Stock News 2010: Meralco says customers to see lower bills

Image by Getty Images via @daylifeMANILA, Philippines - Troubled by a barrage of complaints over the sudden spike in electricity prices, Manila Electric Co. (Meralco) announced on Wednesday that its customers will heave a sigh of relief with a P1.26-per-kilowatt hour drop in the generation charge this month.
Meralco Utility Economics Head Ivanna dela Peña said the decrease was due to lower electricity costs from suppliers -- the Wholesale Electricity Spot Market (WESM) and independent power producers or IPPs.
Dela Peña said cost of power from WESM dropped by a hefty P4 to P7.36 per kWh for the supply month of April from P11.36 per kWh the previous month.
IPPs likewise registered a P1.24 per kWh downward adjustment over the same period as suppliers San Lorenzo and Sta. Rita plants reverted to the use of natural gas after using condensate fuel since the second week of February to early March.
Meralco bills last month showed the biggest increase in generation charge, which accounts for up to 60% of total electricity costs. The generation charge shot up by P0.93 to a record P6.7699 per KWh in April from P5.8417 per kWh in March. The April figure was equivalent to a 60% increase since the start of the year.
Meralco explained that the record-high power rates was due to the spike in demand for electricity this summer, when a number of power plants were undergoing maintenance.
Now that some of these plants have returned to normal operations, Meralco said the power supply deficiency in the past months has eased.
"With more plants running close to full capacity, there is more supply to cope with the demand, effectively bringing rates down," Meralco External Communications Manager Joe Zaldarriaga.
Zaldarriaga reiterated that the generation charge is a pass-through charge, and Meralco does not earn from it.
"The generation charge can move from month to month based on many factors beyond our control like fuel prices, working condition of the power plants and WESM prices, among others. Should there be adjustments in the generation charge, it is our duty to reflect these changes in the customers' bills, such as this month's reduction," he said.
"Meralco does not add any mark-up to the cost of electricity purchased from these electricity suppliers whether it is an upward or downward adjustment," he added.
http://www.abs-cbnnews.com/business/05/05/10/meralco-says-customers-see-lower-bills

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Stock News 2010: Meralco to pay dividends of 50% of core net

Image via WikipediaMANILA, Philippines - Manila Electric Co., the Philippines' largest power distributor, said on Tuesday its board of directors has approved a dividend payout equivalent to 50% of its core earnings compared with about 30% previously.
Meralco also said it was optimistic its core net income this year would be higher than 2009, but declined to give a specific forecast.
"Moving forward, it's better to have a consistent dividend policy," said Rafael Andrada, company treasurer. He added there was no formal policy previously though the company's prior cash dividends were around 30%.
Company chairman Manuel Lopez said in a statement the regular dividends could be supplemented by special dividends on a look-back basis.
Meralco reported net income of P6 billion in 2009, up 114% from 2008.
Core net income -- which takes out the effect of foreign exchange gains or losses, mark-to-market adjustments and provisions for possible refunds to customers -- climbed to P7 billion in 2009 from P2.61 billion a year earlier.
Manila Electric is partly owned by holding firm Metro Pacific Investments Corp. and its affiliate Pilipino Telephone Corp., and food-to-power conglomerate San Miguel Corp.
http://www.abs-cbnnews.com/business/02/23/10/meralco-pay-dividends-50-core-net

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Stock News 2010: Meralco profits more than double due to PBR scheme

Image via WikipediaPROFITS OF Manila Electric Co. (Meralco), the country’s largest power utility, more than doubled last year following an increase in distribution rates.
In a report to the stock exchange, Meralco said consolidated profits went up by 114% to P6 billion or P5.42 per share, from the prior year’s P2.8 billion.
Meralco said this was “attributable mainly to a slightly higher volume of energy sold and to an adjustment in distribution rates” implemented in May last year. The P0.257 per kilowatt-hour (kWh) hike in distribution charges came a month after the utility was allowed by the Energy Regulatory Commission (ERC) to adopt the performance-based regulation (PBR) scheme, retiring the eight-decade-old return-on-rate-base scheme.
The shift to the more profitable PBR coincided with the entry of new shareholders -- Philippine Long Distance Telephone (PLDT) Co. and Metro Pacific Investments Corp. as well as San Miguel Corp.
Under PBR, the electric utility may increase rates by meeting pre-set performance incentive schemes which is supposed to involve rewards and penalties that will force utilities to become more efficient. The previous cost-plus scheme pegged rates on historical costs plus a reasonable rate of return.
The company’s consolidated core net income, which excludes one-time exceptional charges, grew by 169% to P7 billion from P2.6 billion in 2008. Meralco has a policy of distributing half of core profits as dividends.
Consolidated revenues, which is 97% accounted for by electricity sales, dipped 3.6% due to an average decrease of P0.69/kWh in generation and transmission charges for 2009. This was, however, partially offset by an increase in power consumption and the higher distribution charge.
The May 2009 rate hike also pushed the company’s free cash flow up to P18.8 billion from just P500 million in 2008.
Meralco managed to pare down debts by P19.6 billion last year and refunded P1.8 billion to customers. The utility ended 2009 with a gross debt balance of P20.7 billion.
Manuel M. Lopez, company chairman, said 2009 saw “outstanding results” in profits, cash flows, debt profile and operating efficiency.
Meralco, together with 65%-owned subsidiary Clark Electric Distribution Corp., sold 27,516 gigawatt-hours last year, a 1.7% growth.
The system loss rate stood at 8.61%, below the cap of 9.5% of total output set by the ERC. This is a measure of how much power is lost in the distribution system from pilferage as well as technical limitations.
Analyst Fernando Y. Roxas of Eagle Equities, Inc. said it may be difficult for Meralco to top the 2009 performance this year.
“It’s a little better than expected, although it’s actually too high.
Utilities are not expected to grow this fast, except due to one-off gains. It might be hard for them to repeat the same level of growth this year,” Mr. Roxas said in a phone interview.
Mr. Roxas also said the recent Commission on Audit report on Meralco, which found about P7 billion in excess revenues for 2004 and 2007, may affect investor sentiment on the company.
Mr. Lopez, however, said in Meralco’s disclosure that the utility would not “hesitate to challenge any judgment and speculations on overcharging, which may raise undue public expectation of a refund.”
Analyst Astro C. del Castillo, managing director of First Grade Holdings, Inc., said Meralco’s 2009 performance reflected the company’s efficiency.
“It’s basically the performance of the company catching up with the new management. Despite the boardroom battles we’ve seen last year, the company was nevertheless expected to be efficient,” Mr. del Castillo said in a phone interview.
National Association of Electricity Consumers for Reform President Pete Ilagan said the profit increase of Meralco last year was “unreasonable” and came “at the expense of consumers.”
“They are now becoming very profit-oriented which is not in keeping with the principles of a public utility. They should immediately file for a rate reduction with the ERC,” Mr. Ilagan said in a phone interview.
From a P350-million net loss in 2005, Meralco posted P3.5 billion in earnings for 2006. This grew to P3.8 billion in 2007 and declined to P2.8 billion the year after due to regulators’ decision to disallow the recovery of generation and transmission charges.
Meralco shares went up by 1.84% to P163.00 apiece yesterday. The stock hit a record high of P302.50 last year amid the scramble for control between the PLDT group and San Miguel.
The Lopezes and PLDT have an alliance to fend off any hostile takeover.
Mediaquest Holdings, Inc., a subsidiary of the Beneficial Trust Fund of PLDT, has a minority stake in BusinessWorld.
Jose Bimbo F. Santos

February 23, 2010

http://www.bworld.com.ph/weekender/content.php?id=6780

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Stock News 2010: Meralco sees higher energy sales in 2010

Image via WikipediaMANILA, Philippines - Manila Electric Co. (Meralco) is expecting its energy sales to bounce back to pre-crisis levels this year, given its strong performance last month.
"Based on indications from our January sales, we have recovered to 2008 levels for all customer segments," Meralco president Jose de Jesus told reporters on Thursday. The company is set to release its official figures at the end of the month.
"Our sales almost correlates with the growth in the economy. There are signs that it could become positive," he added.
With this development, Meralco head for utility economics Ivanna dela Pena said they may raise their flat growth sales forecast for 2009. The company had projected a 3% growth for 2010.
"We would need to look at these new figures. We have to take into account the impact of El Nino because that is also a factor for our growth projection," dela Pena said.
http://www.abs-cbnnews.com/business/02/11/10/meralco-sees-higher-energy-sales-year

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