Meralco expects electricity demand to ease in 2019

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MANILA Electric Co. (Meralco) expects demand for electricity to ease in 2019 as the year follows two straight years of higher base when relevant economic indicators are relatively tamer, the distribution utility’s top official said.

Oscar S. Reyes, Meralco president and chief executive officer, said aside from temperature, which results in a spike in the consumption of electricity, there was greater “liquidity” this year and in the previous year.

“There was a lot of liquidity, but now interest rates are higher, inflation is higher, exchange rates are higher. Those will impact [not only] on demand for electricity but they will [also] reflect on demand for products and services,” he told reporters last week.

Mr. Reyes said demand for electricity is expected to grow by 4.5% to 5% this year, which is the high base that 2019 will follow.

“We’ll probably end this year at about 4.5 to 5%. I think we have to see what the final November and December figures are, but call it 4.5% to 5% growth for this year,” he said.

Because of that growth, “we expect slightly better bottom line” at Meralco in 2018, he said, without disclosing numbers.

For full-year 2017, Meralco recorded a 3% rise in core net income to P20.2 billion, before exceptional items. Reported net income was up 6% to P20.38 billion.

In the nine months to September this year, Meralco reported a core net income of P16.69 billion, higher by 8.6% from P15.37 billion a year ago. Reported profit rose 14.3% to P18.21 billion from P15.93 billion previously.

Mr. Reyes said next year’s demand growth expectations would also be affected by developments in technology and in the industry.

“I think we have to recognize that there are a number of developments that are happening. Number one, energy efficiency continues to grow because of available devices, because of technology,” he said.

Energy efficiency is one of the reasons why the elasticity of demand growth of electricity compared to the growth of the country’s gross domestic product (GDP) has been declining, Mr. Reyes said.

“Now we are doing about 0.75% growth in electricity for every 1% growth in GDP,” the Meralco CEO said, comparing the figures with those in the late 1990s at 1.3% to 1%, respectively.

“That’s good because consumers are able to save, even thought that means less volume for us. I think for us whatever is good for the consumer will in the end be good for Meralco,” Mr. Reyes added.

Mr. Reyes said the adoption of more solar rooftops for residential, commercial and industrial customers “will mean that they will be getting less from the grid and effectively generating their own.”

“So these are headwinds that will potentially mean that the growth in electricity may decelerate plus further adoption of battery technology, energy storage,” he said. — Victor V. Saulon