expansion into the international power industry.
“We’re looking at [Myanmar] but nothing specific, nothing definite at this stage. Well, we’re checking opportunities in Thailand as well,” Meralco chairman Manuel Pangilinan told reporters.
Pangilinan said Meralco was studying the feasibility of putting up a gas-fired power plant in Thailand because of the rich natural gas supply there.
“That’s one possibility,” Pangilinan said, but stressed nothing had been firmed up.
“Fuel sources supplied are by government [of Thailand] through PTT and the power producers are given an offtake… The returns are not high because you are protected in both ends—on the fuel source and on the offtake. So your risks are basically execution on building the plant,” Pangilinan said.
He said Meralco might build a power plant in Vietnam and purchase its own fuel requirement. The buyer of the electricity will be coursed through EVM (VietNam Electricity), the largest power company in Vietnam with an installed electricity generation capacity of 8,860 MW and a distribution network of 19,396 kilometers.
Pangilinan earlier said Meralco was looking at power generation opportunities in Vietnam for projects ranging from 150 MW to 600 MW.   source

Filinvest’s planned coal-fired plant in Misamis Oriental likely blocked

By Nicole J. Managbanag
Wednesday, February 27, 2013
THE establishment of a multi-million-peso power generation investment of Filinvest Development Corp. (Filinvest) in Villanueva town in Misamis Oriental would likely be a failure as another environmentalist group in Northern Mindanao has been releasing statements to possibly block the entry of another coal-fired power plant in the area.
Sulog, a group of environmentalists based in Cagayan de Oro, claimed future environmental concerns should the project is pushed through by the multi-national investor.
Sulog chairman Orlando Ravanera said the plant, which would generate up to 405 megawatt (MW) power, jeopardizes the health of the residents in the area.
The plant, according to reports, will be set up at an 84.4-hectare land located inside the 400 kilometer-range not allowed Environment department where a community is existing.
Ravanera, though, admitted that the coming of more power generation investments is a welcome development for Mindanao and can certainly help solve the shortage of power in the island, but the local government should also consider other renewable energy sources and not only focus on the coal-fired power plants.
In other countries, he said, they discourage the use of coal as a source of energy as it releases 31 kinds of toxic chemicals that can cause cancer and abortion from the smoke emission during operation.
He said the Department of Environment and Natural Resources (DENR) should thoroughly check the project before an approval is given.
Ravanera even called on citizens to be vigilant against any establishment of “unsafe investments.”
“They should take a stand and say no to coal-fired power plant,” he added.
Miren Sanchez of the Filinvest said the company is still waiting for the completion of key technical studies that would dictate the design of the plant and other environmental concerns before they release a statement.
Sanchez, however, assured the public that they will comply with all the necessary requirements to pass the standards of the Environment department.   source
Published in the Sun.Star Cagayan de Oro newspaper on February 27, 2013.

NEA fines 5 directors of Leyte electric co-op

 (The Philippine Star) 

They have also ordered the Leyeco II management to “ensure” the collection of P141,054.67 from its retired manager, lawyer Jerry Gwen Conde, “including but not limited to the filing of a civil action in the proper court.” 
This was NEA’s decision on an administrative complaint filed by the officers of the National Association of Electricity Consumers Inc.-Tacloban chapter, alleging that Conde still got his salaries and benefits long after his retirement and that the board of directors allegedly condoned it.
Conde was also allegedly given a P3. 73-million retirement package using “18 years” as multiplier, even if the NEA-approved multiplier was only for 17.3 years. This resulted in a difference of P141,054.67 that NEA said should be collected from Conde.
Fined by the NEA were Leyeco II directors Rolando Hidalgo, Reynaldo Galapon, Gregorio Dolina, Feliciano Elizon Jr., and Alan Surpia.   source

EDC resumes Bacman geothermal operations

Manila Standard Today
By Alena Mae S. Flores  Posted on Feb. 27, 2013 at 12:01am
Energy Development Corp. said Tuesday units 1 and 2 of the 150-megawatt Bacon-Manito geothermal plants have resumed operations, following a two-year rehabilitation.
EDC, an affiliate of Lopez-controlled First Gen Corp., said the Bacman geothermal project in Bacon, Sorsogon and Manito, Albay began commercial operations on Feb. 25, after the company undertook a $72-million rehabilitation of the project beginning December 2010.
“For the past three to four weeks, Bacman Units 1 and 2 have been generating energy during their testing and reliability runs. Both 55-MW units have been operating at full load since Jan. 27 and Feb. 11, respectively,” EDC president and chief operating officer Richard Tantoco said.
The Bacman geothermal power plants consist of Bacman I (two, 55-MW units) and Bacman II – (two, 20-MW units).
EDC submitted the winning bid of $28.25 million for the Bacman geothermal plants  in May 2010 to the state-run Power Sector Assets and Liabilities Management Corp.
“Declaring commercial operations marks the full integration of EDC’s operations for the 2 X 55-MW Bacman I power plant. We are very happy to have the plant back in service despite all the technical challenges we have encountered along the way. It is about time the plant and the Bacman steam resource serve the Filipino consumers again,” Tantoco said.
EDC posted a consolidated recurring net income of P9.89 billion in 2012, up 89 percent from P5.24 billion in 2011.   source

Tuesday, February 26, 2013

Meralco posts P16.265-B core income

 (The Philippine Star) 

MANILA, Philippines - Manila Electric Co. (Meralco), the country’s largest power distributor, reported yesterday  that it surpassed its P16-billion core net income target for last year, thanks to higher electricity sales.
Meralco president Oscar Reyes said core net income reached P16.265 billion last year, up nine percent from the previous year’s P14.9 billion.
The company’s net income grew by a faster 29 percent to P17 billion, Meralco said in a separate statement.
Consolidated revenues, of which electricity accounts for 99 percent or P283 billion, went up to P285.3 billion, 11 percent better than 2011 while consolidated core EBITDA was P26.8 billion for 2012.
“The higher revenue is attributable to the seven percent increase in volume over the 30,592 gigawatt-hour (GwH) record in 2011 sales and the higher generation charge, which were partly mitigated by lower Meralco distribution rate and transmission charge to customers,” Meralco said.
Consolidated volume of energy sold for 2012 stood at 32,771 GWh, seven percent higher than 2011.
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The average distribution charge stood at P1.55 per kilowatt-hour in 2012, three centavos lower than the previous year on account of the higher share of industrial and commercial customers in the overall sales mix.
In its report, Meralco managed to keep pace with the growth of the Philippine economy by registering an increase of 7.1 percent in electricity sales volume in 2012.
This is higher than the average annual growth of four percent for the preceding three years to 2007 to 2009 and at six percent since 2010.
“We met record demand for electricity without any rise in distribution charges and managed to bring the system loss rate to record low levels, passing on the resulting savings to customers,” Reyes said.
For this year, Meralco chairman Manuel Panigilinan said prospects are bright, with profits expected to beat last year’s level.
“This year we’re off to a good start with respect to the first two months of the year because of higher energy sales. The full-year outlook for 2013 will be ahead of 2012,” Pangilinan said.
He said the company may have better indications at the end of the first quarter.
“With two months into 2013 and as we look into the remaining ten months of this year, we continue to focus on delivering growth and profitability opportunities and expect core net income for 2013 to exceed 2012,” he said.
The company has allotted P13 billion for capital expenditures this year from P10.3 billion last year.
Meralco intends to refinance existing debts of P14 to P15 billion this year through a loan from local banks, said chief finance officer Betty Siy-Yap.   source

Monday, February 25, 2013

Editorial:Beating the power rates

Philippine Daily Inquirer
Obviously, because the power sector is very complex for the ordinary consumer to understand, every increase in electricity rates is met with criticism. The cost should simply be generation expense plus transmission cost plus distribution charge, but there are various taxes imposed by the government on electricity. To complicate matters, there are the so-called universal charge for stranded contract cost (UC-SCC), universal charge for stranded debts (UC-SD) and, in the near future, the feed-in tariff (FIT) rates designed to help developers of renewable energy.
Thus it was a great relief for consumers when the Energy Regulatory Commission (ERC) rejected the petition of the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) to collect another P65 billion worth of so-called stranded debts. Earlier in the week, though, the ERC had ruled that PSALM could collect P53.58 billion of UC-SCC, which is a new component in electricity bills, from all consumers.
Metro Manila residents already bear the highest electricity rates in Asia, according to a 2011 survey of the region by the Japan External Trade Organization, the second survey by an international agency showing the Philippines as having the most expensive electricity in Asia. In 2010, Australian consulting firm International Energy Consultants found that Manila’s residential rates had surpassed those of Tokyo’s. Of the total retail electricity price, Manila Electric Co.’s distribution charges account for 16 percent; generation charges, 65 percent; transmission cost, 9 percent; and the balance of 10 percent, VAT and other taxes.
Not a few businessmen have complained that the high cost of electricity in the country could be one of the major reasons foreign investments have been avoiding the Philippines. In a summit in 2006 to identify factors why the Philippines was not very competitive in attracting investors, the high cost of electricity was cited as one of the biggest hurdles. It was pointed out that while some progress on issues like professionalizing public offices, improving access of SMEs (small and medium  enterprises) to finance, improving quality of human resources and ease of doing business has been achieved during the last five years, there has been no improvement in making the cost of electricity competitive.
At that time, the Management Association of the Philippines and other business groups, through the National Competitiveness Council (NCC) then headed by former Trade Secretary Cesar Bautista, suggested that the cost of power could be reduced by addressing four low-hanging fruits.
First was for open access to be started immediately to achieve a free-market competition environment that will encourage new private companies to participate in generation. (This, to this day, remains delayed.) Second, for the restructuring of the electric cooperatives to achieve good governance and more economic aggregation. (This part of the power industry remains problematic.) Third, for the high cost of fuels not to be further burdened with additional levies, taxes or royalties. (The scrapping of any tax though is hard to implement because of the current state of government finances.)
However, the country can focus straight away on the fourth proposal: a national energy conservation movement to be imposed by the government with the private sector as partner, and with clear metrics (for example, 10-percent savings in 18 months) and a clear system of “incentives” for those who save and “penalties” for those who do not. NCC noted that this was institutionalized by Energy Secretary Geronimo Z. Velasco during the Marcos years. It said Japan employed such a program during the Fukushima nuclear accident, achieving 19-percent savings quickly. The objective was to maximize the use of existing facilities by reducing wasteful consumption. This is the low-hanging fruit that the Aquino administration can address today to ease the burden caused by high electricity prices.
In the meantime, consumers can do a lot of other things to lower their electric bills. They can replace lighting with energy-saving bulbs that consume less energy and last much longer, retire inefficient and old appliances such as air-conditioning units and refrigerators, put skylights in their houses where possible, unplug electric items that are not being used, including laptop and mobile phone chargers.
Reducing wasteful consumption of electricity should begin at home.   source

Meralco net profit hits P16.3B

By Amy R. Remo
Philippine Daily Inquirer
Manila Electric Co. posted a 9-percent increase in its consolidated core net income to P16.3 billion last year from P14.9 billion in 2011 on the back of higher electricity sales.
In a briefing Monday, Meralco president Oscar S. Reyes reported that a 7-percent jump in the utility’s sales in terms of volume reflected the broad-based growth of the economy, fueled by the services, real estate and manufacturing sectors.
This was further supported by the bigger remittances sent home by some 10 million overseas Filipinos that fueled domestic consumption and, consequently, the growth in residential and commercial energy sales volume.
“This is another record year for Meralco in terms of sales, volume, operating performance and financial results,” Reyes said.
Meralco chief finance officer Betty Siy Yap added that the power firm’s consolidated net income rose 29 percent to P17 billion while consolidated revenues increased by 11 percent to P283 billion. Free cash as of end-2012 stood at P25.3 billion, according to Yap, while the company’s consolidated debt balance amounted to P24.6 billion.
Yap said Meralco planned to refinance roughly P14 billion to P15 billion of its debts within the second or third quarter of the year. The distribution firm is in discussions with local banks for refinancing deals with either a 5-, 7- or 10-year term.
“Our operating performance translated to record earnings and represented four consecutive years of increasing amount of dividends since 2009. While we face increasingly stringent regulatory policies, Meralco stayed focus on its effort to offer solutions to our growing customer base of more than five million,” noted Meralco chair Manuel V. Pangilinan.
Pangilinan declined to disclose a profit guidance for the year as they have yet to assess the impact of the upcoming elections on electricity sales.
“We were off to a good start with respect to the first two months of 2013, with energy sales up 3.9 percent in January and for February, a 2.8-percent increase in energy sales. We will wait for the first quarter results to better assess the full impact of the effect of elections on the economy and on the sales and profitability of Meralco in the first quarter,” Pangilinan explained.
“As we look into the remaining 10 months of this year, we continue to focus on delivering on our growth and profitability opportunities and expect core net income for 2013 to exceed 2012,” Pangilinan further said.   source

2 MGEN plants seen running by ’18

By Amy R. Remo
Philippine Daily Inquirer
Meralco PowerGen Corp., the power generation arm of distribution utility Manila Electric Co., is targeting to have two natural gas facilities up and running in five to six years, as it moves to help ensure adequate power supply in the Luzon grid.
In a briefing Monday, MGEN general manager Aaron Domingo said the company and its partners were scheduled to complete within the year various studies that would prove the feasibility of a natural gas-fired power plant in Atimonan, Quezon, and another 1,500-megawatt natural gas-fired plant in Tabangao, Batangas.
The Tabangao plant will be put up near the Department of Energy’s $2.1-billion Batangas-Manila natural gas pipeline, and the Shell Companies’ planned $1-billion regasification terminal.
MGEN and Japanese electric utilities provider Chubu Electric Power are teaming up for the Quezon LNG project, which will be designed to  generate between 1,200 MW and 1,750 MW of power by 2018.
“The technical and environmental site evaluation to determine the site’s suitability for the power plant and was completed in December 2012. The study indicated that the site was suitable for that purpose. The Grid Impact Study is being conducted by the National Grid Corp. of the Philippines to determine the optimal connection scheme for the project,” Domingo explained.
He added that the Environmental Impact Assessment of the Quezon LNG project was already completed and submitted to the Environment Management Bureau in December 2012. However, its environment compliance certificate has yet to be issued.
For its Batangas LNG project, Domingo said the company expected  the facility to be ready for commissioning  by 2019.
To recall, MGEN has executed last year an agreement with Shell to study the feasibility of locating a nominal 1,500-MW power plant at the site of the Shell refinery in Batangas. The MGEN plant would be fired on re-gasified LNG to be supplied by a floating storage and re-gas facility (“FSRU”) that Shell was planning to install in Batangas.   source

Meralco reports 29% profit hike in 2012

Business Mirror

Published on Monday, 25 February 2013 19:51
Written by Lenie Lectura / Reporter

HIGHER electricity sales and an improved economy lifted Manila Electric Co.’s (Meralco) reported net income by 29 percent to P17 billion last year.
Core profit, which excludes one-time exceptional charges, also rose to P16.3 billion in the same period from P14.9 billion or 9-percent higher. 
Meralco Chairman Manuel V. Pangilinan assured the company will deliver solid financial results through sound investments. “The full-year outlook with respect to 2013 will be ahead of 2012,” Pangilinan said, without giving profit target numbers for Meralco this year.  “We will better assess the full impact of effect of election on the economy and on sales and profitability for Meralco on its first-quarter results,” he added.
Revenues stood at P282 billion last year, an 11-percent increase year-on-year. The growth was mainly attributed to the 7.1-percent increase in the volume of energy sold last year, which reached 32,771 gigawatt-hours. 
Pangilinan said energy sales during the first two months of the year were encouraging. “This year, we were off to a good start with respect to the energy sales in January which was up by 3.9 percent and for February it’s trending toward a 2.8-percent increase in energy sales. Systems loss continues to be on the downward trend in the first two months.” 
The 12-month moving average for system loss rate last year was 7.04 percent, about 0.31-percent better than in 2011 and almost 1.5 percent better than the Energy Regulatory Commission-mandated cap of 8.5 percent. 
Meralco’s average distribution charge stood at P1.55 per kWh in 2012, P0.03 per kWh lower than 2011. By end-2012, Meralco customer count increased by 3 percent to almost 5.2 million. Residential customers comprised 91 percent of the total customer count. 
Meralco’s 2012 results, said President Oscar Reyes, reflected the broad-base growth of the economy, fueled by the service, real estate and manufacturing sectors. 
“We met record demand for electricity without any rise in distribution charges and managed to bring the system loss rate to record-low levels, passing on the resulting savings to our customers,” said Reyes.
He added that Meralco aims to sustain customer centric efforts with a commitment of a total capital expenditure (capex) of close to P13 billion in support of anticipated growth of the economy and continue to pursue operational efficiency and through cost management. In 2012 Meralco’s capex stood at P10.3 billion
Free cash flow as of end-2012 stood at P25.3 billion. Meralco’s liquid position has allowed it to refinance more effectively its debt at more favorable terms. 
Meralco’s debt as of end last year is at P24.6 billion. The utility firm plans to tap peso-denominated loan facility in the amount of P14 billion to P15 billion in the second or third quarter this year. 
The board approved a cash dividend of P6.10 per share to all shareholders of record as of March 26, payable on April 24. The final cash dividend includes a special dividend of P2.89 per share. Total payout represents 70 percent of the company’s 2012 core net income.   source

Biz Buzz: Energy shakeout

By the staff
Philippine Daily Inquirer
An organizational restructuring at the Department of Energy is apparently leaving some employees “demoralized to the point of wanting to resign.”
The latest movement was the appointment of a lawyer Rino E. Abad as director of Energy Resources Development Bureau (EDRB)—a move that, some disgruntled employees claimed, had sidelined longtime employees like ERDB assistant director Ismael Ocampo. What made matters worse was the Feb. 20 memorandum issued by Energy Secretary Carlos Jericho Petilla stating that Ocampo would be the new “In-Charge of Office” (ICO) for the ERDB, and named an alternate, Nenito Jariel Jr. The ICO title, it was alleged, refers to one in charge of mainly administrative work of signing attendance slips and leave forms.
Ocampo, a geologist who has worked with the DOE since 1979, confirmed by phone such realignment and the nature of his new work as ICO, further admitting to being demoralized. “Kami ang magtratrabaho. Sila ang tatanggap ng allowances (We are the ones working, but others will receive the allowances),” he said.
One informed observer noted that the appointment of Abad was made by the new DOE management without any consultation with the ERDB personnel, thus not taking into consideration the technical demands of the position. “The ERDB deals with upstream coal, oil, and gas operations, which can only be led by a person who has technical background and who has earned years of expertise in energy exploration, development and production,” the observer said.
The Inquirer sought to get Petilla’s side on the matter but repeated calls and texts were unanswered.
Another DOE employee said: “It would have been OK if [Abad was appointed] to a lower position, but they’re putting people in very sensitive positions—people who do not have a background at all in energy.”—Amy R. Remo   source

BDO says new guideline on RE developers unfair

 (The Philippine Star) 

MANILA, Philippines - The country’s leading lender has expressed concern over the Department of Energy (DOE)’s move to grant feed-in tariff (FIT) allocation only to those renewable energy (RE) developers that have completed putting up their power facilities.
BDO Unibank Inc. executive vice president Eduardo Francisco, who is also president of BDO Capital  & Investment Corp., said the DOE’s decision would put small RE developers at a disadvantageous position.
“It will be chicken or egg.  (It would be) unfair to RE developers as how can they put up power plants and get financing if there is no FIT,” he said, noting that only big RE firms would manage to put up their facilities without financial assistance from banks.
Francisco said most of the RE developers would definitely need something to back up their loans.
“Banks would look at financial feasibility and the FIT will be integral,” he said.
FIT is a guarantee for the investments made by renewable energy firms. It assigns fixed rates that could be collected from consumers over a period of 20 years.
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The BDO official said the FIT allocation is also a guarantee for the banks to collect payment from the RE developers.
“Banks might not release loans unless there is a FIT allocation,” he noted.
Energy Secretary Carlos Jericho Petilla had earlier said FIT allocation would be given to the first developers who can complete their projects.
Petilla was also earlier quoted as saying that the “definition of (project) completion is the first to commence commercial operation.”
Regulators want to put an installation target on RE utilization to balance power generation mix in the grid.
Since RE is quite expensive, the DOE does not want to put pressure on power rates if they would allow more RE in the grid.
Based on the approved installation targets of the DOE, only 250 megawatts (MW) would be installed for hydro projects; 250 MW for biomass; 200 MW for wind; 50 MW for solar and 10 MW for ocean technology.
The approved FIT rates for each specific renewable technology are: run of the river hydro (P5.90 per kilowatthour); biomass (P6.63 per kWh); wind (P 8.53 per kWh); and solar (P9.68 per kWh).   source