Meralco’s Q2 net income down to P5.271 billion

by Lenie LecturaJuly 25, 2016

from Business Mirror

THE Manila Electric Co.’s (Meralco) second-quarter net income this year declined to P5.271 billion, from P7.326 billion, dragging the utility firm’s first-half performance to P10.768 billion, from P11.747 billion.

Core profit in the second quarter was also down to P5.298 billion, from P7.225 billion in the same period last year. From January to June this year, Meralco’s core income dropped by 10.8 percent to P10.388 billion, from P11.747 billion.

Meralco CFO Betty Siy-Yap said there was an absence of a one-time gain approved by the regulators in June last year.

“Last year we had a regulatory approval of the GRAM [generation rate adjustment mechanism], which provided an income. There was a one-off item in 2015, which was not seen this year,” she said.

In June 2015 the Energy Regulatory Commission (ERC) allowed Meralco to recover generation costs incurred from November 2003 to January 2004, covering the second GRAM. This amounted to P746 million, plus carrying costs. The recovery was correspondingly reflected as a one-time adjustment in Meralco’s financial statements in 2015.

Meralco’s revenues also dipped 4 percent to P128.8 billion at end-June mainly on account of a lower distribution rate following the completion of the third regulatory period in June last year, continued decrease in pass-through charges, and higher availability of the company’s contracted power plants.

The distribution rate of Meralco for the first half of 2016 was at an average of P1.44 per kilowatt hour (kWh), compared with P1.59 per kWh for the same period in 2015.

The company anticipates a single-digit volume growth in the second half of 2016  “at circa 8 percent to 10 percent, absent destructive weather disturbances.”

Meralco said it would feel the full impact of a lower electricity distribution charge imposed by the regulators in July 2015.

“Considering the impact of the interim rate implemented since July 2015, we guide our full-year results to be around P19 billion,” Meralco Chairman Manuel V. Pangilinan said in a statement.

The ERC ordered Meralco to implement a lower distribution rate of P1.39 per kWh.

Meralco President Oscar Reyes said the company’s guidance numbers for the year could be altered after the conclusion of its third-quarter performance.

“Before we change our guidance, we would like to see what happens in the third quarter.  We are looking at the moment something in the order of P19 billion,” Reyes said.