Manuel V. Pangilinan was named chairman of the board of directors of the Manila Electric Company (Meralco) in 2012 — ushering in a new brand of leadership in the century-old company. Under his leadership, Meralco was able to reach significant milestones, including the increase in customer count from one million in 1981 to six million in 2016.
It was also in the same year that the company reportedly embarked on a comprehensive digital transformation journey, as mentioned in its 2017 annual report. Called the “6D’s of Digital,” the initiative is anchored on six key areas: digital customer interaction, digital grid operations, digital asset management, digital field worker, digital enterprise, and digital energy products and services.
In 2017, the same year when Meralco shares marked 25 years of listing on the Philippine Stock Exchange, the company also reported a positive and strong performance. Mr. Pangilinan noted in the annual report along with Meralco’s President and Chief Executive Officer Oscar S. Reyes: “The achievements were made in a conducive business environment of a rapidly expanding Philippine economy, robust consumer spending, bullish business and public sector investment with the government’s public-private partnership and more recently, “Build, Build, Build” programs, and strong demand for electricity. These factors pushed energy sales and customer count higher and boosted our operational excellence and financial strength.”
The two executives specified in their message that the company’s consolidated energy sales reached its highest level in 2017, rising 5% to 42,102 gigawatt-hours (GWh) from 2016. The same year also saw first in Meralco’s history — electricity sales volume consistently breached the 3,000 GWh level in every month of the year.
Meralco attributed these gain in sales to combined effects of the company’s expanding customer base, the positive economic conditions with gross domestic product at 6.7%, moderate inflation at 2.9%, and favorable power supply conditions which saw reduced power plant outages.
The company noted that number of its customer accounts grew 5% to 6.3 million at the end 2017. It also noted that the peak demand in their franchise area was at 6,973 megawatts (MW), 3% higher than the 6,748 MW in 2016. Peak demand in the Luzon Grid reached 10,054 MW, up 3% from the 2016 level of 9,726 MW.
“Our 2017 Consolidated Core Net Income (CCNI) grew to P20.2 billion, 3% higher than in 2016. The increase in energy distributed, higher financing income due to improved yields, as well as adjustments of provisions with the favorable resolution of certain commercial and business issues, sparked the rise in our CCNI. Consolidated Reported Net Income amounted to P20.4 billion, 6% higher than the year before. Core Earnings per Share reached P17.93 while Reported Earnings per Share stood at P18.09,” the two said.
Along with successes in 2017, Mr. Pangilinan and Mr. Reyes mentioned some persistent challenges the energy sector continues to face. These include periodic episodes of power plant and Malampaya gas facility outages and the consequent power supply interruptions and higher Wholesale Electricity Spot Market (WESM) prices; energy policy and regulatory uncertainties; intensifying competition in the retail electricity market; technological disruptions; and the need for massive capital expenditures in power distribution and investments in new power generation to stay ahead of the curve vis-à-vis growing power demand.
“The imperative for the Philippine energy industry continues to be energy security in terms of available, highly reliable, least cost power supply, and 24×7 transmission and distribution to customers across the various grids,” Mr. Pangilinan and Mr. Reyes said.
In relation to this, the approval of new power plants in the country is perceived to address these challenges. “Meralco PowerGen Corporation (MGen) is in joint ventures for the development of new power plants to assure the highly reliable and cost efficient power supply required by our customers in the Meralco franchise area and in the Luzon Grid. These include the country’s first supercritical coal-fired power plant, the 455 MW San Buenaventura Power Limited power plant in Mauban, Quezon; the first ultra-supercritical coal-fired power plant, the 2×600 MW Atimonan One Energy, Inc. (A1E) plant in Atimonan, Quezon; and the first phase of the 2×300 MW Redondo Peninsula Energy (RP Energy) circulating fluidized bed coal-fired power plant at the Subic Freeport Zone,” the two executive said.
“The Power Supply Agreements for A1E and RP Energy, which along with SBPL will significantly contribute to energy security, are awaiting regulatory approval.”
Apart from bringing MGen’s projects into operations, Mr. Pangilinan and Mr. Reyes also mentioned that they are “embracing the emerging realities”of renewables, including solar and wind, distributed generation, and the potential market and use cases for electric vehicles (eVehicles).
“Meralco is venturing into the growing renewable energy market through its wholly owned subsidiary, MSpectrum Inc. (Spectrum) for rooftop solar, and utility scale solar installations. Meralco has also formed eSakay, Inc. to provide eVehicles and charging infrastructure solutions to service public utility and private sector eVehicle requirements.”
Meanwhile, taking the company to greater heights means helping communities grow as well. Meralco’s annual report mentioned that the company reached new milestones in the area of its corporate social responsibility. “Its advocacies, implemented by its social development arm, One Meralco Foundation, transformed the lives of 56,854 families across the country through various programs — from providing electricity access to energy education, youth development, grassroots partnerships, disaster response and employee volunteerism.”