Manila Electric Company (Meralco) Ended Q12024 with P10.1 Billion in Consolidated Core Net Income

The Consolidated Core Net Income (CCNI) of Manila Electric Company (Meralco) increased by 11% to P10.1 billion in the first three months of 2024 from P9.0 billion in the same quarter of the previous year. This increase was attributed to higher sales volumes in the distribution business as well as ongoing contributions from power generation, retail electricity supply (RES), and non-power-related businesses.

The distribution business contributed 58% of the total CCNI, or P5.8 billion; power generation brought in P2.7 billion, or 27%; and RES and non-power businesses got the remaining P1.5 billion, or 15%.

Consolidated Reported Net Income rose 19% to P9.6 billion from P8.1 billion. The difference between CCNI and Consolidated Reported Net Income is the accounting amortization of the "Day 1" gain adjustment, less foreign currency, and other non-recurring gains.

Core EPS was P8.946, up 11% from last year, while reported EPS climbed 19% to P8.514.
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Consolidated revenues were P104.5 billion, a slight decline from P105.6 billion in 2023, primarily due to lower pass-through charges and energy fees. This was due to a drop in prices at the Wholesale Electricity Spot Market (WESM), Malampaya gas, and international coal prices, as well as decreased plant availability at Global Business Power Corporation's (GBP) Cebu Energy Development Corporation's (CEDC) power plant.
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Meralco's average retail rate rose by less than 4%, to P10.78 per kWh from P10.41 per kWh, owing primarily to the completion of the distribution rate true-up (DRTU) rebate in May 2023. Meralco's average distribution rate was P1.47 per kWh, which is 58% more than the distribution charge net of the DRTU return in 2023. Without the DRTU reimbursement, the distribution charge increased by less than 1%.
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The generation charge, which accounted for approximately 63% of the overall retail rate, was reduced by 4%, while the transmission charge, which accounted for 8% of the retail rate, decreased by 3%. Subsidies and taxes increased by 14%, accounting for a combined 11% of total spending, due to higher effective taxes and universal charges.

Purchased power costs (PPC) fell 3% to P76.5 billion from P78.6 billion, in line with the fall in pass-through revenues due to lower fuel input costs.

Average WESM prices in the Meralco franchise area fell to P4.65 per kWh from P6.57 per kWh due to improved grid supply during the quarter, despite the fact that peak demand increased by 112 MW compared to the previous year due to decidedly warmer temperatures.

The average Malampaya natural gas price decreased to US$9.94 per GJ as of end-March 2024 versus US$10.08 per GJ a year ago as a result of lower oil indices. The Energy Regulatory Commission (ERC) issued a directive that prevented the implementation of higher Malampaya pricing under the new Gas Sale and Purchase Agreement (GSPA) of First Gas’ Sta. Rita plant with Prime Resources Development B.V., et.al., pending the relevant regulatory approvals. The new pricing would have increased the average Malampaya gas price by US$0.63 per GJ or an effective P0.09 per kWh on the average generation retail price to consumers.

The Newcastle (NEWC) coal index, on the other hand, decreased to an average of US$125.76 per MT from US$247.81 per MT during the same comparison periods.

During the first quarter of this year, Meralco invested P9.4 billion in capital expenditures (CAPEX), of which P4.99 billion went toward projects related to distribution networks, such as load expansion, asset renewals, and new connections. The remainder went toward funding MGreen's solar projects, building build-to-suit (BTS) towers, and purchasing an additional 154 communications towers from Globe by Miescor Infrastructure Development Corporation (MIDC).

​Operating expenses (OPEX) rose by 3% to P9.8 billion as a result of (i) increased line distribution facility maintenance in anticipation of the summer peak period and the rainy season; (ii) higher customer-related costs as a result of an increase in the number of customers, the resumption of annual bill deposit letter deliveries starting in December 2023, and the handling of customer payment delinquencies; and (iii) the inclusion of SPNEC expenses this year, subsequent to MGen's acquisition of a controlling stake in the latter part of 2003.
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P100.8 billion was the total amount of interest-bearing debt, which included P55.5 billion in subsidiary debt. The debt maturities of Meralco are evenly spaced out until 2037. At the end of the first quarter of 2024, net debt was P1.2 billion, with a net debt-to-EBITDA ratio of 0.02x.

“Meralco has set the pace in the first quarter of the year with the strong performance of our businesses, which we will strive to sustain throughout the year. Our growth prospects go beyond creating value for our shareholders. The opportunities we are pursuing are always anchored on the commitment to support economic development and contribute to uplifting the lives and welfare of more Filipinos,” Meralco Chairman and Chief Executive Officer Manuel V. Pangilinan said. 

“As we continue to deliver stable and reliable service to our customers, we reiterate our pursuit to bring in projects of scale that will boost available generation capacity which we direly need to ensure not just the immediate, but the long-term energy security of the country. This year, along with our partner and in close coordination with the Government, we hope to proceed with the full feasibility study on the possible adoption of nuclear energy. Similarly, we will endeavor to implement more sustainable initiatives to cater to more underserved communities in the country. Given the foregoing, Meralco’s CCNI for the full year is expected to reach over Pesos 40.0 billion,” Mr. Pangilinan added.

Meralco is the largest private sector electric distribution utility company in the Philippines covering 39 cities and 72 municipalities. Its franchise area of over 9,685 km2 is just 3% of the total land area of the Philippines, but accounts for 55% of the country’s electricity output.