Hello. Hi, good afternoon, everybody. Thank you for coming. We'll start. Good afternoon, investors, analysts, fund managers, and key stakeholders. Welcome to Meralco's third quarter nine months results briefing. I am P.J. Ramos from the investor relations office, and I will be moderating today's briefing here in the Meralco office building. We also warmly welcome our guest analysts and investors who are joining us in person, as well as those participating online for MS Teams conference facility. Before we proceed, please be advised that this session is being recorded. Kindly adhere to the ground rules which were sent to you prior to this meeting. Before we proceed, please be advised that this session is being recorded. Today, we will present the financial operating results of Meralco for the nine months of 2025 and then September.
A copy of the presentation may be downloaded from our website at www.meralco.com.ph under the investor relations section. We are joined by members of Meralco senior management team. Presenting will be Mr. Ronnie Aperocho, Executive Vice President and Chief Operating Officer. Ms. Betty Siy-Yap, SVP and Chief Finance Officer. Mr. Emmanuel Rubio, President and CEO of Meralco PowerGen. Mr. Ferdinand Geluz, Senior Vice President, Chief Revenue Officer in OIC Subsidiary Businesses. Attorney William Pamintuan, SVP, Chief Legal Counsel and Head of Legal and Corporate Governance Office. Mr. Froilan Savet, First Vice President and Head of Networks. Attorney Jose Ronald Valles, SVP, Head of Regulatory Affairs and Head of DU Regulatory Management. Mr. Raymond Ravelo, Chief Sustainability Officer. We also would like to recognize our Deputy Chief HR Officer, Mr. Hans Montenegro. Today's agenda will begin with the financial highlights, followed by the operating results of Meralco's distribution utility business.
Update from regulatory, MGEN, and sustainability. We will open the floor for a Q&A session before concluding the presentation with remarks from our chairman. At this point, I would like to introduce our Chief Finance Officer, Ms. Betty Siy-Yap, who will present the financial results.
Okay. Up on your screen is a summary for the nine months of 2025. Our strong results for the year to date ended September 30, 2025, were driven by robust performance of the power generation business and steady performance of the power distribution business. Following are the highlights. In the nine months ended September 30, 2025, the DU business continued to account for the largest share of our PHP 40 billion consolidated core net income at 55% or PHP 21.9 billion, up 8%. Contribution of power generation grew to PHP 14.7 billion, 63% higher versus last year and now at 37% of CCNI. While RES and the other non-electric businesses brought a combined PHP 3.4 billion or 8% of CCNI. On the power generation results, MGEN's thermal plants continue to play a critical role in ensuring grid reliability with 128.9 MW capacity allocated to regulating and contingency reserves support.
The LNG business contributed PHP 10.9 billion as Chromite Gas and PacificLight delivered a total of 8,467 GWh and 4,290 GWh respectively. MGreen delivered 557 GWh, 15% higher with the contribution of the newly operational solar plants and more than 98% average plant availability. Dividends from unconsolidated investees totaled PHP 7.2 billion, of which PHP 4.5 billion came from PacificLight and PHP 1.6 billion from San Buenaventura. Following, on your screen would be the financial summary. Our CCNI for the first nine months of the year increased by 14% to PHP 40 billion, from PHP 35.1 billion in 2024. Consolidated reported net income increased by 9% to PHP 36.8 billion from PHP 33.8 billion last year. The gap between CCNI and reported net income represents accretion of day one gain adjustment, foreign exchange loss, and gain on sale of various assets by MGEN.
Similar to our CCNI, our core EBITDA rose 14% to PHP 67.2 billion from PHP 59 billion. Consolidated revenues increased by 5% to PHP 371.8 billion from PHP 355.4 billion in 2024, mainly due to increase in pass-through generation and transmission charges, higher revenues from MGEN from the reserve market, and higher volume of the retail electricity sales business. Costs and expenses increased by 4% to PHP 332.3 billion, the bulk of which is still purchase power cost, which accounted for 85% of total costs and expenses. Capital expenditures totaled PHP 78.8 billion, largely for the development of the solar power plants and distribution network improvement projects. Cash and cash equivalents amounted to PHP 88.2 billion, while consolidated debts stood at PHP 213.4 billion.
This slide shows our segment business, our segment results. The charts on the right show the contribution of each of the segments to our CCNI revenues and core EBITDA.
The CCNI contribution of our regulated or distribution business was from consolidated energy sales volume of Meralco, Clark Electric, Shin Clark Power Corporation of 40,719 GWh. Note that while CCNI contribution of DU declined to 55% in the overall share, CCNI contribution in terms of peso amount increased by 8% to PHP 21.9 billion versus PHP 20.3 billion last year. For our unregulated businesses, the higher CCNI in terms of peso amount came from the growing power generation business with its share now at 37% from 26% a year ago. This is equivalent to PHP 14.7 billion of the CCNI owing to its LNG investments and higher revenues from participation in the reserve market.
The retail electricity supply business and non-electric businesses, meanwhile, brought a combined PHP 3.4 billion or 8% with combined energy delivered by the rest business of 5,524 GWh as of the end of September.
DU revenues accounted for 83% of the total RES and non-power subsidiaries and affiliates accounted for 11%, while power generation at 6%. DU contribution to consolidated core EBITDA amounted to PHP 39.4 billion, up 15% versus last year and accounted for 59% of the total. Power generation was at PHP 22.6 billion, up 40% and comprised 33% of total while RES and other non-power subsidiaries and affiliates accounted for the remaining PHP 5.3 billion of the consolidated amount. This chart shows our system-wide power sales volume, which is at 50,880 GWh, slightly higher than the 50,641 GWh last year. DU volume including sales of PELCO II which we manage and operate under an investment management agreement, was at 41,538 GWh including 4,482 GWh sold by our RES units within the Meralco franchise area.
RES volume was at 5,524 GWh with 4,482 GWh sold within and 1,042 GWh sold outside our franchise area. MGEN volume was at 20,226 GWh with 15,936 GWh sold within the Philippines, of which 11,746 GWh were sold to Meralco Group DUs and RES. On your screen would be our revenues. Electric revenues of PHP 362.2 billion accounted for 97% of the consolidated revenues of PHP 371.8 billion. Generation, transmission, and other pass-through charges were 6% higher at PHP 288.4 billion due to the higher fuel cost of power plants using LNG and the Malampaya natural gas, which comprise about 65% of our total supply mix. Transmission charge also went up due to the higher service charges from the additional capacity sourced by the National Grid Corporation of the Philippines under its new ancillary services procurement agreements and capacities from the reserve market.
Distribution revenue decreased to PHP 53.9 billion with the implementation of the regulatory reset fee adjustment starting February of 2025. Energy fee, which totaled PHP 19.8 billion, increased by 7% from PHP 18.5 billion to PHP 19.8 billion, with higher revenues from the reserve market. This report partially offset by the lower fuel costs charged to customers with a decline in fuel price and decrease in WESM sales in Panay. Non-power subsidiaries revenues were flattish as a decrease due to the deconsolidation MIDC at the end of September 2024 was offset by MIESCOR's higher revenues from its EPC and telecoms project and Bayad with a higher transaction volume. Costs and expenses totaled PHP 332.3 billion. Purchase power costs accounted for 85%, OpEx represents 10%, depreciation 4%, and combined costs and fuel and power plant O&M accounted for 2% of the total.
Purchase power costs increased by 7% to PHP 281.6 billion from PHP 262 billion, consistent with the movement in pass-through revenues. OpEx increased by 13% to PHP 32.5 billion, primarily driven by expenses for repairs and maintenance of distribution facilities, upkeep of various IT-related equipment and software, cloud and online subscriptions. Also, MGEN continues to strengthen its workforce to support its growing portfolio of operating power plants and new projects, contributing to the rise in salary-related expenses. Depreciation and amortization were lower by 5% due to deconsolidation of MIDC at the end of September 2024. Combined coal and fuel and power plant O&M amounted to PHP 8.3 billion, 23% lower with a decrease in maintenance costs and fuel and coal prices. With respect to our capital expenditures, this totaled PHP 78.8 billion as of the end of September 2025.
Of this amount, 75% or PHP 58.8 billion were utilized for the development of Terra Solar, Greenergy, and Greentech solar power projects. The DU accounted for PHP 20 billion, of which PHP 17 billion was spent for new connections, asset renewals and load growth, as well as pole relocation. For power generation, it continued its upward trajectory, posting a 63% increase in CCNI contribution for the nine-month period. This was fueled by earnings from LNG investments, which are both Chromite and PacificLight, as well as strong revenue gains from the participation in reserve market. With a diversified portfolio across the Philippines and Singapore, MGEN reached a net saleable capacity of 5,079 MWs year to date and delivered a total of 20,226 GWh of energy, a 75% improvement compared with the same period last year.
The LNG business contributed PHP 11 billion to MGEN's CCNI as Chromite Gas and Singapore-based PacificLight delivered a total of 8,467 GWh and 4,290 GWh respectively. Note that with respect to PacificLight , the 100 MW fast start unit also began to deliver power on May 16, 2025. Meanwhile, the thermal plants contributed PHP 5.4 billion to MGEN's core net income from PHP 3 billion a year ago due to higher revenues from the reserve market and increased energy output. MGEN Renewable delivered 557 GWh, 15% more than a year ago. Our consolidated interest-bearing debt stood at PHP 213.4 billion, including PHP 98.1 billion of debt of our subsidiaries. As of end of September, net debt stood at PHP 123.7 billion, with net debt to EBITDA of 1.5x . Debt maturities are well spread through 2040. All of Meralco's consolidated debt are in Philippine peso.
Cash and cash equivalent amounted to PHP 88.2 billion, of which our short-term and long-term investments totaled PHP 6.4 billion. Our core EPS stood at PHP 35.509 a share, up 14%, versus PHP 31.138 a share last year. Our reported EPS was at PHP 32.67 a share, up 9% compared with last year. That ends my report.
Thank you, Ms. Betty. We will now move on to the operating results presentation to be led by our Executive Vice President and Chief Operating Officer, Mr. Ronnie Aperocho, followed by the heads of our different business segments.
Thank you, P.J. Good afternoon, and thank you for joining us today. We are very pleased to present Meralco's operational performance report, highlighting our headline numbers for the nine months that ended September 2025. Starting with energy sales. Our energy sales slightly dropped by 0.4% at 40,719 GWh with the cooler weather compared with the hotter than normal temperatures last year, driven by the El Niño, as well as the one-day difference versus 2024 leap year. In addition, our energy sales growth was tempered by the elevated vacancies in office and condo spaces from POGO exit, along with the muted demand during typhoon-related work and class suspensions, which increased this year. Similarly, the DU net system input or NSI was 42,199 GWh, posting a marginal decline of 0.7% compared with the same period in 2024.
Meralco's year-to-date peak demand reached 9.13 GW recorded last April 23 this year, 2% lower than last year's 9.32 GW. The drop can be attributed to last year's unprecedented power demand surge, which normalized this year. Our customer count is growing by 2.4% to reach 8.178 million customers by end of September. On the service performance of the DU, the 12-month moving average system loss for September was 5.78%, a notable 0.26 percentage point improvement over the same period last year as a result of our intensified system loss reduction initiatives and a higher share of low loss to serve commercial and industrial customers in the sales mix. In terms of system reliability, we recorded significant improvements for our performance indicators, SAIDI and SAIFI, translating to shorter and fewer power interruptions.
Our total SAIFI was better by 9.6% at 0.762x , while our SAIDI likewise improved by 8.3% at 80.576 minutes. We are on track to meet our year-end target of one SAIFI and 100 SAIDI, underscoring Meralco's commitment to deliver world-class electric service to its customers. The year-to-date average time to connect customers also improved by 3.4% at 1.41 days over 1.46 days last year, translating to better customer experience with faster energization of service applications. Lastly, our average electricity retail rate was PHP 11.63 per kWh , 11.3% higher versus the same reporting period last year, primarily due to the following.
First, it was due to higher generation charge, 13.9% increase, mainly from higher Malampaya natural gas prices due to the implementation of new gas sale and purchase agreement or GSPA for First Gas plants, recovery of previously deferred charges for First Gas plants and depreciation of peso. It was due also to the increased transmission charges, 30.8% increase from higher ancillary services costs. Thank you, and I'm turning you over to Ferdi Geluz for the customer report. Ferdi.
Thank you, Ronnie, and again, good afternoon. Ronnie already mentioned that our nine months sales at 40,719 GWh is slightly below last year at 0.4% negative or -153 GWh, mainly attributable to cooler temperature and the impact of the typhoons, as well as the vacancies brought about by the POGO exit. This decline is despite the robust energization efforts, as we now serve 8.18 million customers. This is actually 194,000 more customers compared to the same period last year. Residential and commercial segments declined as organic sales offset new energizations, while industrial sustained a modest growth as it sustained a modest positive momentum, slight uptick from both organic sales as well as new energizations.
To give you an idea, our newly energized customers actually contributed close to 2% additional sales of 772 GWh, only to be offset by the decline of 2.3% or around 940 GWh for same-store sales as well as terminations brought about by the POGO vacancy. This netted out a -0.4% decline. Ronnie mentioned the typhoons. To date, the impact of typhoon already reached more than 150 GWh versus the 110 GWh from same period last year. In terms of government and class suspensions, to date, we are registering 25 days of suspensions of government and classes. Government is eight days versus two days. Class is 17 days versus 14 days last year. It was an incremental of nine days.
On a quarter-on-quarter basis, while we grew 1.5% in quarter one, we are actually -0.3% quarter two and -2% quarter three with the worsening weather conditions. Residential incurred most of the impact with year-to-date decrease of 1.6% or -238 GWh. Broken down into organic decline of more than 500 GWh. But slightly offset by the 309 GWh, or around 2%, brought about by the newly energized services. Accounts with zero consumption, mostly from condos in Metro Manila, are up 15%, so more than up 20,000 more vacant condominiums due to the residual impact of the POGO exit. This is mostly in the Pasay, Parañaque area. In terms of decline, Metro Manila bears the brunt of the decline at - 3%, Laguna - 1%, while there was slight increase in Bulacan, 1%, and Cavite by 0.3%.
For residential, quarter- on- quarter, it grew 3% quarter one, - 1% quarter two, and - 6% quarter three. Commercial also felt the impact of the weather as well as POGO exit and office vacancies, as well as the slowdown in foreign tourist arrivals. But the dip is actually just 0.2% or - 23 GWh on the first nine months. As the decline in organic sales of - 400 GWh was offset by the almost 380 GWh, or 2.5% increase, from sales brought about by newly energized services. Real estate bears the brunt of the negative decline at - 2.4% due to low office occupancy, while hotels also declined by - 2%, affected by the downturn of foreign tourist arrivals, mostly mainly Chinese and Korean tourists. I guess it is a residual impact of the POGO exit.
Retail trade partially offset those decline as it is up 1.5%, as well as restaurants are up 4.2%, with sustained increase driven by ramp up and expansions in malls, supermarkets, and convenience stores, and quick service restaurants and cafes. Quarter- on- quarter, the same story. Commercial is actually up 1.5% quarter one, and with the worsening weather, down 0.6% quarter two, and 1.1% down quarter three. Industrial, meantime, posted a modest growth of 1% at +107 GWh on the back of steady upswings in semiconductors, steel, cement, and construction materials, which offset the declines in food and beverage and generator wheeling. Organic sales is slightly up at 15 GWh or 0.14%, and new energizations brought about +85 GWh or 0.8%, which actually contributed to the more than 100 GWh improvement.
Semiconductors actually improved 2%, still up back on the strong demand on storage devices and microchips. Steel up 5.4%, boosted by continued smelting activities. Cement and construction materials up 4.5%, lifted by Solid Cement's new production line. In terms of quarter-on-quarter performance, it is an improvement quarter-on-quarter story for industrial. It is actually flattish at +0.2% quarter one, up 1% quarter two, and up 2% quarter three. That ends my report, and I now turn you over to Froilan for the networks report.
Thank you, Mr. Geluz. Good afternoon, everyone. For networks project updates, last quarter, we energized three electric capital projects, one capacity addition, and two reliability improvement projects. On July 27, we completed the project upgrading of 115 kV circuit breakers at Gardner Substation. This project involved the installation of 14 units of circuit breaker and the associated exchanges. The project will provide sufficient capacity to accommodate the increase in safety issues due to the expansion of Meralco's transmission system in the area, as well as accommodate future connection of embedded generators in the cities of Muntinlupa, Taguig, and Parañaque. On August 19, we installed the third 300 MVA power transformer at Calamba 230 kV delivery point substation. This will strengthen our system reliability, improve load distribution, and support the growing demand in the areas of Batangas Province and Laguna Province, particularly the industrial estates in the area.
Last one, on September 25, we completed the project reliability improvement of Binangonan Substation. Project will strengthen system reliability, improve load distribution, and support the growing demand in Rizal Province. Among the major beneficiaries are the Thunderbird Resorts & Casinos, Rizal Provincial Hospital, Binangonan Hall of Justice, Binangonan Municipal Hall, Rizal Doctors Hospital and Medical Center, Talim Island, and the University of Rizal System. That is all for the network project update. Here is Attorney Valles for the regulatory report.
Good afternoon. For the regulatory update, last October 16, there was an open commission meeting by the ERC, where the commission adopted the following actions in relation to the DUs reset process. First, it approved the rationalized rules for setting distribution willing rates for privately owned DUs under PBR. It also approved the issuance of a resolution directing all private DUs to file their respective AWAT applications for the lapsed period. It adopted a trending method as a new valuation methodology for the regulatory asset base of Meralco's unbundling application in compliance with the Supreme Court decision in NASECORE versus ERC. Shown on the table in your screen, is a summary of the distribution rate true-up that we have already refunded to the consumers. The RTU one, two, three, and four covers the seven-year original lapsed period with a total refund of around PHP 40.5 billion.
This was followed by AWAT 1, which covers July 2022 to December 2024. The amount approved by the commission for refund was PHP 19.96 billion. We have already refunded around PHP 3.33 billion. We have filed the AWAT 2 covering the period January 2025 to June 2025, or a period of six months, for a total refund of PHP 4.69 billion, but we have yet to receive the action of the commission on this recent filing. The last AWAT that we are going to file pursuant to the rules of the ERC will cover the period July 2025 to June 2026. Since the period has not started yet, we cannot calculate the exact amount of the refund. Next slide, please.
Under the rationalized rules for setting distribution willing rates, although the ERC has not released the official resolution or the rules today, based on the open commission meeting, the highlights of the RRDWR are as follows. It closes the issues on the lapsed period, enabling all privately used to have a fresh start to proceed with a rationalized and streamlined process. The commission also adopted the RAB Roll Forward Handbook and applicable provisions of the position paper. The reset application for the approval of the ARR and the PIS will now include the proposal for the first regulatory year translation of the MAP into distribution rates. All PDUs or private distribution utilities will begin with the first regulatory period under the RRDWR. It's not anymore fifth regulatory period for Meralco. Under Group A are Meralco, CEPALCO, DECORP, and Cotabato Light.
The first regulatory period under the RRDWR shall cover July 1, 2026 to June 30, 2027. We are expected to file our first RP, ARR application or annual revenue requirement application by January of 2026. Next slide, please. Next is the DOE Department Circular or the DC 2025-09-0013, which is the guidelines for the prioritization in the procurement and utilization of ING or indigenous natural gas. This took effect last September 3. The guidelines on prioritization will apply only to procurement and utilization of ING over imported LNG. This will not apply to the prioritization of electricity produced from ING over other conventional energy sources such as coal. This will be covered by a separate guideline. As a guiding principle in the circular, ING shall be prioritized to help attain energy security without impairment of contracts.
The policy applies to new ING volume, so that all existing arrangements under the current gas sale and purchase agreements and the PPA will not be affected. Next slide, please. All users of natural gas shall first utilize available quantities of ING. Today, this is only First Gas. Natural gas users have the option to temporarily purchase LNG in lieu of ING for a period of not more than three consecutive months, subject to any contractual obligations under their respective GSPAs. When the ING price is higher than the six-month weighted average of the landed cost of LNG purchased from the spot market, including all taxes and regasification costs. The DOE will evaluate and review this purchase with due regard to the government's share in the production of the ING.
Subject to the rules that will be promulgated by the DOE on prioritization of electricity from LNG, an LNG supplier shall offer its gas at a uniform price to all qualified gas customers. Upon acceptance, the available gas shall be allocated on a pro rata basis according to the respective power generation capacities of purchasing customers. Next slide, please. As you may be aware, we have extended the power purchase agreement with FGPC Santa Rita plant. The original PPA has a 25-year term, beginning August 17, 2000, or until August 17, 2025. This was subsequently extended by the parties by reason of an event of force majeure as provided in the PPA, and the extension was until August 28, 2025.
After August 28, there was another extension, and this was the interim extension by mutual agreement of the parties, again, as provided for under the PPA, and the extension was for five months from August 29 to January 31, 2026. The parties commenced the implementation of this interim extension on the basis of the ERC order dated August 27, which approved the interim extension condition on the dispatch of FGPC Santa Rita plant at its minimum level only and the pass-through rate to Meralco for fixed fee shall be the previously approved rates equivalent to or computed at 83% plant capacity factor.
However, given the different interpretation by First Gas and Meralco , Meralco filed a very urgent motion for reconsideration, seeking confirmation that given dispatch of plant is limited to minimum level only, equivalent to 644 MW, then it follows that the MEQ under the First Gas PPA is also reduced from energy equivalent to 83% plant capacity factor to the Pmin of 644 MW for all hours. ERC promulgated a clarificatory order last September 10, confirming that the MEQ is reduced to Pmin of 644 MW for all hours or actual dispatch, whichever is lower, and the pass-through rate shall continue to be computed at 83%. The fixed fees accordingly shall be proportionately reduced based on the actual dispatch of the plant capped at Pmin or 644 MW. Next slide.
We received several orders from the ERC granting interim relief to implement our base load PSAs, excuse me, with GNPD and Masinloc Power Partners Co. Ltd. for 100 MW and 500 MW respectively. For GNPD, the equivalent rate is about PHP 4.91 headline and PHP 4.90 LCOE, whereas for Masinloc it's PHP 4.85 headline and PHP 4.8675 LCOE. The term is 15 years at 100% availability. Next slide. We also received the ERC decision approving the mid-merit PSA with GNPD for 400 MW and the equivalent rate is PHP 6.733 headline and a PHP 6.8586 LCOE rate. Again, the term is 15 years and the availability is 100%. Next slide. We received also the ERC decision approving the renewable energy mid-merit PSAs of Meralco with San Roque Hydropower, Inc. and Gigasol 3.
San Roque is a hydropower plant and Gigasol is for solar with battery. The rates are shown on the screen at PHP 7.1 for San Roque and PHP 8.18 for Gigasol, with the line rental capped at PHP 15 for San Roque and the line rental for Gigasol is borne by it. Again, the availability is 100% with no outage at all. That is it. Thank you very much.
Thank you, Ronnie. FOG, FJS, and JRV, we now proceed with the highlights from the power generation represented by Manny Rubio, President of MGEN.
Thank you, P.J. I begin my report with our top priority across all sites, health and safety. We are proud to share that we maintained a safe working environment with over 65 million safe man-hours, both for employees and contractors. While we recorded zero lost time accidents and zero fatality, we had 13 first aid cases and five recordable cases, all of which were immediately addressed on-site. These cases remind us that safety is a continuing responsibility, and we will keep reinforcing our systems and culture to ensure that every member of our organization works and returns home safely each day. As of end September, the overall MGEN Thermal Group delivered 6,912 GWh of energy, marking a 2% increase driven by high plant availability and stable operations.
Energy delivered from San Buenaventura Power grew by 7% with 2,664 GWh, while Global Business Power, or what is now M Thermal, recorded 4,248 GWh. M Thermal, our coal plants, continues to be a key contributor to grid stability providing significant capacity for regulating and contingency reserves in the Visayas. MGEN's liquefied natural gas investment through Chromite Gas Holdings delivered 8,467 GWh, while Singapore-based PacificLight Power Pte. Ltd. delivered 4,290 GWh. Lastly, MGEN Renewable Energy, Inc., or formerly MGreen, and what we will call moving forward, MGEN Renewables, delivered 557 GWh, 15% more from a year ago, driven by new capacity from our new operations of its 19.8 MWs and 52.7 MWs plants in Bongabon, Nueva Ecija, and Cordon, Isabela, respectively, to service GEAP 2.
Overall, MGEN delivered a total of 20,226 GWh of energy in the first nine months of 2025, a remarkable 75% increase compared to the same period last year. This significant growth was driven by the added capacity from Chromite Gas Holdings, improved dispatch across our plants and consistently high plant availability, and of course, the dedication of our teams to operate these plants effectively. Following these strong results, we are now focused on our growth actions. Joining us recently are Felino Bernardo and Arnel Santos, two of our new leaders for MGEN Thermal. Together, their leadership will help ensure that MGEN remains steadfast in its mission of powering a better tomorrow.
Another key development for MGEN Thermal this quarter is the signing of the EPC contract for Toledo Battery Energy Storage System project in Toledo, Cebu, a partnership with CATL and SUMEC a complete equipment and engineering company.
CATL is a global leader of new energy innovative technologies, while SUMEC is a leading global engineering solutions provider. The first phase of the project is targeted to deliver an initial 25 MWh by Q2 2026, with a total capacity of 47 MWh , providing a reliable and balanced power delivery across the Visayas grid. The remaining capacity is expected to be completed in 2027, subject to regulatory clearances, and this battery will be participating in the optimized market to provide both regulating up and regulating down reserves. On a more recent news, just this October, PacificLight Power has already selected a consortium of Mitsubishi Power and Jurong Engineering Limited, or JEL, as the engineering, procurement, and construction contractor for its upcoming combined cycle gas turbine project in Singapore, a 670 MW project in Jurong Island.
The new CCGT power plant will deploy Mitsubishi state-of-the-art H-class gas turbine with hydrogen co-firing potential as the power sector works towards net zero carbon emissions, a key focus of the Singapore Energy Management Authority. This gas turbine is recognized as the world's most efficient large frame gas turbine model, with more than 64% combined cycle efficiency and proven reliability through 3 million operational hours across the globe. On the renewables front, construction progress of the MTerra Solar project continues with ongoing construction activities, including grid interconnection and land acquisition, conversion, and reclassification. As of October 15, phase one's overall progress stands at 65%.
On a more recent news, just this October, we made agreements on the EPC works for the south block of the project with GEDI Construction Development Corporation, China Energy International Group Company Limited, and China Energy Engineering Group Guangdong Electric Power Design Institute Co., Ltd. to be the EPC for that phase. Following the magnitude 6.9 earthquake that struck northern Cebu last September 30, MGEN's thermal plant in Cebu Energy Development Corporation or CEDC, and Toledo Power Company, TPC, tripped for a few hours, but went back online on the same day. On October 1, just shortly after all the checks, these units went back servicing the grid.
MGEN through CEDC and TPC has already mobilized PHP 1.3 million worth of relief goods to support families affected by the earthquakes, particularly in northern Cebu, distributing almost 2,000 food packs and essential supplies like rice, canned goods, and 20 L water containers in coordination with local authorities and partner communities. Beyond the relief operations, our head office here in Pasig is also extending further assistance to families in need. Altogether, One Meralco Foundation's efforts are set to reach 2,230 families in Cebu. As safety remains our top priority, we are actually assessing the overall structural integrity of the plants and carry out necessary repairs if needed, and so far, it's looking well as far as the operating units are concerned. MGEN's strong performance in the first nine months of 2025 demonstrates how far we've come in strengthening our portfolio, from thermal to LNG to renewables and now storage.
We continue to execute our growth projects with discipline and purpose while maintaining a steadfast commitment into health, safety, and inclusive community development.
As we move toward the close of the year, we remain focused on delivering energy that powers progress and on building an energy future that is secure, reliable and sustainable. Together, we power a better tomorrow for the region and all the communities that we serve.
Thank you, EVR. We now move forward and welcome Mr. Raymond Ravelo to discuss the Meralco sustainability initiatives.
Thank you, P.J. Good afternoon, everyone. I will be providing a brief update on the sustainability front. In particular, I will be covering updates on our recently held leaders summit on One Meralco's long-term sustainability strategy, as well as updates on our ESG ratings and recognitions. First, last September 19, we convened more than 600 members of our senior and middle management corps at the Meralco Theatre to unveil our long-term sustainability strategy, a distinctive roadmap for a just, orderly and affordable transition to clean energy spanning three decades from 2021 to 2050. The event was headlined by Chairman MVP and Department of Energy Secretary Sharon Garin, reflecting strong alignment between our corporate directions and the government's energy priorities. Throughout the event, the message was very clear. One Meralco's long-term sustainability strategy strikes a deliberate balance between science and practicality, growth and responsibility, innovation and inclusion.
At its core, our energy transition is geared not only towards reducing emissions, but also uplifting communities and empowering people. With your indulgence, please allow me to share a very short video on what transpired during Horizons.
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Strong ESG performance also continues to anchor our sustainability journey. Excuse me. In particular, Meralco demonstrated robust environmental, social and governance performance, as evidenced by our continued inclusion in the FTSE4Good Index Series, and this is for the fifth consecutive year. In addition, we advanced our leadership in diversity and inclusion with an improved Bloomberg Gender-Equality Score, rising to 4.6 in 2025 from 4.1 in 2024. If you could click the next button, please. This was driven by our commitment and transparency to close the gender gap, as evidenced in part by greater representation of women in our management corps. Moving on, we are very pleased to report that at the 2025 International Business Awards, One Meralco earned an all-time best 15 Stevie Awards, surpassing our previous record of 11 awards in 2019.
We were recognized with five golds, eight silvers and two bronzes, highlighting our achievements in driving sustainability, innovation and social impact. Of these 15 Stevie Awards, 10 were ESG related. Next, One Meralco likewise won in the 2025 Asia-Pacific Stevie Awards, garnering a total of 11 recognitions, nine of which were sustainability related. These recognitions, these accolades, further affirm our excellence in sustainability and strategic communications. Next, last month, Meralco was also named a Sustainability Champion by The Manila Times, recognizing the alignment between our sustainability agenda and the United Nations Sustainable Development Goals. Moreover, we were featured in The Manila Times inaugural ESG publication, citing how Meralco is leading by example from transforming how energy is generated and distributed to empowering underserved communities.
Lastly, just last Friday, October 24th, our 2024 One Meralco Foundation integrated report, our very first IR, earned top honors at the 2025 Asia Integrated Reporting Awards, or AIRA, securing the Platinum Award for Asia's Best Integrated Report under the First Time category. AIRA is considered the most prestigious recognition for excellence in sustainability in corporate reporting.
Covering Asia, the Pacific, and the Middle East, honoring companies that demonstrate long-term value creation, integrated thinking, and transparency. Thank you very much.
Thank you, Raymond. We will now open the floor for questions from our analysts and investors. You may raise your questions in two ways. Raise your virtual hand and wait to be recognized before speaking. Alternatively, you may type your questions in the chat box, and I will read them on your behalf. In either case, kindly state your name and the company you represent before asking your question, and please mention the executive you would like to address. We actually have several questions already on hand. From Klein Resilar of Regis, could you please confirm whether the loan used for Chromite acquisition has been pushed down to the operating unit in the third quarter?
Not yet. We are working on it. So before the end of the year, hopefully.
Thank you, Ms. Betty. We have a question on-site.
Hi, thank you for the opportunity. I am Germaine from Maybank. I have a question, I guess, first for Sir Ferdinand. Is there any updated guidance on DU volume growth following observed sluggish demand? Is a rebound expected, or should we expect current levels of growth to continue?
Yeah, I think as far as guidance is concerned, with the onset of, technically, La Niña, I think we see the same trend for Q4. So we will probably end up around 0.5%-0.8% negative. So a bit on the negative side, but not far from what we have last year. But at least on the regasification side, I think we are ramping up. And in terms of organic, I think by next year, as weather patterns normalize and maybe occupancy picks up, we are going to get some sort of uplift on what we lost this year in terms of our organic contraction.
Thank you. Following on that, maybe for Ms. Betty, what CCNI split of distribution and generation does Meralco expect by year-end and overall in the long term, if possible?
Well, I guess I am more or less where we are right now in terms of our generation and [audio distortion]
Sorry to ask, Ms. Betty. Can we have more color also on the mentioned regulatory reset fee adjustments? Is there an exact cost or timeline for these adjustments?
That could simply be the set cost that the Energy Regulatory Commission asked us to refund because we did have a reset in the last several years, the last two regulatory years. The amount, I will get to you.
Thank you, Ms. Betty. Last one from me, maybe for Sir Manny. Is there progress on the upcoming projects like Terra Solar that has, I believe, a contract for 2026, around 850 MW. Are things on track, or are we seeing delays, and due to what, if ever?
Well, the project today is 65% completed. We have experienced challenges on-site, including the weather. Some of the lands we have yet to acquire, and this requires some realignment of the feeder lines. Key components along the project's critical path, like transmission towers, have been secured. 100% of the transmission towers, 89 out of 89. Corridor access has been acquired 82%, and connecting land for phase one are already being secured and is progressing well. We still believe that we are within the allowed timeline, provided by the PSA with Meralco.
Thank you.
Thank you for that. We are just seeing some online chats saying that Ms. Betty's response earlier was not heard. Just going back to Klein Resilar's message, could you please confirm whether the loan used for the Chromite acquisition has been pushed down to the operating unit in the third quarter? Ms. Betty mentioned earlier that, "Not yet, we are working on it.
We are looking at before year-end, I said. Germaine, your question, the set fee is over PHP 900 million.
Thank you, Ms. Betty. In line with Germaine's question earlier in terms of the contribution mix, to what extent is the strong LNG contribution exposed to volatility in Malampaya and global LNG prices? How are you managing margin stability? The question from Marky Carunungan of F. Yap.
Well, the pricing for LNGPH, for Excellent Energy Resources Inc. and IRRI, the fuel is passed through. As far as the generator is concerned, that volatility is actually managed on the generator side. It is a charging capacity. The two plants are also contracted fully with Meralco. What we are also working on now, just to again to address the fuel volatilities, we were informed that Prime is going to start work on the pipeline that connects Ilijan SPPC to the Malampaya pipeline in Tabangao. They will start picking, I think that is maintenance, starting December 1, and hopefully ready to accept gas from Malampaya, if gas can be actually supplied by Malampaya post December 16, 2025.
Thank you, EVR. We have a question on-site.
Hi, everyone. Good afternoon. Peter Garnace from Unicapital Securities. Thank you so much for the briefing, and congrats on the results. I have three questions. I will go through them one by one. First is on the provision write-backs. Are the consecutive quarters of provision write-backs an indication of increased confidence of rate reset by July next year? Will this trend continue, or would it be safe to assume a similar scale of write-backs moving forward? That is for my first question.
Sorry.
Sorry, I will just repeat it. Are the consecutive quarters of provision write-backs an indication of increased confidence of a rate reset by July next year? Will this trend continue, or would it be safe to assume a similar scale of write-backs moving forward?
The write-backs right now are all related to our settlement of real property tax, and it has nothing to do with the reset.
Got it. Thanks.
We need to settle on real property tax for our poles, wires, et cetera, which has been a case that was decided by the Supreme Court back in 2015, if I am not mistaken. So, there are several LGUs that we need to settle, and this consists of different types of assets.
Got it. Thanks, Ms. Betty. I think my second question is still addressed to Ms. Betty. Can you provide a breakdown on the difference between the core net income and the reported net income?
Okay. I did mention earlier that it pertains to the day one gain adjustment. That is about PHP 4 million. Foreign exchange loss of close to PHP 500 million. The balance would be gain on sale of asset of MGEN. That should be a total of about PHP 350 million-PHP 360 million. Right, PHP 362 million to be exact.
Thank you so much for that, Ms. Betty. My last question, I think I will address it to Sir Manny Rubio. Could you provide an update on MGEN Renewable or MGreen's exchangeable note agreement with Solar Philippines? If I am not mistaken, both of the exchangeable agreements have matured in September of this year. Any update if the loan was or will be repaid through cash or through shares? Thank you.
Exchangeable notes with Solar Philippines Power Project Holdings to buy shares in SPNEC. The exchange of shares for the loan extended by MGEN Renewables was to be affected after the shares were released from the lockup after they got listed. This occurred in September 2, 2025. Prior to effecting the block sale, MGEN Renewables was asked if SP can first transfer to the owner, Lian, before transferring to MGEN Renewables. This assignability is part of the exchangeable note agreement. The transfer to Mr. Leviste was implemented already, and the transfer to MGEN Renewables has also been accepted by the Philippine Stock Exchange. Settlement is due today and will be reflected tomorrow.
Thank you, EVR. We have a set of questions here for still on MGEN, MTerra Solar in specific. For a set of questions from Nikki Frank of Abacus Securities: Is there a firm date or window for declaring commercial operations? Kindly confirm that the capacity factor for solar panels used, is it 18% or 20%? Third question is, can you give EBITDA margin guidance? Fourth one is, what is the average cost of debt?
The contract allows us to declare COD up to August 1, 2026. That is for phase one. For phase two, February of 2027. On the capacity factor, Philippines is, because of the regions, anywhere between 17%-18%. I think that would be a number that we are looking for the PV panels of Terra Solar.
The third question is, can you give EBITDA margin guidance?
We are expecting EBITDA to be north of 80%.
Last one, what is the average cost of debt?
Average cost of debt would be around 7%.
Thank you, EBR. A question related to battery energy storage. What kind of scale in terms of MW is the company looking to build up for this, and what type will be used?
Well, it is not about just building on batteries. I think what we are looking at when we build batteries is where are they needed and what will be the purpose. At the moment, we are looking at building one in Cebu because it is needed. We are talking to our partners in Mindanao, where energy storage is also needed. However, when a case is actually built, we have extra land in Terra Solar, and if we can actually justify putting additional batteries outside of the Terra Solar project, and we can justify it through an arbitrage, then we will do the same. But it has to serve a purpose. It is not just a matter of building batteries for building capacity's sake.
Thank you, EVR. Just related to MTerra Solar still. We have a question from Cristina Ulang of First Metro. Good afternoon. Appreciate your information, guidance for equity valuation purposes on selling prices for Terra Solar, WESM based or mid-merit on the higher end, like PHP 7, for instance, and load factor, say, 30%.
Well, Terra Solar's 53% capacity factor to be delivered to Meralco. Ronald Valles presented earlier the results of the CSPs approved by ERC. 50% capacity factor is then sold at an approved rate of PHP 18.18-PHP 19. We will be lower than that.
Thank you, EVR. We have a question on site.
Yes. Good afternoon. Martin Marty, also from First Metro. I wanted to direct this question, I guess it's either to Attorney Valles or Mr. Rubio. How will this prioritization of indigenous natural gas affect Chromite Gas, I guess, at the point where gas can be delivered?
As Ronald presented earlier, the prioritization of indigenous gas should not impair existing contracts for gas. Obviously, if indigenous gas is actually cheaper, we should have access because the Philippine Natural Gas Industry Development Act mentions that everyone should have non-discriminatory access to gas. At the moment we're asking DOE, but it seems that whatever gas is going to be available will be allocated based on installed capacity. So we have bigger capacity, so it has to be 55, 45. I think that's what we're looking at. But yeah, at the end of the day, I don't think if indigenous gas were to be cheaper, you don't even need to prioritize it. We will have access to that.
Thank you for that. Before we go on-site, we have a question online. It is a question from Jelline Gaza. Can you open the line?
Hello. Good afternoon. Can you hear me?
Yes, we can.
Thank you. My first question is on the trending method that will be adopted in the PBR asset methodology or RAM methodology. Can you please expound on what it means and what it effectively translates to in terms of the ARR or effective rate for Meralco? That is my first question.
The way we understand the trending method is that it is a form of reappraisal as allowed under the EPIRA for assets that are undergoing devaluation during the RORB time. It is trending because it is subjected to an adjustment based on recognized adjustment factors for CPI or indexation. That is how we understand it.
Effectively, it is like a form of revaluation still?
Yes, it is a revaluation because the Supreme Court decision did not say that when it voided the replacement power cost, that the revaluation of the asset will be based on historical costs.
That is it. Thank you, Attorney Valles. Another on the latest, on the tariff determination. I recall in the last PC you were mentioning that there is an ongoing Supreme Court case about questioning the applicability of the final interim rate. Are there any updates on that?
Sorry, can you say that again? I did not hear the question exactly.
The Supreme Court case filed by a consumer group, which questions the validity of the final interim rate.
You mean the AWAT?
Yes, correct.
That have been settled by the ERC. There were three cases that were elevated to the courts by consumer groups, two in the Court of Appeals and one in the Supreme court. Meralco has already submitted its comments to all of these cases, and our comments are aligned with the comments submitted by the Office of the Solicitor General representing the ERC. So consistent in position taken by the government and Meralco in defending that award decision. We have yet to receive any further advice or notice from the ERC on the action to be taken on these cases from the Supreme Court or Court of Appeals rather.
Okay, understood. Thank you for clarifying that. My next question is actually a follow-up on the prioritization of the local indigenous gas. Do you think that this might have any impact on Meralco as a distributor, your plans for future PSA auctions?
Well, right now, the guidelines speak only of prioritization of ING over LNG. It does not yet cover prioritization of ING over coal or other conventional sources. Although I think that the Department of Energy is going to issue separate guidelines on that. Based on my reading of the circular, the applicable CSP or guidelines for the procurement process is still the same CSP that the DOE has approved prior to the issuance of these guidelines.
It's a matter of just waiting for the order to come out, because if I recall, when we look at the law or initial IRR, there's a mandatory percentage, procurement by distribution utilities for power plants using local gas, right? Is that understanding correct?
Yes. There is no implementing guidelines yet on the mandatory procurement of LNG over any other sources of fuel. We are awaiting further advice or issuance from the DOE in that respect.
Okay, so it's more like waiting for it. Understood. Lastly, on the numbers for Ms. Betty, would you be able to disclose the net income contribution to Meralco of LNGPH after contributing or considering the PPA adjustment? Thank you.
I should have the number for LNGPH. Can I get back to you? I have the number. I think PHP 5 billion. That's PHP 5 billion, LNGPH.
After PPA and before net interest?
Yes.
Got it. Thank you. Thank you.
Thank you, Jelline. We have a question on site.
Hi, good afternoon. Eunice Dolatre from Security Bank. My first question would be directed to Sir Manny Rubio in terms of the timeline for MGreen's pre-IPO via SPNEC., any target on the target transfer of assets and, if there are any changes on the earnings mix, should this materialize? That's my first question.
We do not have any timeline yet, times yet on that one because, it's just an option that we're considering. If ever, we'll do that once Terra Solar is fully delivered and we've merged the assets of MGreen and SPNEC. But to date, we're still planning for the milestones to achieve that if we take that option.
All right. Thanks for that. My next question would be on the current plans for the Atimonan One.
We've started project development of Atimonan One. We've issued. We've conducted bids for the EPC. We have received three offers. We are in a position to participate in a CSP that will come out probably by around anytime between December and January, whether that's through Meralco or base load capacity auction by the DOE. By then, we'll be ready to participate for 1,200 MW capacity.
All right. My last question for now would be on the spot market trends. Currently, the year-to-date spot average is now below PHP 5. Looking at the recent PSA contracts, it's now also below PHP 5 per base load. Just wanted to know your outlook or perspective on the spot prices moving forward and for your future contracts. Just a follow-up on that, what's the current contract mix for Terra Solar, and your spot market exposure, if there's any?
For the spot market, our view is that it's going to remain low, given that new capacities are coming in. JF2 capacities, there are four plants that came in, which pushes the merit order dispatch to the right side. Then, of course, as we continue to construct and commission Terra Solar, that capacity will also be coming in 2026. If there will be any excess, apart from charging the batteries of Terra Solar, then probably an option, if the prices in the spot market are low, we can sell it to our risk and sell it to the retail electricity market.
Thank you, EVR. We have an online question from Klein Resilar of Regis regarding RES. Why are RES volumes up 8%, but EBITDA and income contributions from RES and service subsidiaries dropped?
The reason why the EBITDA decreased despite volume would be mainly because last year we had the benefit of trading gains when spot prices were higher. That amount has actually decreased, the trading gains that we have this year compared with last year. If I recall correctly, the trading gain last year was about closer to PHP 3 billion, I think PHP 2.7 billion, compared with what we have this year, which is only less than PHP 300 million. If we look at the volumes, these are actually coming from customer contracts where the margins are not as big as if it were a trading margin.
Thank you, Ms. Betty. Klein, as a follow-up question, could you elaborate on the factors behind the rise in distribution profits, even as sales volumes dipped?
On the distribution side, while the volumes are lower, to a certain extent, we looked at cost and also the other point was as it relates to the reversal of provisions related to settlement of tax cases. More of real property tax. As we conclude on settlement for taxes, as I mentioned earlier, this pertains to real property tax on poles and wires. This is based on a Supreme Court decision back in 2015. The settlement is not as Meralco itself. We have to go to each of the LGUs. It takes a while. We continue to settle that one.
Thank you, Ms. Betty. The virtual hand of Jelline Gaza was up earlier. Can we check with her again? Jelline?
Okay, sure. Thank you for the opportunity. Maybe as a view on the demand, just curious to know about Meralco's view on rooftop solar and net metering. Do you think that this might be a potential driver of how volumes has been weak? If you have any figures on the extent of net metering or your own internal review of how much this has been, even for those that are not connected to the grid, that would be extremely helpful. Thank you.
Yes, Jelline. I have some figures now. For estimated solar losses, we estimate our solar loss to date at around 427 GWh. This is up around 74 GWh compared to 353 GWh of losses that we had last year. We project the incremental loss to reach around 100 GWh. That is year on 2025 versus 2024.
The incremental by 100 GWh for the full year and the 74 GW increase in loss was for the nine months.
For the nine, yeah. For the nine. In terms of total, it will be more or less around 600 GWh by end of the year. The incremental is around 100.
400 out of. Just around only 1% of total demand.
Yeah. The incremental is around 100, but in terms of the actual loss, it will swing around 600 to 600+ GWh.
Understood. Thank you, sir.
Thank you, F.O.G. We have a question from Raymond Franco related to the regulatory. I believe Attorney Valles answered this earlier, but if you can elaborate further, J.R.V.V. What does management expect to happen with regard to the supply agreement extension with First Philippine Holdings Corporation or Santa Rita after January 2026?
Today, the parties are discussing it, but there are no firm commitment or decision yet on whether there will be another extension beyond January 31, 2026.
Thank you, Attorney J.R.V. We do not have questions on site anymore? Okay. Peter?
Thank you, P.J. Just one last question from me. I think I will address it to Ms. Betty. With regards to the peso depreciation. The peso is now back to 58.9, almost 59 versus the USD. Would you be able to quantify for us the impact of every peso depreciation to Meralco's operations?
First, we don't have foreign currency denominated debt. We do have a little of the foreign currency denominated trade liabilities. We plan all of this. We factor it in our daily requirements for foreign currency. On the purchase power side, we do a daily purchase to manage the impact of forex to purchase power cost, which is billed to the consumer. The purchase power cost, so now we have the currency already. When we settle it, that's the same rate that we use to settle. There should be not much impact to us for that one, except with respect to the dollar liabilities which are related to trade.
Thank you, ma'am.
Thank you, Ms. Betty. That's the last set of questions we have. Mindful of the time. Well, thank you everyone for attending our briefing this time. We look forward to having you in our full year briefing come February 2026.