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PROFITS 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. Read more...
PROFITS 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. Read more...
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