MANILA, Philippines, April 24, 2023 – Manila Electric Company (“Meralco”) today reported that Consolidated Core Net Income (“CCNI”) in the first three (3) months of 2023 rose by 40% to Pesos 9.0 billion from Pesos 6.4 billion in the same quarter in 2022 with the significant increase in CCNI contribution of power generation, which grew three (3) times versus the same period last year.

Consolidated Reported Net Income meanwhile increased by 26% to Pesos 8.1 billion from Pesos 6.4 billion.

Core earnings per share amounted to Pesos 8.027, up by 40% versus last year, while reported earnings per share increased by 26% to Pesos 7.161.

Consolidated revenues were up by 23% at Pesos 105.6 billion from Pesos 85.9 billion in 2022 mainly due to (i) higher pass-through charges resulting from the increase in natural gas prices, depreciation of the Peso against the US dollar which averaged at Pesos 54.813 during the first three (3) months of 2023 vs. Pesos 51.573 during the same period last year, and increase in purchases from the Wholesale Electricity Spot Market (“WESM”); (ii) higher power generation charges due to increase in fuel prices; and (iii) growth in volumes sold.

Meralco’s average retail rate increased by 17% to Pesos 10.41 per kWh from Pesos 8.89 per kWh. Generation charge, which accounted for about 68% of the total retail rate, went up by 33%; while transmission charge, comprising 8% of the retail rate, increased by 6%. With a 10% share in the total retail rate, subsidies and taxes, which are calculated based on the amount of generation and transmission charges climbed by 13%.

On the other hand, Meralco’s average distribution charge of Peso 0.93 per kWh, which accounted for 9% of the retail rate, dropped by 30% following the implementation of distribution rate true-up (“DRTU”) adjustments which averaged Peso 0.53 per kWh during the quarter. About 93% or a total of Pesos 44.6 billion of the Pesos 48.3 billion total DRTU adjustments ordered by the Energy Regulatory Commission (“ERC”) for refund have already been credited to the customers’ bills as of end-March and the remaining refund amount is expected to be settled by May 2023.

Purchased power cost (“PPC”) increased by 28% to Pesos 78.6 billion from Pesos 61.7 billion due to the increase in Malampaya gas prices, depreciation of the Peso, and increase in purchases from the Wholesale Electricity Spot Market (“WESM”) following the suspension by South Premiere Power Corporation (“SPPC”) since December 2022 of its Power Supply Agreement (“PSA”) with Meralco.

The average Malampaya natural gas price increased to US$ 10.08 per GJ versus US$ 8.71 per GJ a year ago. Due to persisting Malampaya gas supply restrictions that began in March 2021 and the 15-day Malampaya maintenance shutdown in February 2023, First Gas natural gas plants were compelled to continue using more expensive alternative fuel to ensure continued supply to Meralco.

The depreciation of the Peso against the US dollar also contributed to the higher PPC. Average Wholesale Electricity Spot Market (“WESM”) prices, on the other hand, which peaked at Pesos 37.97 per kWh on March 21, 2023, averaged at Pesos 6.58 per kWh. Peak demand recorded during the three-month period was lower by 151 MW compared with a year ago due to relatively cooler temperatures.

In the first quarter, Meralco spent Pesos 5.1 billion for capital expenditures (“CAPEX”), of which Pesos 4.5 billion went to Networks projects consisting of new connections, asset renewals, and load growth projects, among others.

Operating expenses (“OPEX”) increased by 15% to Pesos 9.5 billion driven by higher bills management-related expenses, information technology (“IT”) licenses and maintenance, and higher manpower and cybersecurity costs of subsidiaries with increasing digitalization and work accomplishments for the construction unit.

Consolidated interest-bearing debt stood at Pesos 102.2 billion, including debts of subsidiaries totaling Pesos 52.0 billion. Of the total amount, Pesos 33.9 billion are maturing within one (1) year.