Optimistic for Future Rate Reductions
Future Rate Reductions? Meralco is Optimistic With Next CSP Round
The country’s biggest power utility is hoping to ease customer burden during the pandemic.
By Cris Laraño
Published October 30, 2020
Meralco is optimistic that the next round of competitive selection process (CSP) would result in further reduction in electricity rates for consumers and businesses within its franchise area, which covers a major swathe of Luzon that accounts for over half of the Philippines’ gross domestic products.
The result of the first CSP has helped Meralco substantially bring down power rates this year to their lowest since September 2017. Average retail rate at the end of September stood at P8.04 per kilowatt hour, down 10.6 percent compared with P9.00/kWh in the same period in 2019.
The 2019 CSP covered six power supply contracts for a combined 1,700 megawatts in fresh capacity. Meralco estimated savings of P13.86 billion for consumers over the next decade.
Meralco president and chief executive officer Ray Espinosa said although it is still too early to tell whether the next CSP round scheduled for 2021 will mean further reductions in electricity rates, there is reason to be optimistic.
“Meralco is looking forward to generating savings based on the precedent set by the last CSP,” Espinosa told a virtual news conference held by the power utility to announce its financial and operating performance for the January-September period.
The next CSP will cover 1,800 MW of capacity and already nine power generation companies have offered a combined capacity of 3,600 MW. Included in this round of CSP is the 1,200 MW ultra supercritical coal-fired power plant in Atimonan, Quezon, which will be bid out in January. The Atimonan project is estimated to cost $3 billion.
Meantime, Meralco posted a 39 percent drop in reported net income to P11.25 billion for the nine-month period to September as gross revenue declined 11 percent year-on-year to P214.21 billion. Electricity sales declined 7 percent as a result of the community quarantine imposed by the government to slow down the spread of the COVID-19 pandemic.
Meralco chairman Manuel Pangilinan said the government’s decision to gradually reopen the economy is starting to show improvements in electricity sales, and four quarter power consumption should be better compared to the second and third quarters of 2020. He said, however, that core profit this year should still show an 11 percent decline to P21 billion compared to 2019.
Pangilinan said that although a formal review of the 2021 budget has yet to be undertaken, “we see a slightly more optimistic picture for 2021” and core profit should be an improvement than the P21 billion core profit forecast for this year.
Even with the adverse impact on the 2020 financials of the coronavirus pandemic, Pangilinan said the dividend payout this year will remain at 60 percent of last year’s earnings, or a total P13 billion.
To learn more, contact your Relationship Manager, call 16210 or email us at corporatepartners@meralco.com.ph.
Story originally posted on Power Club.