Meralco sees lower H2 profit due to rate cut

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MANILA Electric Co. (Meralco), the country’s largest power distributor, expects lower profits in the second half of the year compared to the first half due to the impact of the 10 percent cut in its distribution charge.

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Meralco Chairman Manuel Pangilinan said the company is set to implement the reduction in its distribution charges once it secures the approval of the Energy Regulatory Commission (ERC).

“It is likely the second half will be poorer than the first half. Lower because the new tariff, subject to approval, we will bring it down by approximately 10 percent,” Pangilinan told reporters.

He added that the lower tariff will be applicable in the second half and onwards, and would therefore affect Meralco’s second half profits.

However, Pangilinan said the lower revenue may be mitigated by customer count growth which is moving to 4 percent, and volume growth of about 2 percent to 3 percent this year.

How the economy performs will also affect Meralco’s bottom line in the second half, he explained. “That is also a function of how the economy performs in the second half,” he said.

“We’re quite optimistic because we’re approaching elections. Usually there’s a bit of election spending,” he said.

Luzon grid placed on ‘yellow’ alert
Meanwhile, the Luzon grid was placed on yellow alert on Friday as power supply dipped after  seven power plants were either derated or went on shutdown.

To derate means to reduce the electrical power rating of a power plant to improve safety, reliability, or efficiency.

“As of Friday we are on yellow alert. Hopefully there are no other power plants that will go offline,” Meralco spokesperson Joe Zaldariagga told reporters on the sidelines of the Meralco Technology and Innovation Summit held at the Meralco grounds in Ortigas, Pasig City.

Zaldariagga cited data from the National Grid Corporation of the Philippines (NGCP) which reported that six power plants were on shutdown on Friday, namely: Malaya 1 and 2, Limay 2, Tiwi 2, Pagbilao 1, Malaya 2 and Sta. Rita Module 40.

Calaca Unit 1 was derated at 146 megawatts (MW) and Quezon Power Philippines Limited (QPPL) had lower capacity as well.

The shutdowns and reduced power capacity affected reserves, which dropped to 487MW as of 1 p.m. Friday, below the regulating reserve of 647 MW.

This prompted NGCP to place the Luzon grid on yellow alert, a system condition where the total reserve is less than the capacity of the largest plant online. For the Luzon grid, this is 647MW.

The Luzon grid ideally needs contingency reserves of 647 MW, dispatchable reserves of 647 MW and regulating reserves of about 300 MW to avert any power outages in case several power plants go on sudden forced outages.

Data from the NGCP showed that the Luzon grid has an expected capacity of 9,146MW and a projected peak demand of 8,659 MW.

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