Meralco core profit rises 15%, prepares shift to clean energy

MANILA, Philippines — Manila Electric Co. (Meralco) expects to exceed the core net income it registered last year following “encouraging” results in the nine months to September.

The Meralco group is also looking to spend P180 billion over the next three decades for its energy transition to clean energy.

In a virtual briefing yesterday, Meralco CFO Betty Siy-Yap said consolidated core net income (CCNI) from January to September grew by 15 percent to P18.1 billion, driven by the combined effect of the six percent increase in energy sales volume with the easing of quarantine restrictions, and increased contribution from its different business units and subsidiaries.

Reported net income also jumped by 47 percent to P16.5 billion due to lower exceptional charges arising from the impairment recognized from the company’s investment in Pacific Light Power Ltd. in 2020.

Consolidated revenues were higher by 11 percent at P231.7 billion, mainly boosted by electricity revenues, which grew by 11 percent to P225.4 billion.

Non-electricity revenues, meanwhile, contributed P6.3 billion, a nine percent increase from the P5.8 billion reported in the same period last year.

Consolidated energy sales rose six percent to 34,398 gigawatt-hours as the commercial and industrial sectors recovered in the nine-month period following more flexible community quarantine restrictions, and sustained growth in the residential sector.

The industrial sector “grew strongly by 17 percent, returning to 2019 levels,” Meralco president Ray Espinosa said in the same briefing.

In terms of the sales mix, residential sales accounted for 37 percent, while commercial and industrial sales accounted for 33 percent and 30 percent, respectively.

For the company’s outlook, Meralco chairman Manuel Pangilinan said management expects 2021 results to be ahead of 2020 numbers.

“Our financial results through September are encouraging, and there is indication that we will exceed the CCNI achieved last year. The sudden but significant rise in fuel prices across the board–gas, coal and oil – which can impact generation margins, as well as the lingering effect of the pandemic remain key risks to our outlook for the fourth quarter,” Pangilinan said.

“We will nonetheless continue to be steadfast as we collectively learn to navigate this new normal and slowly mitigate the impact of both these adverse developments to lives and businesses,” he added.

Meralco has also charted its long-term sustainability agenda, rooted in the United Nations’ Sustainable Development Goals.

“As we do our share to keep our people and customers safe, we are also moving towards our goal of a more sustainable Meralco – one that protects the environment and powers good lives for all today, and for future generations,” Pangilinan said.

This long-term sustainability strategy and framework will be implemented in the next three decades, which will entail an investment of P180 billion, Espinosa said.

“We have a strategy for the orderly and affordable transition to cleaner energy. That, in our view, must take over three horizons, or three decades, all the way up to 2050. That includes basically ramping up our investments in renewable energy projects and then securing more RE sources by way of supply,” he said.

In the immediate term, Meralco is ramping up efforts to support and promote the country’s transition to electric vehicles (EVs) under its Green Mobility Program.

To shift its energy mix, Meralco is targeting to bid out 1,000 to 1,500 MW of RE generation in the next five years and build over 1,500 MW of RE capacity.

“Our senior management and sustainability committee have mapped out a strategy that will bring us closer to our commitments to build and contract over 1,500 MW of capacity from renewable energy sources, to spur electric mobility, and to use and promote Earth-friendly technologies,” Pangilinan said.

Meralco is planning to shift all its mid-merit capacity, which accounts for 29 percent of its total supply, to renewable energy.

“Our plan is to go full renewable with the mid-merit. That in our view is a huge commitment for Meralco,” Espinosa said.

In its latest Power Supply Procurement Plan submitted to the DOE, Meralco said it would subject to competitive selection process (CSP) a total of 3,850 MW starting this year until next year.

For purely RE contracts, the power utility is looking to bid out a total of 1,650 MW, broken down into 100-MW RE baseload and 850-MW mid-merit capacities in July this year, 500-MW mid-merit capacity in August and 200-MW RE baseload in January 2022.

The 100-MW RE baseload capacity is targeted to start supplying in March 2023 until February 2043 and the 200-MW RE baseload from March 2025 to February 2045.

Meanwhile, the two mid-merit RE capacities are targeted to supply from March 2026 to February 2046.