Meralco cautious on H2 sales prospects

Manila Electric Co. (Meralco) is cautious on its sales expectation for the rest of the year due to challenges facing the industrial sector.

“For the rest of the year, we’re a bit cautious because we saw the industrial sector being challenged because of the global supply chain issues, as well as high fuel prices,” Meralco chief commercial officer Ferdinand Geluz said.

“But the commercial sector is sort of picking up, but at the same time, as commercial picks up, there’s a corresponding decline in demand from the residential customers because people tend to get out of their homes,” he said.

In June, Geluz said Meralco saw an 11 percent increase in demand from commercial segment, but a four percent decline in power demand from residential customers.

“So there’s a balance between those two. What we hope is that demand from our industrial customers picks up again on top of these challenges I mentioned,” he said.

In the first half, residential and commercial segments both accounted for 35 percent of Meralco’s sales mix, showing signs of a shift back to the prepandemic mix, while industrial contributed 30 percent.

Meralco said household demand was tempered by return to onsite work and higher vaccination levels that improved public confidence to travel, thereby reducing time at home.

Increasing prices of commodities also affected sales as customers became more conscious of their rising expenses, leading to controlled electricity consumption.

Industrial sales volumes during the six-month period, on the other hand, still managed to increase modestly by four percent year-on-year despite the logistical concerns from shortage of raw materials and high production costs.

“For July, things are looking good. It will be better than last year because of recovery of commercial, but not better than June. I think June is our peak sales where we peaked at 4,400 plus gigawatt hours so this is the first time we breached 4,400 level,” Geluz said.

“So July will still be around 4,000 plus, but lower than 4,100,” he said.

Meralco said that as early as April, its monthly sales volumes already breached the 4,000-GWh level, and were sustained throughout the second quarter, leading to an all-time high of 4,464 GWh in June.

Geluz said fears of global recession could impact its energy sales moving forward, especially the residential segment.

“Of course with recession, it’s actually the capacity to pay for customers, especially in the residential segment. We saw a tapering off in the growth in demand for the residential segment mainly because of mobility and secondly, because of high prices,” he said.

Meralco expects its energy sales to grow by six percent this year as the economy picks up with the recovery of the commercial sector and as quarantine restrictions ease further.