Manila Electric Company

Meralco posts 5% electricity sales in first 9 months

THE Manila Electric Co. (Meralco) recorded a 5-percent increase in electricity sales from January to September this year as against the same period a year ago.

Meralco Senior Vice President Alfredo Panlilio said on Monday the utility firm sold 32,530 gigawatt-hours at end-September this year, up 5 percent from last year.

He attributed the growth in electricity sales to the company’s “strong first-half” results, which posed a 14-percent increase in earnings to P11.97 billion at end-June this year.

From January to June this year, electricity sales went up by 6.5 percent to 21,665 GW.

Meralco Chairman Manuel V. Pangilinan said 2018 is going to be “a better year than 2017.”

“So far, apart from economic conditions, there’s no reason Meralco should not perform better,” Pangilinan had said.

Pangilinan noted that during the second half of the year, the economy continues to expand, boosted by strong consumer spending and the growth in the service industry, and even the industrial sectors. Also, the ramping up of government infrastructure projects is expected to further lift the country’s growth prospects.

“Consumer wallets continue to expand as money sent home by overseas Filipinos continue to grow, as well as from employment generated by BPOs and POGOs. These have continued to drive the growth of commercial and residential-energy sales volumes. However, economic headwinds from higher fuel and commodity prices, higher exchange and interest rates, and inflation remind us to remain vigilant and cautious about our own growth targets, investments and spending,” he said.

The utility firm also registered 6.5 million customers by end-June, almost five percent higher, as new connections across all customer classes increased by 294,000 year-on-year.



Meralco vying to supply power to BCDA

THE Manila Electric Co. (Meralco) is one of two shortlisted entities vying for a contact to supply power to the Bases Conversion and Development Authority (BCDA).

“I think there are two. Very stringent ang requirements nila,” said Meralco President Oscar Reyes, who was referring to BCDA.

He did not identify the other shortlisted firm. It had been reported though that AboitizPower earlier submitted a bid to provide electricity to New Clark City, envisioned to be Asia’s premiere economic hub.

Reyes did not reveal the supply requirement of BCDA, saying “Meralco is still studying what the potential is,” nor did he say how much investment Meralco will shell out if it is chosen by BCDA.

BCDA said last month it would soon award the maintenance and operating contracts to the water and power-distribution utilities in New Clark City.

It earlier identified Maynilad, Manila Water and Prime Water as the three qualified bidders for the water- and wastewater-distribution facilities, while at least four companies have expressed interest back then to bid for the electric-power distribution system.

The 9,450-hectare New Clark City, located within the Clark special economic zone that spans Angeles City in Pampanga and the towns of Capas and Bamban in Tarlac, is the country’s first smart, disaster-resilient and sustainable city.

The first phase of the development covering 60 hectares features the National Government Administrative Center that will house backup offices of various government agencies and a world-class sports complex now being constructed in time for the 2019 Southeast Asian Games.

The new metropolis will also have mixed-use residential, commercial, agro-industrial, educational institutions and information-technology developments.



...ito lang yata ang solid na Blue Chip sa ngayon Smile

Meralco core profit up 11% in Q3

MANILA Electric Co. (Meralco) reported a core net income of P5.84 billion in the third quarter, up 11.2% year-on-year, but lower than the second quarter as revenues slowed in part because of the cooler temperature.

Reported net income, which includes one-off items, reached P6.24 billion during the third quarter, higher by nearly 15% from P5.43 billion a year ago.

“It’s looking good, I mean based on the nine-months results,” said Meralco Chairman Manuel V. Pangilinan during the distribution utility’s quarterly media briefing to present its operating and financial results. “I think the full year [will be] another historic number for Meralco.”

In the nine months to September, Meralco reported a core net income of P16.69 billion, higher by 8.6% from P15.37 billion a year ago. Reported profit rose 14.3% to P18.21 billion from P15.93 billion previously.

Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, said consolidated gross revenues reached P227.41 billion, or 6% higher compared with the previous year’s P214.39 billion.

“Electric revenues amounted to P221.3 billion, higher by 6% over the comparative period [in 2017] due to significantly higher generation charges resulting from the combined effects of increased prices of coal, oil and gas, and the further weakening of the Philippine peso versus the US dollar,” she said.

Ms. Siy-Yap added that non-electric revenues was at P6.1 billion, up 11% compared with the level a year ago, and represents about 3% of the total consolidated revenues for the period.

Among customer classes, industrial consumers recorded the biggest growth in terms of energy sales at 7.3% followed by commercial at 4.5% and residential at 3%.

Oscar S. Reyes, Meralco president and chief executive officer, said as of the third quarter the company recorded a customer base of 6.542 million, an increase of 4.7% from 6.252 million a year earlier.

“We are seeing continued healthy growth in our customer count,” he said.

In terms of customer count, residential consumers recorded the biggest growth of 4.8%, followed by commercial with 2.8%, and industrial at 2%.

Residential customers at 6.017 million, accounted for 92% of Meralco’s client base.

Mr. Reyes said sales volumes, net system input and peak demand within the Meralco franchise area grew by 5%, 4% and 6%, respectively.

Sales volume reached 32,921 gigawatt-hours (GWh), net system input was at 34,815 GWh, while peak demand hit 7,399 megawatts (MW) registered on May 23, 2018, which compares with Luzon’s peak demand of 10,876 MW recorded on May 28, 2018.

In a statement issued during the briefing, Mr. Pangilinan was quoted as saying: “The major driver of growth for Meralco continues to be our core distribution business, with volumes from real estate-related businesses, including the Philippine Online Gaming Operators [or POGO], having provided the uplift for the Commercial sector.”

He noted the third quarter, “which historically generated the strongest volumes in any operating year, managed to remain relatively good, albeit affected by adverse macroeconomic factors and weather disturbances.”



Meralco unit, Korea partner to bring new rail technology to the Philippines

MANILA, Philippines — MRAIL Inc., a subsidiary of power distribution giant Manila Electric Co., is teaming up with Seoul Metro to bring the latest technology to the country’s railway system.

MRAIL said it was appointed by Seoul Metro to exclusively introduce the ballast to slab (B2S) track conversion solution to the Philippine railway system.

The B2S replaces ballast tracks with concrete slab tracks which, according to MRAIL, is proven to enhance safety and minimize rail defects.

The system is also expected to increase the service cycle of rails which will lead to improved passenger experience.

Seoul Metro, the O&M of the Seoul Metro system, pioneered in 2012 a new system of converting its ballasted tracks to slab tracks without disrupting revenue operations on its existing lines.

The system proved to be a game changer to the metro systems as it eliminated the periodic maintenance activities for the ballasted tracks as well as the systematic replacements of ballasts.

The innovation generated huge savings in operation for Seoul Metro and increased its train operations efficiency as train vibrations were significantly reduced.

Today, MRAIL said Seoul Metro is migrating all its ballasted tracks to the slab track configuration.

MRAIL, whose main focus is to support the Philippine railway industry, seeks to be a leader in rail transport by providing safe, reliable, innovative and world-class services.

Through a joint-venture, Meralco established in 2009 MIESCORRAIL, which was tasked to design, build, and improve various railway systems in the country. MIESCORRAIL was changed to MRAIL in 2015.



Meralco Powergen in ‘serious’ talks with renewable energy developers

MERALCO POWERGEN CORP. (MGen) is in “serious” discussions with renewable energy developers to buy into existing projects, including a wind farm with an existing feed-in tariff (FiT) contract with the government, as it trains its sights into clean energy projects.

“Meron na kaming (We have) serious discussions with some developers and we’re also looking at some greenfield [projects] na kami mismo ang magde-develop (that we ourselves will develop),” said Rogelio L. Singson, MGen president and chief executive officer, in a chance interview last week.

Aside from MGen’s long-delayed Atimonan coal-fired power plant project, the company’s focus now is on renewable energy development.

“I don’t think any of the parties we’re talking to have any of the FiT. Kung meron man (If there is one) it’s with the wind project that we’re talking to na may feed-in-tariff,” Mr. Singson said.

Asked about the capacity of the wind farm with an existing FiT, Mr. Singson said: “If I’m not mistaken mga (around) 100 [megawatts]).”

He added that only one project has a secured FiT, or the government scheme to encourage the development of renewable energy by awarding a fixed rate for the power they produce for 20 years.

He declined to name the developers with which the company has ongoing talks, except that their projects are all in Luzon. MGen will be buying into existing projects, he added, without disclosing whether it would take a controlling interest.

“We’re not at this point looking outside Luzon,” he said. “We’re talking to a few developers who are interested in tying up with MGen.”

MGen, a unit of Manila Electric Co. (Meralco), is leading the development of three power plants — all coal-fired — either on its own or in partnership with other entities.

Its unit Atimonan One Energy, Inc. (A1E) is building a two-unit ultra supercritical coal-fired power plant, each with a capacity of 600-MW in Atimonan, Quezon.

A1E’s power supply agreement with distribution utility Meralco was submitted to the ERC in April 2016 and had gone through public hearings, technical working group review and assessment of the tariff.

Another unit, San Buenaventura Power Ltd. Co., is constructing a 455-MW facility in Mauban, Quezon province. It will be the country’s first supercritical coal-fired power plant. The plant was targeted to be completed in mid-2019.

The third project, a coal-fired power plant under Redondo Peninsula Energy, Inc., has two units, each with a capacity of 300 MW using the circulating fluidized bed technology.

In May, Mr. Singson said MGen was targeting renewable energy (RE) to account for at least 20% of the company’s attributable capacity in the coming years. He said placed a target RE capacity of between 500 MW and 600 MW in the next three to four years.

He had said solar has a “very strong potential” in Luzon amid a tighter window for coal-fired power plants. At that time, he said the company was looking at some of the stranded solar farms that failed to make it to the government’s FiT scheme.



...I think temporary lang yan, babalik ulit sa high demand yan

Meralco expects electricity demand to ease in 2019

MANILA Electric Co. (Meralco) expects demand for electricity to ease in 2019 as the year follows two straight years of higher base when relevant economic indicators are relatively tamer, the distribution utility’s top official said.

Oscar S. Reyes, Meralco president and chief executive officer, said aside from temperature, which results in a spike in the consumption of electricity, there was greater “liquidity” this year and in the previous year.

“There was a lot of liquidity, but now interest rates are higher, inflation is higher, exchange rates are higher. Those will impact [not only] on demand for electricity but they will [also] reflect on demand for products and services,” he told reporters last week.

Mr. Reyes said demand for electricity is expected to grow by 4.5% to 5% this year, which is the high base that 2019 will follow.

“We’ll probably end this year at about 4.5 to 5%. I think we have to see what the final November and December figures are, but call it 4.5% to 5% growth for this year,” he said.

Because of that growth, “we expect slightly better bottom line” at Meralco in 2018, he said, without disclosing numbers.

For full-year 2017, Meralco recorded a 3% rise in core net income to P20.2 billion, before exceptional items. Reported net income was up 6% to P20.38 billion.

In the nine months to September this year, Meralco reported a core net income of P16.69 billion, higher by 8.6% from P15.37 billion a year ago. Reported profit rose 14.3% to P18.21 billion from P15.93 billion previously.

Mr. Reyes said next year’s demand growth expectations would also be affected by developments in technology and in the industry.

“I think we have to recognize that there are a number of developments that are happening. Number one, energy efficiency continues to grow because of available devices, because of technology,” he said.

Energy efficiency is one of the reasons why the elasticity of demand growth of electricity compared to the growth of the country’s gross domestic product (GDP) has been declining, Mr. Reyes said.

“Now we are doing about 0.75% growth in electricity for every 1% growth in GDP,” the Meralco CEO said, comparing the figures with those in the late 1990s at 1.3% to 1%, respectively.

“That’s good because consumers are able to save, even thought that means less volume for us. I think for us whatever is good for the consumer will in the end be good for Meralco,” Mr. Reyes added.

Mr. Reyes said the adoption of more solar rooftops for residential, commercial and industrial customers “will mean that they will be getting less from the grid and effectively generating their own.”

“So these are headwinds that will potentially mean that the growth in electricity may decelerate plus further adoption of battery technology, energy storage,” he said.



Meralco eyes partnerships with electric vehicle makers

MANILA ELECTRIC Co. (Meralco) is considering a partnership with makers of electric vehicles as it aims for wider adoption of the environment-friendly mode of transportation in the Philippines, company officials said.

“Hindi lang namin alam (We still don’t know) which arm of Meralco will do that,” Meralco Chairman Manuel V. Pangilinan told reporters last week.

Asked about which segment of the e-vehicle business that Meralco was planning to be part of, he said: “Probably assembly.”

Alfredo S. Panlilio, Meralco senior vice-president, confirmed that Mr. Pangilinan brought up the idea when he was riding one of the eJeeps that the group launched on Friday.

“That’s the next step siguro (maybe). And I think our chairman, MVP (Mr. Pangilinan), when we’re in the [electric] vehicle when we toured around, [said] we wanted to explore some form of cooperation with people like Star 8, but we haven’t started those discussions,” he said.

Star 8 is the assembler of the 15 eJeeps that Meralco unit eSakay, Inc. presented to the public. Of these numbers, five have started plying the route from Buendia-MRT station to the Mandaluyong City Hall on Dec. 17, 2018.

“I think what MVP and the group were thinking, is really how do you propagate electric vehicles. The key to that is supply, and then the supply of these types of vehicles,” said Mr. Panlilio, who is also chairman of eSakay.

He said Star 8 is led by an Israeli national who has small assembly plants in the Philippines. He added that parts that go into making the eJeeps were made and imported from China.

“Obviously China is building a lot. So Star 8 could be one partner but we obviously know that there a lot more suppliers out of China,” Mr. Panlilio said.

The officials said e-vehicles would be complementary business to Meralco, which is the country’s biggest power distribution utility with around 6.5 million customers.

The eJeeps of eSakay are fully electric, emission-free, and compliant with the government’s public utility vehicle innovations for convenience and safety. The vehicles are equipped with side entrances, onboard Wifi and USB ports.

Although the fare for eJeeps rides is paid in cash, it will eventually be under an automated fare collection system. The vehicles also has GPS tracking system and CCTV cameras. The service will also have priority seating for senior citizens and persons with disabilities.

Mr. Panlilio said eSakay had invested close to P2 million for each of its eJeeps.



...bad for consumers, good for MERalco  Angry

Power plant outages to push Meralco rates higher in February

MANILA ELECTRIC Co. (Meralco) expects electricity rates to rise in February in part because of the power plant outages in the latter part of January, which resulted in an increase in the power prices at the spot market, an official of the company said.

“During the second half of January, there were many power plants on outage,” Lawrence S. Fernandez, Meralco vice-president and head of utility economics, told reporters after a Senate hearing on Monday.

“More than 3,300 megawatts of capacity went on outage, both forced outage and due to scheduled outages,” he added.

Mr. Fernandez said the power plant that went offline triggered a rise in the prices at the wholesale electricity spot market.

“Tumaas ‘yung spot market prices during the second half of January. That might also affect the generation charge in February,” Mr. Fernandez said.

He also said that as in the past two to three years, the reduction in the generation charge in January prompted a “normalization” in February. He noted prices in January reflected the reduced capacity fees for the outage allowance reconciliation for the power supply agreements (PSA).

“If power plants do not use their outage allowance for the year, then by December they charge us lower or with no capacity fees. And that leads to the lower generation charge in January,” Mr. Fernandez said.

“Since we have a new calendar year starting January, then the capacity fees go back to normal. And that will be reflected in the January generation charge,” he added.

In January, Meralco announced a decrease in the overall electricity rates to P9.835 per kilowatt-hour (/kWh), down P0.3418 per kWh from the rate in the earlier month, mainly due to the lower cost of power from its PSA.

The generation charge for January went down to P4.9119 per kWh, a decrease of P0.4184 per kWh from P5.3303 per kWh in December.

The decrease is largely the result of a P1.2293-per-kWh reduction in the cost of power from Meralco’s PSAs, the share of which was at 40% of the utility’s requirement for January.



Meralco-led consortium to supply power to New Clark City

MANILA Electric Co. (Meralco) has received the notice of award from the Bases Conversion and Development Authority (BCDA) for power distribution in New Clark City, an official of the company said.

“We received notice of award,” Lawrence S. Fernandez, Meralco vice-president and head of utility economics, told reporters. “We’re going to comply with those conditions precedents so we can already sign the joint venture agreement.”

Mr. Fernandez said the award was given on Jan. 18. BCDA aims to transform New Clark City into the country’s first smart and green metropolis.

“The next milestone is signing of joint venture agreement but we have to submit other documents to the BCDA. We’re compiling those, along with our consortium partners,” he said. “Our commitment is to provide service in time for the SEA (Southeast Asian) Games.”

In December last year, BCDA said the Meralco-led consortium offered the lowest power distribution rate for New Clark City. The consortium, which includes Marubeni Corp., Kansai Electric Power Co., Inc., and Chubu Electric Power Co., Inc., submitted a tariff bid of P0.6188 per kilowatt-hour (kWh).

The rate is lower than the P0.9888/kWh proposal put forward by the Aboitiz-KEPCO consortium of Olongapo Energy Corp. Both bids were below the P1.25/kWh tariff limit set by BCDA.

The first phase of the New Clark City development covers the construction of the so-called National Government Administrative Center and sports facilities, which will host the SEA Games this year.

Meanwhile, Meralco’s pending advanced metering infrastructure (AMI) application is undergoing further scrutiny from the Energy Regulatory Commission (ERC) to minimize its impact to consumers.

In a statement, ERC said it was conducting “further study pertinent to the smart meters for the AMI” considering that its initial calculations showed an average rate adjustment of P0.2309/kWh will be added to consumers’ electric meters if the smart meters will be shared by all Meralco customers.

ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said the average rate adjustment would be P0.3972/kWh if the meters are charged only to Meralco’s bulk customers.

Meralco filed its application for approval of its AMI project with the ERC in March 2017. It included the smart meters and other devices and systems necessary to implement the project in its application for capital expenditures in April 2017.

“We welcome these state-of-the-art technologies that will help consumers manage their electricity consumption. However, we must see to it that the installation of [AMI] should not adversely affect the consumers in terms of paying higher electricity rates,” Ms. Devanadera said.



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