Power retailer Manila Electric Co. said Monday net income in the first half fell 8.3 percent to P10.77 billion from P11.75 billion a year ago, in the absence of one-time gains and as lower prices of electricity weighed on revenues this year.
Meralco said core net income also went down by 10.8 percent in the first six months to P10.39 billion from P11.64 billion in the same period last year.
Consolidated revenues shrank 4 percent to P128.8 billion in the six-month period from P134 billion in the same period last year, pulled down by lower distribution charges and continuing decrease in pass through charges. Prices of coal and crude oil continued to decline.
Data, however, showed consolidated volume of energy sold in the first half increased 11 percent to 19,717 gigawatt-hours from 17,753 gWh sold in the same period last year.
Meralco said the 11-percent increase in sales volume helped mitigate the effect of the 9-percent decline in average distribution rate and lower first-half contribution from certain subsidiaries due to seasonal factors affecting businesses.
Meralco said the lower core and net income this year arose from the P800-million recovery from generation rate adjustment mechanism.
The Energy Regulatory Commission in a decision dated June 1, 2015 allowed Meralco to recover generation costs incurred from November 2003 to January 2004. The Gram recovery cost amounted to P746 million.
“Last year, we had a regulatory approval of the Gram, which provided an income. There was a one-off item in 2015 which wasn’t seen this year. We had the generation rate adjustment mechanism,” Meralco treasurer Betty Siy-Yap said.
Meanwhile, Meralco’s net income in the second quarter also dropped to P5.271 billion from P7.326 billion a year ago, while core net income declined to P5.298 billion from P7.225 billion.
Meralco president Oscar Reyes said the higher sales volume in the first half was led by the 16.7-percent rise in residential power demand.
Reyes said sales to residential customers grew on increased customer base, warmer temperature, lower inflation and lower electricity rates. Meralco’s customers stood at 5.9 million as of end June.
Commercial sales also increased 11 percent in the first half driven, by the real estate, retail trade and hotels and restaurants while industrial sales went up 6 percent as a result of higher demand from cement manufacturing, food and beverage and plastic and packaging industries.
Meralco spent P4.5 billion in capital expenditures in the first half. Electricity capital related projects amounted to P3.8 billion.
Completed projects in the period included the expansion of Masinag substation with the commissioning of the second 83-MVA power transformer, energization of Banawe GIS substation, development of Sitio Gitna 115 kV switching station, among others.
“Meralco is also keeping an eye on the energy industry policy and regulatory developments to ensure that markets are allowed to work with minimal intervention, and that customers continue to have the fullest freedom of choice as competition is maintained and fostered with least disruption of businesses,” Meralco chairman Manuel Pangilinan said.
Pangilinan said Meralco was also moving towards renewable energy development to complement baseload power development projects.
Meralco said it was also determined to pursue major investments in power generation through Meralco PowerGen Corp. to ensure that adequate capacity was ahead of power demand in the coming years.