Keeping the Lights On is Priority
"The three most consequential matters during this time are our people, keeping the lights on for our customers, and helping our government to respond to COVID-19," says the Meralco chairman.
Keeping The Lights On Will Always Be Meralco’s Top Priority, Says MVP
Profitability will have to take a back seat for the power utility.
by Meralco Power Club
Meralco remains guardedly optimistic of its prospects for 2020. The power utility sees early signs of economic recovery following the government’s gradual lifting of the community quarantine imposed to contain the spread of the COVID-19 pandemic.
Consolidated core net income, or CCNI, declined 14% year-on-year to P10.6 billion in the January-June period while reported net income was down 43% to P6.84 billion as sales declined with business closures following quarantine imposition starting mid-March.
But in a time of a crisis, Meralco Chairman Manuel V. Pangilinan pointed out that profitability will have to take a back seat.
“The three most consequential matters during this time are our people, keeping the lights on for our customers, and helping our government to respond to COVID-19,” Pangilinan said in a statement to announce Meralco’s first-half performance.”
Victor S. Genuino, Meralco First Vice President and Head of Customer Retail Services and Corporate Communications, told a virtual news conference that electricity sales had started to normalize in June while energization of projects and ordinary service applications had shown steady recovery.
“We’re starting to see some life in service applications with project covered and ordinary service applications are up by 43% and 200% respectively versus May,” he added.
Capital expenditures in the first half is down 36% year on year to P6.86 billion as work restrictions because of the lockdown slowed project completions. Also delayed by the quarantine is the completion of the 50-megawatt solar farm project of PowerSource First Bulacan Solar, Inc. (PFBSI), which should have been completed in the third quarter. MGEN Renewable Energy (MGreen) Inc., a subsidiary of Meralco PowerGen Corporation, has a 43% stake in PFBSI.
The Philippines' largest power distributor, whose franchise area accounts for over half of the country’s gross domestic products, has also endeavored to ease the burden on customers’ pockets.
Since June last year, Meralco has reduced systems loss charge by 1.34 percentage points below the 7.25% cap set by government, and continued to find ways to trim average retail rate by P1.06 per kWh—from P9.25 per kWh in the first half of 2019 to P8.19 per kWh.
Generation charge was also down 17% as Meralco signed new power supply deals, saw lower prices in power spot market, and invoked force majeure claims during the community quarantine. As a result, Meralco’s overall rate in July is the lowest since September 2017.
Meralco President and CEO, Atty. Ray C. Espinosa, said the pain brought by the global pandemic, including most of the power distributor’s nearly seven million customers, will likely be felt for some time. That is why, he said, Meralco relaxed customer credit even as the company remains mindful of its obligations to power suppliers and stakeholders.
Meralco Chief Finance Officer Betty Siy-Yap said even as the company sets aside a provision for collectibles from customers, it has started paying power suppliers in full starting June. She also said Meralco declared first-half cash dividend of P4.697 a share, albeit lower than the P5.464 in the same period of 2019.
Pangilinan said it is essential a vaccine is developed for the economy to fully recover. Even so, Pangilinan thinks a recovery would only begin in early 2021 and will likely take the form of a “Nike swoosh” rather than V or U shape.
Pangilinan emphasizes that recovery would only begin in early 2021
“We are moving with caution but remain positive that a recovery is in the offing. While it is difficult to give a firm indication of 2020 performance, based on our outlook for the rest of the year, we expect our full year 2020 CCNI to be in the area of P21 billion,” Pangilinan said in the same statement.
Espinosa said Meralco is also making sure that for the rest of 2020, the power distributor is ready to enable businesses, both large and small, to bounce back.
“We are looking at their requirements and ensuring that we are ready to energize them when and as needed. We are in constant communication with our regulators on automation, digital transformation and a more responsive service. Policies and rules are also being updated to respond to the needs and requirements of the times,” he added.
To learn more, contact your Relationship Manager, call 16210 or email us at corporatepartners@meralco.com.ph.
Story originally posted on Power Club.