MANILA, Philippines, February 27, 2023 – Manila Electric Company (“Meralco”) today reported that Consolidated Core Net Income (“CCNI”) for the year ended December 31, 2022, rose by 10% to Pesos 27.1 billion from Pesos 24.6 billion in 2021 as energy sales volumes exceeded pre-pandemic levels and the power generation business booked significant earnings from its gas-fired power plant in Singapore.

Consolidated Reported Net Income meanwhile increased by 21% to Pesos 28.4 billion from Pesos
23.5 billion in 2021. Core earnings per share amounted to Pesos 24.05, up by 10% versus last year,
while reported earnings per share increased by 21% to Pesos 25.23.

Consolidated revenues were at Pesos 426.5 billion, 34% higher than Pesos 318.5 billion in 2021 mainly due to higher pass-through charges.

Meralco’s average retail rate increased by 16% to Pesos 9.52 per kWh from Pesos 8.24 per kWh due to higher pass-through charges with persisting increases in global fuel prices, higher spot market prices, and peso depreciation. Generation charge, which accounted for about 66% of the total retail rate, went up by 32%; while transmission charge, comprising 9% of the retail rate, increased by 19%. With a 10% share in the total retail rate, subsidies and taxes climbed by 11%.

On the other hand, Meralco’s average distribution charge of Peso 0.85 per kWh, which accounted for 9% of the retail rate, dropped by 41% following the implementation of DRTU refunds which averaged Peso 0.67 per kWh during the year. Of the Pesos 48.3 billion total DRTU refunds ordered by the ERC, Pesos 38.8 billion or 81% have already been refunded to customers as of end-December. The entire refund amount is expected to be settled by May 2023.

Purchased power cost (“PPC”) increased by 43% to Pesos 322.6 billion from Pesos 224.9 billion reflecting the unprecedented upward movements in prices of fuel supply sources. At endDecember, the Newcastle (“NEWC”) coal index rose to an average of US$ 360.2 per MT versus US$ 137.3 per MT in 2021.

The average Malampaya natural gas price meanwhile increased to US$ 10.18 per GJ last year versus US$ 7.50 per GJ in 2021. Due to persisting Malampaya gas supply restrictions that began in March 2021, First Gas natural gas plants were compelled to continue using more expensive alternative fuel to ensure continued supply to Meralco.

Average Wholesale Electricity Spot Market (“WESM”) prices went up to Pesos 7.73 per kWh in 2022 from an average of Pesos 4.99 per kWh the previous year amid the tight supply condition brought about by increase in international fuel prices, the decrease in production of the Malampaya gas facility, and cessation of gas supply to the Ilijan gas-fired plant. Luzon grid was placed under Yellow Alert for ten (10) days and on Red Alert for two (2) days in 2022 compared with only four (4) days of Yellow Alert and three (3) days of Red Alert in 2021. The secondary price cap was triggered 25.6% of the time versus only 4.8% in the same comparative period. Luzon demand hit its peak of 12,113 MW in May 2022 from the previous year’s 11,640 MW.

Also weighing on the PPC was the weaker Peso, which depreciated by about 11% to an average of Pesos 54.48 versus the US dollar from Pesos 49.25 in 2021. The local currency recorded its all-time low closing price of Pesos 59.00 four (4) times in October 2022.

Meralco’s consolidated capital expenditures (“CAPEX”) amounted to Pesos 42.6 billion, of which Pesos 19.0 billion went to Networks CAPEX, which consisted of new connections, asset renewals, and load growth projects, among others. A total of Pesos 10.6 billion was invested for the towers business, Pesos 6.1 billion for power generation, and Pesos 2.8 billion was mainly for expansion of Radius Telecoms, Inc.’s (“Radius”) communication network.

Operating expenses (“OPEX”) meanwhile went up by 18% to Pesos 37.4 billion due to higher expected credit losses (Pesos 506 million in 2021 versus Pesos 2.5 billion in 2022) of the distribution utility and RES business coupled with the increase in expenses of subsidiaries to support expansion projects.

Consolidated interest-bearing debt totaled Pesos 103.8 billion, already including Pesos 53.6 billion debts of subsidiaries. Of the total amount, Pesos 35.1 billion are maturing within one (1) year.

On February 27, 2023, the Meralco Board of Directors (“BOD”) approved the declaration of final cash dividend of Pesos 11.028 a share to all shareholders of record as of March 29, 2023, payable on April 26, 2023. This brings the total dividend declared out of the 2022 CCNI to Pesos 16.834 a share equivalent to 70% of core EPS. Dividend yield calculated using the December 31, 2022, closing price of MER of Pesos 298.80 is at 6%.