Manila Electric Company (Meralco) reported a 40 percent surge in consolidated core net income to P9 billion for the first quarter of 2023 from the P6.4 billion in the same period last year. In a disclosure to the Philippine Stock Exchange, the firm said the growth came on the back of the significant increase in contribution of power generation, which grew three times versus the same period last year. Meanwhile, consolidated reported net income increased by 26 percent to P8.1 billion in the first three months of the year from P6.4 billion in the same quarter of 2022. “The growth in our energy sales volume, particularly the strong performance of the commercial segment, signifies that public confidence has returned and demand for power will certainly continue to increase,” Meralco President and CEO Ray C. Espinosa said. He added that, “With this, we will pursue strategic energy sourcing activities for our medium- and long- term requirements as we work to secure supply to ensure sufficient and cost-competitive power for our customers.” “Meralco’s operational and financial performance in this first quarter indicate that we are off to a good start,” Meralco Chairman Manuel V. Pangilinan said. He noted though that, “we recognize that supply challenges in the energy sector, which include the depletion of the Malampaya gas field, the country’s reliance on volatile imported fuel, and Peso depreciation, will put continuing upward pressure on power prices.” “The critical need to bring more power generation capacities online to ease the tightness that we continue to experience – as well as its long-term goal of energy independence with indigenous source of fuel including renewables – must be acted upon with urgency,” Pangilinan said. Consolidated revenues were up by 23 percent at P105.6 billion from P85.9 billion in 2022 mainly due to higher pass-through charges resulting from the increase in natural gas prices, depreciation of the Peso against the dollar which averaged at P54.813 during the first three months of 2023 against P51.573 during the same period last year, and increase in purchases from the Wholesale Electricity Spot Market (WESM). Revenues also rose on the back of higher power generation charges due to increase in fuel prices and growth in volumes sold. Meralco’s average retail rate increased by 17 percent to P10.41 per kWh from P8.89 per kWh. Generation charge, which accounted for about 68 percent of the total retail rate, went up by 33 percent; while transmission charge, comprising 8 percent of the retail rate, increased by 6 percent. Purchased power cost (PPC) increased by 28 percent to P78.6 billion from P61.7 billion due to the increase in Malampaya gas prices, depreciation of the Peso, and increase in purchases from WESM following the suspension by South Premiere Power Corporation (SPPC) since December 2022 of its Power Supply Agreement (PSA) with Meralco. 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 dollar also contributed to the higher PPC. Average WESM prices, on the other hand, which peaked at P37.97 per kWh on March 21, 2023, averaged at P6.58 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. Consolidated distribution utility energy sales volumes in the first quarter rose to 11,287 GWh from 11,069 GWh, as volumes of Meralco and Clark Electric Distribution Corporation increased by 2 percent and 9 percent, respectively. Sales mix continues to shift towards pre-pandemic levels with the continued recovery of business operations and resumption of social activities. Share of commercial segment increased to 37 percent from 34 percent in 2022. Share of Residential was down to 33 percent from 35 percent a year ago, while the Industrial segment’s share was at 30 percent from 31 percent. Commercial sales volumes recorded a double-digit growth of 11 percent to 4,213 GWh in the first quarter of 2023 from 3,781 GWh in the same period a year ago. Energy demand from educational institutions continued to increase as face-to-face classes resumed. Hotels, restaurants, and real estate sectors likewise grew with the improvement in room occupancy, foot traffic, and consumer spending as leisure travel, social events, and business conventions went on full swing. Residential sales volumes slipped by 3 percent to 3,701 GWh from 3,808 GWh last year, coming from a high base due to an Omicron-stricken first quarter 2022 when self-imposed home quarantine was observed. Thereafter, higher mobility and greater public confidence in conducting face-to-face classes, business, and social activities, as well as longer time spent in traffic and revenge travel, further reduced the time spent at home by customers. Cooler temperature compared with last year also contributed to lower household consumption. The impact of global economic headwinds and inflation was felt by the Industrial segment as sales declined 3 percent from 3,443 GWh to 3,336 GWh. Slower demand for consumer electronics globally continued to dampen growth of the semiconductor industry, while plant shutdowns due to maintenance activities and lower production due to high input cost negatively impacted sales of plastics and cement industries. Meralco ended the first quarter of 2023 with consolidated customer count of 7.7 million, up 3 percent from 7.5 million a year ago as energization of new customers for both ordinary service and project-covered applications further continued.