Meralco hikes sales volume forecast

Power distributor Manila Electric Co. (Meralco) has hiked its sales volume projections this year as demand continues to pick up in its franchise area.

Sales volume this year is seen to grow five percent by year-end, still a robust growth coming from a high base last year, Meralco president Oscar Reyes said on the sidelines of the ASEAN Energy Business Forum 2017 Wednesday.

“This year… we’ll probably end the year at close to five percent at a high base. As of August, growth was about 4.2 percent. We’ve seen growth to be around six for the balance of the year, which has been since July,” he said.

Reyes said demand has been strong in all residential, commercial and industrial segments.

“Residential had a slow first three months because of weather… But with economic growth, there’s rising affluence, even for residential,” he said. “Commercial remains strong with all of these developments you see—real estate, retail trade, BPOs (business process outsourcing), surge in Philippine online gaming operators, and then new hotels, restaurants. Demand in industrial, over the last two months, has been going over seven percent,” Reyes said.

In 2016, energy sales went up 8.1 percent to 40,142 gigawatt-hours (gwh), which was beyond the power distributor’s estimates. This was driven by the El Niño phenomenon and election-related activities.

In the first quarter this year, Meralco officials deferred issuance of a profit guidance for 2017 since sales volume has been unsteady because of the cooler temperature. Other uncertainties include prices of oil, coal and commodities as well as the foreign exchange performance with the looming interest rate hike increase in the US.

But the surprise increase in demand has worried Meralco since the supply-demand situation in the Luzon grid seemed unstable with three instances of yellow alerts raised since Aug. 30.

“I think it just shows potential vulnerability of the entire system and you’re better with adequate capacity,” Reyes said.

“We don’t want to raise an alarm. It’s really just a realiza- tion that you’re better off with adequate capacity because it takes time to build, its not instant,” he said.

Meralco’s seven power supply agreements (PSA), which can serve the additional requirements of the Luzon grid, are still pending with the Energy Regulatory Commission (ERC) since they were filed in April 2016.

The PSAs involve supply of 3,551 MW, which corner 81 percent of the combined output of the seven power plants, most of which are owned or partly owned by Meralco through its power generating unit Meralco PowerGen Corp. (MGen).

“Those were filed as early as 2016. It’s already 18 months… PSAs are usually approved within six to nine months,” Reyes said.