Meralco 2017 income rose 6% to P20.4 billion

By Lenie Lectura -  February 26, 2018

https://businessmirror.com.ph/meralco-2017-income-rose-6-to-p20-4-billion

THE Manila Electric Co. (Meralco) posted a net income of P20.4 billion in net income last year, up 6 percent from the previous year mainly due to higher electricity sales.

During the company’s operating and financial results briefing held on Monday afternoon, the utility firm said core income stood at P20.2 billion at end-2017, 3 percent higher than 2016’s P19.6 billion.

Last year’s revenue was 10 percent higher at P282.55 billion, from P257.18 billion in 2016. Of which, electricity revenues amounted to P275.2 billion, while the remaining P59.6 billion accounted for distribution revenue.

Meralco said 2017 proved to be another strong year in the commercial, operating and financial fronts.

“The year 2017 turned out to be another good year for Meralco,” Meralco President Oscar Reyes said. “For the first time in history, sales each month exceeded 3,000 gigawatt-hours [GWh], so that’s something that I think helped us generate record sales in 2017.”

Consolidated energy sales volumes for 2017 grew by 5 percent to 42,102 GWh, brought about by a growing customer base, positive economic conditions, stable power supply and low power-plant outages during the year.

This was underpinned by customer retail and networks initiatives to accelerate new customer acquisitions and energization, and to minimize distribution system interruption, according to Meralco.

Growth in sales volume for the first three months of the year could hit 5.5 percent, as January and February figures are trending at a 5.6-percent and 5.3-percent growth, respectively.

The year ended with a total of 6.3 million customer accounts. The year also saw no significant rate issues with the average retail price at P8.03 per kilowatt-hour (kWh) as of December 31, 2017, the second lowest since 2010, albeit higher than in 2016, due to higher fuel prices and depreciation of the peso versus the greenback, which drove generation charges up and to the higher feed-in-tariff allowance, which had been granted by the Energy Regulatory Commission (ERC).

The company’s capital expenditure in 2017 stood at P12.1 billion.

During the briefing, the issue on delayed power supply agreement (PSA) approval by the ERC was raised.

“Their approval with urgency is needed, even as the passage of time since their filling in 2016 has already caused significant increases in the engineering, procurement and construction (EPC) costs and financing costs of these new power plants,” Reyes said.

Meralco’s PSA applications cover a total of 3,551 megawatts (MW) with various generation companies.

These are with Redondo Peninsula Energy Inc., Saint Raphael Power Generation Corp., Atimonan One Energy Inc., Central Luzon Premiere Power Corp., Mariveles Power Generation Corp. of the San Miguel Group and Global Luzon Energy Development Corp. of Global Business Power Corp.

Meralco said a delay in the approval of these applications and the consequent delay in the financial close and, subsequently, the commercial operations date of the power projects, will adversely affect the utility firm’s ability to meet demand growth in its franchise and overall energy security in the Philippines.

“Our option is to continue to hope,” Reyes said.

Rogelio Singson, president of Meralco PowerGen, said the Atimonan power project is considered a “very high priority” because it is the single biggest investment so far at P153 billion or $3 billion, which can significantly increase foreign investment. PowerGen is Meralco’s power-generation arm.

“In terms of approval, everything is in place from financing, EPC, BOI [Board of Investments] approval, NGCP [National Grid Corp. of the Philippines] connection agreement, LGU [local government unit] support, O&M [operations and maintenance] venture; the only [thing] missing is the PSA,” Reyes said.

“Financing continues to escalate. In this case, our EPC can’t even commit to hold the price so we are now in serious discussion on how to hold onto our EPC contractor,” he added.

For now, all Meralco could do is to “continue to make our case and appeal for timely action and decision,” according to Reyes.

“These are PSA we entered into as early as April 2016. We’ve been through all necessary due process: we met all documentation, public hearings. We can’t stress [enough] that these are very critical plants that will assure energy security. We don’t think there is any valid reason for further delay,” he added.