by Business World


THE Manila Electric Co. (Meralco) on Monday reported a 2.1% growth in core net income in the first quarter to P5.72 billion as energy sales proved strong amid the global coronavirus disease 2019 (COVID-19) pandemic.

This came despite a 7.1% drop in the listed utility’s gross revenues to P70.03 billion in the January-March period, compared with the P75.38 billion recorded in the same period in 2019.

In a virtual briefing, the country’s biggest distribution utility said its electricity revenues, which make up 97% of its total revenues, decreased to P67.91 billion, compared with P73.63 billion in the preceding year.

According to Betty C. Siy-Yap, Meralco’s senior vice-president and chief financial officer, the lower share of generation and transmission pass-thru charges in the electricity revenues was “mainly due to the decrease in WESM (Wholesale Electricity Spot Market) prices driven by the improved supply condition in the Luzon grid, lower generation charges after implementing the new PSAs (power supply agreements) starting Dec 26, 2019, and lower fuel costs throughout the first quarter of 2020.”

“Distribution revenue grew by 9% to P15.6 billion reflecting the impact of higher volumes distributed, including the sales mix,” she added.

Recently, Meralco invoked a force majeure provision in their power supply contracts which brought down generation costs for its customers.

The lowered revenue came as its energy sales went up 4.8% to 10,879 gigawatt-hours (GwH), of which around 10% or 1,117 GwH was estimated beginning March 17 when it postponed the meter reading for their customers’ bills upon the implementation of the enhanced community quarantine (ECQ) to contain the spread of COVID-19.

Industrial sales volume decreased over 2%, lagging behind the other two segments, residential and commercial, which recorded a growth of 12% and 5%, respectively.

In the March billing period, about 33% of the utility’s energy sales were estimated based on consumers’ electricity consumption from the past three months.

Meralco added over 251,000 customers in the quarter, mostly from its residential business, to 6.93 million customers in total.

Further, its reported net income in the quarter was at P2.62 billion, lower by 53.8% compared to P5.67 billion in the same quarter last year, attributed to its share in the impaired investment of P2.7 billion in Singapore-based PacificLight Power Pte Ltd.

As the power utility attended to both power restoration activities during the Taal Volcano eruption in January and the ECQ from March 15, which “severely limited the deployment of people and transport of materials and equipment” for its fixed-asset projects, the company only utilized P4.2 billion of its total capital expenditure in the first quarter, according to Ms. Siy-Yap.

On April 11 and 20, the utility resumed its meter reading. It announced that it will reopen most of its business centers on May 4.

Meralco Chairman Manuel V. Pangilinan, who is also present at the virtual briefing, said he is expecting a continued earnings decline by the second quarter.

“So far, what we are experiencing for the April month is a decline in our volume, and that’s likely to hold for the entire second quarter. With the lower volumes and lowered revenues, it is likely that the second-quarter results will come in below the first-quarter results,” he said.

Despite this, Mr. Pangilinan said in a separate statement: “[W]e remain optimistic that we will see a recovery in the overall business environment starting the second half of 2020.”

Meanwhile, Meralco PowerGen Corp. (MGen) President and Chief Executive Officer Rogelio L. Singson reported that site preparation activities of the ultra-supercritical coal-fired power plant was suspended due to the ECQ. The plant has two units, each with an identical capacity of 600 megawatts (MW) under MGen’s wholly owned subsidiary Atimonan One Energy, Inc.

Mr. Singson also said that the suspension of the site works at the 50-MW solar project by PowerSource First Bulacan Solar, Inc. in San Miguel, Bulacan would cause at least two months of delay before it can commercially operate. The renewables plant was expected to run by the end-2020.

On Monday, shares in Meralco slipped by 1.56% to close at P252 each.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.