Meralco Net Income Gets 10% Amplification At PHP5.264B In Q1 2022

 Manila Electric Company (“Meralco”) today reported Consolidated Core Net Income (“CCNI”) in the first three months of the year rose by 10% to Pesos 5.624 billion from Pesos 5.1 billion in the same quarter last year, on the back of increased contribution from its power generation business and higher volumes of energy sold.

Photo Insert: In terms of the sales mix, residential sales accounted for 35%, while commercial and industrial sales accounted for 34% and 31%, respectively.

Core earnings per share amounted to Pesos 4.99, up by 10% over the comparative period last year. Reported net income meanwhile improved 28% to Pesos 5.564 billion from Pesos 4.3 billion with the adjustments made in 2021 in relation to the passing into law of the Corporate Recovery and Tax Incentives for Enterprises (“CREATE”) Act.

Consolidated revenues rose by 33% to Pesos 85.9 billion from Pesos 64.7 billion, as electricity revenues grew similarly by 33% to Pesos 83.3 billion from Pesos 62.5 billion, mainly due to higher pass‐through charges on account of the unprecedented increase in global fuel prices.

Meralco’s average retail rate increased by 14% to Pesos 8.89 per kWh from Pesos 7.82 per kWh as generation charges, which accounted for about 59% of the total retail rate, went up 21%. Transmission charges, comprising 9% of the retail rate, also increased by 9%.

The rate increase was mitigated by the Pesos 0.1064 per kWh average refund of distribution overrecoveries, which was implemented by Meralco following the order of the Energy Regulatory Commission (“ERC”) in March 2022. This refund was intended to expand its coverage to include the December 2020 to December 2021 period.

This is in addition to the Pesos 0.1528 per kWh refund of distribution over‐recoveries for the period July 2015 to November 2020, which is currently being implemented as ordered by the ERC in February 2021. With these, the average effective distribution rate charged to customers by Meralco was Pesos 1.33 per kWh for the first quarter of 2021.

Purchased power cost (“PPC”) increased 30% to Pesos 61.7 billion from Pesos 47.5 billion due to the higher cost of power caused by the spike in global fuel prices, as well as by the increase in the Wholesale Electricity Spot Market (“WESM”) prices as a result of tight supply conditions and higher average capacity on outage in Luzon.

The average Malampaya natural gas price also increased to US$8.71/GJ during the quarter versus US$6.26/GJ the previous year. The Malampaya gas supply restrictions, which began in March 2021, forced suppliers to use more expensive alternative fuel. The depreciation of the peso against the US dollar to Pesos 51.74 at the end of March this year from Pesos 48.53 as of end‐March last year also contributed to the higher PPC.

Meralco spent Pesos 6.0 billion for capital expenditures (“CAPEX”), of which 70% or Pesos 4.0 billion went to Networks CAPEX. The Networks CAPEX consisted of new connections, asset renewals, load growth projects, support for the government’s Build, Build, Build (“BBB”) program, and the Meralco Electrification Program (“MEP”).

Operating expenses (“OPEX”) went up by 16% to Pesos 8.2 billion mainly due to higher spending of subsidiaries, particularly Meralco Industrial Engineering Services Corporation (“MIESCOR”), CIS Bayad Center, Inc. (“Bayad”), and Radius Telecoms, Inc. (“Radius”), to support their growth.

Consolidated interest‐bearing debt stood at Pesos 86 billion, of which Pesos 33.9 billion are maturing within one (1) year. The total amount includes debt of subsidiaries of Pesos 45.3 billion.

Energy sales volumes recover across all segments; customer count nearing 7.5 million

Consolidated distribution utility energy sales volumes in the first quarter rose to 11,069 GWh from 10,473 GWh in the same three months last year following the easing of pandemic‐related restrictions and higher temperatures.

National Capital Region (“NCR”) and parts of Cavite, Laguna, Batangas, Rizal, and Quezon (“CALABARZON”) were placed under the least restrictive Alert Level 1 in March, driving power demand in Luzon that peaked at 11,654 MW on March 23, exceeding the actual peak demand in 2021. Meralco's peak demand for the first quarter of 2022 was at 7,816 MW, 10% higher than the previous year.

In terms of the sales mix, residential sales accounted for 35%, while commercial and industrial sales accounted for 34% and 31%, respectively.

While demand in the residential segment continued to normalize with increased mobility due to the higher vaccination rates, the continuing hybrid work arrangements and home‐based learning setup, as well as the relatively warmer temperatures pushed residential sales volume to grow 5% to 3,808 GWh from 3,616 GWh.

Commercial sales volumes likewise went up to 3,781 GWh from 3,560 GWh amid the increase in economic activities. Demand in the real estate and education sectors posted growth as schools began hybrid face‐to‐face classes. Full operation of the retail, restaurant, and hospitality sectors also contributed to the higher commercial sales volumes.

With the more relaxed restrictions, growth in industrial sales volumes was sustained, increasing to 3,443 GWh from 3,261 GWh. Growth mainly came from the semiconductor, cement, food and beverage, plastics, and chemical packaging industries.

Meanwhile, the consolidated customer count grew at a steady 4% to 7.46 million in end‐March from 7.21 million in the same period last year. Energization of new customers for both ordinary service and project‐covered applications recovered, as local government units and developers cleared backlogs and normalized operations.

Meralco’s 12‐month moving average (“12‐MMA”) system loss at end‐March was at 6.02%, a 0.12 percentage point improvement compared with 6.14% in 2021 as a result of sales approaching pre-pandemic mix and system loss management initiatives. Clark Electric Distribution Corporation’s 12MMA system loss was at 2.01% as of March 2022.

Meralco cautions that the ongoing Russia‐Ukraine conflict, along with the continuing effects of the pandemic, that has affected fuel prices, in particular, may have a significant impact on customer electricity consumption moving forward.

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