S&P upgrades Meralco credit rating

Manila Electric Co. (Meralco), the country’s biggest power distributor, has earned a credit rating upgrade from global debt watcher Standard & Poor’s.

In a regulatory filing Meralco said S&P Rating Services upgraded its long-term corporate credit rating on Meralco to “BB plus from “BB minus.”

At the same time, S&P raised its ASEAN regional scale rating on the country’s largest power distributor to “axA minus” from “axBBB plus” on the back of expectations Meralco would grow moderately and maintain stable margins in its core business.

The New York-based debt watcher also expects Meralco to smoothly execute its capital expenditures and investments.

“The stable outlook reflects S&P’s anticipation that Meralco will grow moderately, maintain stable margins, and smoothly execute its capital expenditures and investments,” the company said.

The ratings upgrade were also given as the debt watcher expects that pending power supply agreements (PSAs) for the output of the power plants being developed by Meralco will be approved by the Energy Regulatory Commission (ERC).

However, the Energy Regulatory Commission said Meralco already applied for urgent motions to resolve the case of its 2x300 megawatt (MW) Redondo Peninsula Energy Inc. in Zambales; the 2x600 MW Atimonan One Energy Inc. in Quezon province; and the 2x350 MW St. Raphael Power Generation Corp. in Batangas.

“ERC cannot assure the granting of the urgent motions especially that the power plants are facing oppositions from various groups including the National Association of Electricity Consumers for Reforms Inc. and the Matuwid na Singil sa Kuryente Consumer Alliance Inc,” ERC spokesperson Floresinda Digal told reporters.

Meralco earlier said amid delays and criticism it is getting from the big PSAs it is applying for it would rely on the government’s eventual policy on the matter but expressed the country’s need for additional capacity especially if the present growth trajectory continues.

Meralco managed to post a slightly higher core net income in the first quarter despite slower growth in sales amid a more challenging business environment during the review period.

Meralco’s core net income amounted to P4.6 billion in the first quarter, slightly higher than the P4.59 billion recorded in the first quarter of 2016.

Reported net earnings, meanwhile, rose 5.9 percent from P4.55 billion to P4.82 billion.

Despite the flat net income, the company recorded an overall better performance in the fields of energy sales and customer count.

Meralco’s energy sales for the quarter posted a 2.6 percent rise with 9,317 gigawatt hours (gwh) from the previous year’s 9,077 gwh as customer count went up by 4.5 percent to 6.107 million in the first quarter from last year’s 5.842 million.

Meralco is the largest electric distribution utility in the country and accounts for 75 percent of Luzon’s and 55 percent of Philippine energy sales.