Good afternoon, everyone. We welcome our investors and analysts on site here in the 14th floor of Lopez Building inside the Meralco Operating Center, as well as those attending online via MS Teams. I am PJ Ramos from the Meralco Investor Relations team, and I will be moderating today's briefing. Before we proceed any further, please be advised that the conference call is recorded. Kindly follow the ground rules that were sent to you beforehand. We will present the financial and operating results of Meralco for the quarter ended September 30, 2024. You may download a copy of the presentation from our website, www.meralco.com.ph, under the investor relations section.
We have members of Meralco's management team on hand for this briefing, to be led by our EVP and Chief Operating Officer, Mr. Ronnie Aperocho, SVP and Chief Revenue Officer, Mr. Ferdinand Geluz, SVP and Chief Finance Officer, Ms. Betty Siy-Yap, FVP and Head of Networks, Mr. Froilan Savet, SVP and Head of Regulatory Affairs and DU Regulatory Management, Attorney Jose Ronald Valles, Senior Vice President, Assistant Corporate Secretary, Chief Legal Counsel, Compliance Officer, and Head of Legal and Corporate Governance, Attorney William Pamintuan, FVP and Chief Sustainability Officer, Mr. Raymond Ravelo, and MGen President and CEO, Mr. Manny Rubio. I would like also to acknowledge other Meralco executives present today. We will begin the presentation with the financial highlights, followed with the operating results of Meralco's DU business, then update from Meralco PowerGen Corporation. Shortly after, we will have a brief report on our company sustainability report.
At this point, I would like to hand the floor to our Chief Finance Officer, Ms. Betty Siy-Yap.
Good afternoon, ladies and gentlemen. Representing the results for the nine months ended September 30, 2024. On your screen is a summary of financial highlights. For the third quarter of 2024, we saw the highest third quarter results with the continued momentum across all business segments. The third quarter CCNI was at PHP 11.9 billion, and this was generated from 4% increase in sales volume, higher contribution from Global Business Power plants, from contracts and income from WESM and reserve market. We saw higher trading gains from the retail electricity supply segment across the group. We also saw higher yields from fixed income placements. In the third quarter also, we consolidated our tower business under MIESCOR Infrastructure Development Corporation or MIDC with Phil-Tower Consortium Inc. in creating one of the largest telco tower companies in the Philippines.
For the nine months ended September 30, 2024, we delivered record CCNI of PHP 35.1 billion, 17% higher year-on-year. This comes from the DU share at 59%, power generation accounted for 29%, and the collective RES and non-power subsidiaries delivered 16%. Dividends received from our unconsolidated investees totaled PHP 8.6 billion, of which 87% was from PacificLight and San Buenaventura. In the third quarter also, S&P raised our long-term credit rating to BBB , a notch below the sovereign credit rating of BBB+ , and our outlook remained at stable. This chart shows our quarterly financial highlights. For the third quarter of 2024, as mentioned, CCNI is at PHP 11.9 billion, 10% higher than last year's PHP 10.8 billion. The DU CCNI contribution increased by 12% from PHP 6.4 billion -PHP 7.7 billion, with the 4% increase in sales volume from 13,372 GWh - 13,918 GWh.
This accounted for about PHP 500 million impact or addition to the CCNI. Our contribution from the unregulated business was at PHP 4.2 billion, almost flat versus last year. The higher power generation contribution came largely from Global Business Power, which was PHP 653 million compared with PHP 485 million last year. This comes from their contracts as well as WESM sales. This partially offset the lower contribution by PacificLight, although remains to be positive, which was lower contribution by PHP 796 million at PHP 1.8 billion in 2024 from last year's PHP 2.6 billion. RES CCNI contribution increased by 49% from PHP 956 million -PHP 1.4 billion due to higher trading gains and better margins for their negotiated contracts.
Our consolidated CCNI for the nine months was higher by 17% at PHP 35.1 billion, compared with PHP 30 billion in the same period, owing to the consistent increase in sales volume of the distribution utility and contribution from power generation and RES. Our consolidated reported net income rose by 19% to PHP 33.8 billion from PHP 28.4 billion, while our core EBITDA increased by 16% from PHP 50.8 billion -PHP 59 billion. The gap between CCNI and our reported net income is accounted for by the day one gain adjustment of PHP 1.7 billion, foreign exchange loss of PHP 32 million, and SPNEC loss on exercise of put option of PHP 48 million.
Net gain on sale of assets by Panay Energy Development Corporation of about close to PHP 400 million. Our consolidated revenues grew by 6% to PHP 355.4 billion from PHP 335.2 billion in 2023, mainly from the 7% increase in volume.
Cost and expenses increased by 4% to PHP 319 billion, the bulk of which still pertains to purchased power cost, which accounted for 82% of the total cost and expenses. Our capital expenditures totaled PHP 26 billion, largely from the distribution network improvement projects, development of solar plants, and purchase and construction of the telecommunications tower. Our cash and cash equivalent amounted to PHP 65.5 billion, while our consolidated debt was at PHP 89.1 billion. Of the total CCNI, our regulated business or the distribution business accounted for 59% or PHP 20.5 billion as volume grew 7% with residential and commercial volumes increasing by 10% and 8% respectively.
For our unregulated business, this accounted for 41%. As expected, power generation contribution was at around PHP 8.9 billion or 25% of the total. The RES business accounted for the difference. As mentioned, this was largely from the trading gains and higher margins from the WESM.
We go to the details of our revenues. Consolidated revenues grew by 6% to PHP 355.4 billion, mainly on account of the increase in volume and higher transmission charges. Generation, transmission, and other pass-through charges increased by 7%, reflecting the volume increase. With respect to transmission, this is accounted for by the higher ancillary charges billed by National Grid Corporation of the Philippines. Our generation charge, meanwhile, decreased on a per kWh basis due to lower WESM charges and decrease in international coal prices and implementation of the new PSAs from the recently concluded CSPs.
These factors more than offset the impact of the peso depreciation, which weakened to an average of PHP 65.99 per US dollar during the first nine months versus PHP 55.49 in the same period last year. In addition, this also offset the higher cost of fuel from the First Gas plants where they used LNG.
With the ERC approval of the interim average rate of PHP 1.35 per kWh , our distribution revenue increased reflecting the 7% volume increase. Energy fees, which totaled PHP 18.5, decreased by 9% due to lower fuel and coal prices, coupled with lower plant availability of Cebu Energy and Panay Energy, which was partially offset by revenues from the strategic participation of Global Business Power's Visayan power plant in the co-optimized and reserved markets. With respect to MIESCOR Infrastructure Development Corporation, note that we have completed the merger with Phil-Tower by creating a new holding company called Pylon Holdings, Corp. The effective interest of MIESCOR in MIESCOR Infrastructure Development Corporation and Phil-Tower is 26.6%. Cost and expenses totaled PHP 319 billion, of which purchased power cost accounted for 82%. OPEX represented 9%, while depreciation and combined coal and fuel and power plant O&M accounted for 4%.
Purchased power increased by 5% to PHP 262 billion, consistent with the movement of pass-through charges. Our operating expenses increased by 8% due to intensified maintenance work on DU facilities, including work done to address overloaded transformers during the high heat index period as well as activities in preparation for the rainy and holiday seasons. Higher cost of software maintenance and subscription, as well as inclusion or consolidation of the SP New Energy or SPNEC expenses this year following MGen's acquisition of a majority stake at the end of 2023. Depreciation and amortization increased by 9% to PHP 13.3 billion due to the completed capital expenditures of the distribution utilities, the acquired towers for SLB or sale and lease back, as well as the completed build, the two towers of MIESCOR Infrastructure Development Corporation.
The completion of the Baras plant in March of 2023, and the completion of phase two in August of this year. The combined coal and fuel and O&M expense of our power plants amounted to PHP 10.8 billion, 23% lower with the decrease in fuel and coal prices. With respect to our capital expenditures, this totaled PHP 26 billion. The DU CapEx amounted to 65% of the total, which comprised largely of distribution network project, which includes new connections, asset renewals, load growth, and maintenance CapEx. Power generation CapEx was 11%, while other subsidiary CapEx, which was largely MIESCOR Infrastructure Development Corporation, is 24%. With respect to MIESCOR Infrastructure Development Corporation, we deconsolidated starting September of this year. The next slide shows our power generation results.
MGen's contribution to Meralco's earnings for the nine months was driven by operational stability and efficiency of its power generating plants, as well as maximize opportunities in the co-optimized and reserve market. As of end of September, MGen had total power generation capacity of 2,417 MW in its diversified portfolio in the Philippines and Singapore. During the period, MGen delivered a total of 11,556 GWh of energy, 3% more compared with the same period last year. PacificLight, which owns a liquefied natural gas facility in Jurong Island, Singapore, booked core net income of SGD 219.9 million or an equivalent PHP 9.5 billion. While the total delivered energy is 4,299 GWh, 1% lower than last year's 4,337 GWh. Global Business Power recorded CCNI of PHP 2.2 billion, 62% better than last year's results.
The San Buenaventura plant delivered a total of 2,493 GWh, a 37% increase over from the 1,962 GWh in the same year last year. With respect to dividends received, for PacificLight, we received a total of PHP 5.5 billion in the nine months of 2024 and PHP 2 billion from San Buenaventura. Our consolidated interest-bearing debts stood at PHP 89.1 billion, including the PHP 47.9 billion debt of our subsidiaries. Our debt maturities are spread through 2039, with net debt as of the end of September 2024 at PHP 14.5 billion, net debt to EBITDA of 0.2x . All of our consolidated debt are denominated in Philippine peso. Cash and cash equivalent amounted to PHP 65.5 billion, and short-term investments totaled PHP 9.1 billion.
Our core EPS is at PHP 31.137 per share, up 17%, while our reported EPS amounted to PHP 29.948 per share, 19% better than last year. S&P upgraded Meralco's credit rating to BBB. Meralco's solid financial performance earned the upgrade from S&P Global, which is now a notch below the Philippines' BBB positive sovereign grade credit rating. S&P Global cited the company's strong financial position, improving profitability of the power generation business and the steady cash flows from the regulated distribution business and affirmed Meralco's stable outlook. That ends my report. Thank you.
Well, thank you. Good afternoon to everyone. For the operational highlights of our main distribution utility business, we're happy to report that we have seen remarkable growth in our business drivers such as energy sales and peak demand. While service performance has notably improved, especially our network reliability with double-digit improvements over last year's performance. Energy sales grew by 7.1% at 40,872 GWh. The net system input also grew by 7.7% at 42,480 GWh. Meralco's peak demand stood at 9.32 gigawatts. This was registered last April 24, 2024. Basically, all these increases were driven by the sustained growth in commercial and residential segments, as well as the recovery on the industrial segment.
For the customer count, we are now at, as of end of September, 7.986 million customers, but we are looking at breaking or achieving an 8 million customer connection milestone before the end of the month. That is something that we will be celebrating, that of attaining the 8 million customer connections. In terms of service performance, system loss was at 6.04%, higher by 0.23 percentage point versus the same period last year. This still stays below the 6.5% regulatory cap. Basically, the increase was driven by the higher share of high loss to serve residential customers in the total sales mix. As for reference, before the pandemic, the share of residential customers was only at 31%, but in 2024, the share of residential customers is already at 36%. That explains why our blended or total system loss was higher.
Of course, the entire Networks organization, our frontline organizations are doing its best to somehow bring the system loss below 6% at the end of the year. Meanwhile, for our reliability indicators, our Total SAIFI and Total SAIDI improved by double- digits. Total SAIFI improved by 16%. When you say improvement, this means the reduction in terms of interruption frequency as well as reduction also in terms of interruption duration. Total SAIDI improved by 11.7% at 87.89 minutes. Time to connect still at below two days. This is still within the rewards level of the performance-based regulation of ERC.
Lastly, on electricity rate, our average electricity retail rate is PHP 10.44 per kWh, slightly lower by 0.6% over the same period last year, mainly due to the decrease in generation charge from lower WESM prices, lower coal prices, implementation of new power supply agreements, and implementation of generation over-recovery adjustment for July to September 2024 billing months. Thank you, and I am turning you over to Ferdi Geluz for the customer report.
Good afternoon, everyone. For the details of the consolidated energy sales, our conso sales for the first nine months of the year already breached 40,000 GWh at 40,872 GWh, a 7.1% increase, or an increase of around 2,708 GWh compared to the same period last year. It is driven by continued growth in the commercial and residential segments, as well as modest recovery of the industrial segment. Residential is still at double-digit growth at 10.4% for the first nine months, with new energizations upstream in organic per capita consumption due to warmer temperatures brought about by the first half El Niño. For residential, it registered an additional close to 1,400 GWh versus the same period last year. 1,000 GWh is basically from organic sales or same-store sales.
Our year-to-date per capita consumption for residential is at 226 kWh, compared to 210 kWh per capita in 2023. While close to 380 GWh came from new energizations or newly energized customers. Commercial grew for the first 9 months by 8.1%, mainly driven by expansions and increased activities in hotels, restaurants, and retail. We boosted the search in office occupancy in the real estate space. The hotel industry is the highest growing at 14% growth year to date as they continue to benefit from robust tourist arrivals. Retail trade as well as restaurants grew 8% and 10%, respectively, with sustained growth with business expansions and openings, as well as increase in activities. Industrial, meanwhile, improved by just 1.6% with positive contributions from plastic, food and beverage, semiconductor, and non-metallic sectors such as cement. But I think the steel industry continues to be challenged.
Plastics and cement grew 7%, food and beverage 4%, and semiconductors grew 2%. In terms of sales mix, as Ronnie alluded, commercial leads the segment, the sales share at 37%, closely followed by residential at 36%, while industrial is down to 26% from 28% last year. Again, as Ronnie mentioned, we're happy to note that as of September, we have grown by more than 220,000 customers for the same period last year, and we're very close at hitting 8 million. At 7.986 million by end of September. As we speak, we are only less than 700 customers short of 8 million, and we project to hit the 8 million any day this week. That ends the customer report, and I now turn you over to Froi for the networks report.
Good afternoon, everyone. Meralco completed three major CapEx projects in the third quarter of this year. First was on July 28th, we have completed the project installation of a third 300 MVA power transformer at Duhat delivery point substation. This project will ensure continuous power supply to major industrial and commercial customers in the area. Second was on August 31st. We commissioned the new San Joaquin 115 kV, 34.5 kV GIS substation. This is the first Meralco fully indoor GIS substation. Everything housed in a building, and the very first also in the Philippines. The project will unload the existing Taguig substation, provide additional capacity, and ensure the reliability of service to customers in Taguig and Pasig cities. Third and last, on September 30, we commissioned the Milagrosa 115 kV switching station.
This project will enable Tanauan Solar Power Plant to deliver its 50 MW AC power to the 115 kV system of Meralco for added capacity. At a grid level, TSPP will support the government's increased RE share policy. Also, a portion of TSPP's output, 25 MW, to be exact, is under a 20-year power supply agreement with Meralco in support of its RPS compliance. Thank you. I'm now turning you over to Attorney Valles for the regulatory report.
Good afternoon. We will start with the regulatory update, with the case of the case filed by Prime Energy versus Meralco at RTC Taguig City. You will recall last July 30, Prime Energy Resources, Prime Oil and Gas, and PNOC Exploration Corporation had filed a complaint for temporary restraining order and with a preliminary injunction. It sought to enjoin Meralco from continuing the CSPs for the 600 MW and 400 MW PSAs. Last July 31, 2024, Meralco received the 72-hour TRO issued by the executive judge, and after hearing, the court issued an amended order to extend the TRO to 20 days, until August 20, 2024.
Last August 14, we filed our motion to dismiss, citing that RTC does not have jurisdiction, and instead it is ERC that has jurisdiction over the case and that Prime has no legal right that must be protected through the issuance of a TRO injunction. Finally, last August 17, the RTC order was issued rendering the TRO without force and effect and dismissed the complaint filed by Prime Energy against Meralco, which led us to continue the CSPs for both the 600 MW base load PSA and 400 MW mid merit PSA. We continued the CSPs for these two requirements. Last August 30, the Bids and Awards Committee determined the results for the 600 MW CSP, where Masinloc Power and GNPower Dinginin won the bidding. Masinloc offered 500 MW, and GNPower for 100 MW.
The rates as shown on the screen are much lower than the total headline rate and total LCOE reserve prices. The term is for 15 years, and this is going to be effective upon approval by the ERC. The fuel costs for these PSAs are full pass-through, based on the submitted formula subject to the heat rate cap. Subsequently on October 11, Meralco BAC continued with the CSP, this time for the 400 MW mid merit requirement. The BAC found the bid submitted by GNPower to be the best bid, with a total headline rate of PHP 7.54 per kWh, again, lower than the reserve prices for the total headline rate of PHP 7.95 and LCOE rate of PHP 8.05 or PHP 8.06 per kWh.
The term is again for 15 years, subject to ERC approval, and the fuel cost is again full pass-through, based on the submitted fuel formula and subject to heat rate cap. Next update is on the First Gas PPAs. Last August 13, the ERC resolved the issues raised by First Gas on non-recovery of incremental costs for its GSPA and LNG. The resolution states that Meralco or rather FGPC or Santa Rita and San Lorenzo are allowed to recover, and Meralco is authorized to collect from its customers the previously withheld charges related to incremental costs of the old and new GSPAs and LNG incidental costs over a period of 12 months commencing from the October billing period. Also authorize Meralco to reflect the adjustment in the GSPA of First Gas plants effective October 2024.
Santa Rita and San Lorenzo generation costs will reflect the respective new GSPA on all LNG related costs, and the impact of that is PHP 0.16 per kWh, beginning Meralco October 2024 billing to its customers. While for the deferred cost, the recovery of around PHP 6.4 billion from January to August 2024 supply months, will translate to around PHP 0.16 per kWh in generation charge for the next 12 months, as directed by the ERC. Finally, for the franchise renewal update. Last September 24, 2024, the House of Representatives finally approved on second reading House Bill No. 10926, which seeks to renew the franchise granted to Meralco for another 25 years.
Representative Joey Salceda, the main author of the bill, delivered a sponsorship speech stating that Meralco had clearly met its mandated requirements of least cost efficiency, reasonable pricing, open and non-discriminatory access, and anti-market power abuse under its current franchise. The Committee on Legislative Franchises chairperson, Representative Gus, also highlighted Meralco's reputation as a customer-friendly firm. Both sponsors responded to questions raised by various interpellators, including the suggestion of first District Representative Raul Daza. The bill is expected to be approved on third reading and subsequent transmittal to the Senate of the Philippines upon resumption of plenary session during the week of November 4, 2024. At the Senate on September 12, Senate Bill No. 2824 was filed by Senator Joel S. Villanueva, and the same was referred to the Committee on Rules on September 16, 2024.
The bill is expected to be referred and deliberated by the Senate Committee on Public Services once the House version is transmitted to the Senate. That's it for the regulatory update. I will now turn you over to Mr. Manny Rubio.
Thank you, Ronald. I'll begin the update for the power generation group with health and safety. Safety being the top priority at all MGen sites. With clear intent and focus on ensuring a secure and risk-free environment, we achieved a total of 38 million safe man-hours across employees and contractors. For the month of September, we are happy to report that we have zero lost time accident, zero first aid case, zero recordable case, and of course, zero fatality. These results underscore our dedication towards maintaining a safe work environment while we ensure stable and reliable power supply. For the operational highlight at the power generation group, we're able to deliver 11,556 GWh of the energy for the first nine months of the year, higher than 11,171 GWh posted in the same period a year ago. This uptick in performance due to higher availability across all our assets.
Global Business Power's energy delivered decreased by 7% compared to last year, reaching 4,281 GWh on account of plant outages during the period. Meanwhile, our San Buenaventura plant registered 2,493 GWh, 27% higher than the 1,962 GWh posted a year ago. San Buenaventura Power Ltd. Co. achieved an 89.9% average plant availability in the past nine months after its first major scheduled maintenance in January this year since it started commercial operations in 2019. Our Singapore-based subsidiary, PacificLight, saw a slight decrease on its energy delivery to 4,299 GWh on account of its plant outage to upgrade the facility, making it one of the most efficient plants now in Singapore. Lastly, MGen, the renewable energy unit of MGen Group, delivered a total of 483 GWh of energy, supported by the operations of SPNEC subsidiaries, Solar Philippines Tarlac Corporation, and Solar Philippines Calatagan Corporation.
For Terra Solar, we continue to make significant strides in our low-carbon energy transition journey, highlighted by the progress we have made on this flagship project. Last July, the project was certified by Department of Energy as an energy project of national significance. Further, Terra Solar Philippines, Inc. secured the Green Lane certification from the Board of Investments on July 23, 2024. The Green Lane certification enables the project to benefit from streamlined and expedited permit approval and processing. Driven by its commitment to efficiency, Terra Solar Philippines, Inc. partnered with MIESCOR to build the infrastructure connecting Terra Solar to the national grid. This includes the main collector substation, two solar collector substations, and the installation of the 230 kV connection asset. In terms of completion, Terra Solar project achieved on project development 73% overall project development numbers. Key progress areas include land control.
PV land is now 62% complete, and transmission line right of way is 62% complete. Permitting for pre-development is 61% complete. Solar farm development on the preparation for land is 96% complete. Procurement is 95% complete. Interconnection development is 92% complete, and PV site clearing is 23% complete. Meralco and SP New Energy Corporation formed a strategic partnership with Actis on September 6. Actis is known as a key global player in sustainable infrastructure. The partnership involves Actis' investment in a 40% equity stake in Terra Solar Philippines, a project set to become the largest integrated renewables and energy storage power plant in the world, and the largest FDI in infrastructure development in the Philippines today. Beyond Terra Solar, MGen and Vena Energy signed an investment agreement for the development, construction, and operations of the 450 MW solar project in Pangasinan through 3 Barracuda Energy Corporation.
Chromite continues its path towards acquiring regulatory approval, and we submitted all requirements to the Philippine Competition Commission. All the questions and all documents that were asked by Philippine Competition Commission have been submitted, and we are now waiting for their decision. The existing South Premiere Power Corp., or the Ilijan plant, continues to run at capacity equal to the PSA with Meralco. Excellent Energy Resources Inc., the new plant, is on track to deliver energy to the grid with the first unit within the year and the two units first for January and February of 2025. MGen, as part of its commitment to Powering the Good Life, continues to push programs that help build a more sustainable future for everyone.
MGen, through MGreen, continues to empower communities through renewable energy, and in partnership with One Meralco Foundation, successfully distributed 150 solar kits to residents of Sitio Tamale in Bongabon, Nueva Ecija.
A renewable energy arm, MGen, as reported earlier, generated 483 GWh of clean energy, the highest it has delivered ever, which was sourced from our solar power plants. As part of OMF's One for Trees program, we have successfully planted 1.5 million trees to date. Lastly, we also partnered with Rex Education to conduct a 2-day book donation drive, which supported 7,569 public high school students in Rizal and Bulacan. That's it for the generation group.
From the Powering the Good Life discussion, we will now proceed with the sustainability report by Mr. Raymond Ravelo.
Thank you, PJ. Good afternoon, everyone. I'll be presenting some updates on the sustainability front. First, we're very pleased to report that this year, Meralco maintained its inclusion in the FTSE4Good Index, driven by our strong performance across FTSE's ESG standards. The FTSE4Good Indices are a set of sustainability metrics that assess companies' performance in areas such as climate change, labor standards, and good governance practices. This marks the fourth consecutive year we have been included in the index, and it validates the alignment of Meralco strategies and operations and practices with global sustainability standards. Next, we have likewise improved our standing in the latest ESG risk ratings of Sustainalytics. Sustainalytics is a global risk rating institution which evaluates companies' exposure to and management of industry-specific ESG risks. For the year 2024, our risk score decreased or improved to 31 versus 31.7 last year and against 31.4 in 2022.
Sustainalytics cited our strong risk management practices in areas such as carbon emissions, community relations, and ethics and governance. This actually places Meralco in the top 39% of electric utilities across the globe. Next, last September 16th, we launched our latest sustainability initiative called Greening the Meralco Operating Center or Greening the MOC, which is an effort that seeks to, as our chairman himself puts it, position our nearly 22-hectare headquarters as the lungs of Ortigas. This project sits under the banner of two of our greenification efforts, One Meralco Foundation's reforestation program, One for Trees, and our urban farm initiative called Meralco PowerPlants. Greening the MOC aims to plant more than 1,000 additional trees here in our compound before the end of this year, bringing our total count to over 2,800 trees.
We will be planting a total of 16 types of trees, including hardwoods, softwoods, ornamentals, and even medicinal trees, transforming our Meralco Operating Center into a vital carbon sink for the city.
Well, for the last part of our presentation, we're happy to report that Meralco continues to gain global acclaim, winning eight Stevies at the 2024 International Business Awards. One gold, three silvers, and four bronzes. These awards reflect Meralco's excellence in sustainability, corporate social responsibility, and human resource management. We secured the prestigious Gold Stevie with our Chief Sustainability Officer, Raymond Ravelo, recognized as the Sustainability Hero of the Year. This marked the second consecutive year that Raymond has been the lone winner of this award. We earned three silver Stevies with our outstanding sustainability and corporate social responsibility and initiatives. Meralco's sustainability agenda, called Powering the Good Life, was awarded for sustainability leadership, also for the second consecutive year. Our One Meralco Foundation president, Jeffrey Tarayao, was honored as the Thought Leader of the Year in the nonprofit category for the second consecutive year as well.
Additionally, OMF's initiative supporting energy access for underserved communities was recognized for advancing inclusive development. We also garnered four bronze Stevies with our achievements in human resources and digital innovation. Meralco's #Mbrace Diversity and Inclusion program, fostering gender balance and women empowerment. Our employee engagement and retention efforts, reflecting Meralco's commitment to building a positive workplace culture. Meralco's innovative customer experience dashboard, showcasing our use of competitive intelligence to address evolving customer needs. Finally, our ninth edition of the Meralco Luminaries Awards, honoring external stakeholders who align with Meralco's vision for a more progressive Philippines. These accolades reinforce Meralco's standing as a global leader in sustainability, social responsibility, and organizational excellence, and ultimately inspires us to further elevate our initiatives and impact our customers, communities, constituents, and the country. Thank you.
By the way, please can you raise your virtual hand and please wait to be recognized before you speak. Alternatively, you may also type your questions in the chat box, and I will read them for our executives. For those who are here at the main dining hall at the 14th floor, please raise your hand and approach any of our microphones to ask your question. We actually have a series of questions already online. We'll start with Gregg Ilag of BPI Securities.
Thanks for the call. Can you share an actual number for the distribution CCNI and generation CCNI for 9 months 2024? First of four questions. Share of actual number for the distribution CCNI and generation CCNI for nine months 2024, nine months 2023.
It's 59%, right, of CCNI. If you calculate that comes out to be about PHP 21 billion for the DU, and power generation, PHP 8.4 billion.
Okay. Second question is, what is the latest update with regard to rate increase from EPIRA?
Yes, for the 5-RP, the motion to withdraw that we filed last September 2023 has been decided by the ERC. According to the chair when she was interviewed, I think it was in TV Patrol and Pandesal Forum. She disclosed that there was already a decision on our 5-RP, and the commission supposedly ruled that the 5-RP of Meralco will be considered as lapsed because of the delay, and that Meralco will instead continue to charge the reduced rate of PHP 1 and 35.22 centavos per kWh until June 30, 2026, and that Meralco is instead directed to file a 6-RP instead of the 5-RP. We are waiting for the official copy of that decision, and the ERC has not released the official copy as of this time.
Thank you, sir, Jose Valles , another question is, what is the outlook for PacificLight blended margin trends in FY 2025? Are we seeing this going down or lower?
Because we see fuel rates going down. The prices, of course, in the merchant market in Singapore would follow the trend of fuel rates, right? Having said that, we tend to balance whatever decline there would be in the trend that we're seeing from PacificLight with the capacities that we have here in the Philippines. As you know, we have been participating quite actively in the co-optimized market, and we intend to increase our capacities that are being offered to the co-optimized market, particularly in the Visayas region. Those that are following the numbers, the clearing prices in the co-optimized market will see that Visayas prices are much higher than Luzon. We intend to take the opportunity by introducing more capacity from PEDC and CEDC in 2025.
Thanks for that, Manny. Last question from Gregg. What are the prospects of the telco tower business?
Well, with the integration with Phil-Tower, the outlook is also a lot better because then the coverage would be now more nationwide. For MIESCOR Infrastructure Development Corporation, we're more focused on Luzon and Phil-Tower has more of the Visayas-Mindanao towers. The other thing also is, recently, we had received orders from about 300 from Smart Communications. If we look at that, in terms of co-location or tenancy, the ratios actually got up and should be better in the coming years. Although, from the P&L standpoint, we think that it will take us about four years from today to deliver positive numbers. But the tenancy ratio should increase already, and that should improve the numbers.
Thank you, Ms. Betty. We have a live question online from Mayank Maheshwari. We open your line, Mayank.
Thank you for the presentation.
Yes, go ahead.
Can you hear me? Yeah. I had three questions. One was on the point of-
No, Mayank.
Singapore power. Can you hear me?
While we wait for Mayank, we'll go on the next questions on screen. What is the energy sales guidance for fourth quarter 2024 and the full- year of this year?
I think for fourth quarter of 2024, we're sort of projecting a modest 3% growth, and that will bring us to around 6% growth on the year, ending at around 53,350+ GWh. This is more than 3,000 GWh better than the 2023 numbers.
Thank you Froi. Another two set of questions for Peter. When do you see core net income growth to recover in PacificLight and SBPL? I guess related to that, is there any update on the 21 SPNEC service contracts that are currently in the process of termination?
I think the performance of PacificLight is relative to an event when fuel prices were really high during the height of the Ukraine and Russia conflict. We're seeing the numbers normalizing, and we're still seeing quite a profitable margin in Singapore, to the point that we're even going to participate in the submission of a 600 MW technical offer due on November 1. On SBPL, it's a fully contracted facility, contracted to Meralco with capacity fee. So we don't expect really any fluctuation in terms of income as far as San Buenaventura is concerned.
Thank you, Manny. I guess these two other questions are for the generation. For the Terra Solar project, is the timeline for phase I still intact? Has the group encountered any issue with connecting to the transmission lines and right of way?
Yes, we're still sticking to the timeline of delivery of the first phase of 2,300 MW completion by February of 2026. So far, we have really not seen any significant opposition in terms of securing the land. In fact, phase I for the PV site is almost completely acquired. We're working on, I think what's remaining of the 89 tower sites, would be around close to 30, if I'm not mistaken. We have already issued a notice to proceed to the transmission EPC to start work on the installation of the transmission connection.
Thank you, Manny. We have one last question online from Jeline Gaza of JP Morgan. Jeline, would you open your line?
I don't think I can hear them.
Hello?
She's talking, but.
Jeline, why don't you type your question?
Okay.
Sorry, we are having technical difficulties.
Ms. Maya, we could not hear the question.
PJ, can I just question earlier with regard to SP and service contracts that is not clarified. We saw in the news recently that DOE canceled a number of service contracts, JF1, JF2, and it actually mentioned SPNEC. We have not received any notice of disqualification. We have filed for a declaration of force majeure on one of our sites, which is SP Santa Rosa, if I may say, this for one, because we cannot actually evacuate the energy, since the transmission line that needed to evacuate this capacity will only be available, one line is 2030, one or the other, by 2040, according to the SIS.
The ones that have been terminated by DOE are the ones that SPNEC actually transferred back to Solar Philippines, because we have a put option, and we have declared, we have actually put these projects, and I think both of those projects were the ones terminated, including some other service contracts that participated in JF1 and JF2.
Thank you, Manny. More power generation questions. Does Meralco intend to extend the closing deadline for PRAMAC if the conditions precedent are not met by year-end? Can you share more the timeline for LNG deal? Do we expect this to be finalized by year-end? After obtaining the PCC approval, what are the remaining items before you can finalize?
Well, I think the significant CPs, the significant condition precedents for this would be, of course, PCC approval and ERC approval for Excellent Energy. Well, we have submitted all the documents and answered all the questions that were sent to us by PCC. As I said, we are just waiting for the final ruling. For Excellent, we are waiting for ERC approval. At least now there is an OIC chair, and we expect that ERC would again start hearing and making rulings on PSAs. The closing will really be dependent on these condition precedents.
What is the review, Manny? On plan for MGen IPO, what are the key milestones you are looking for? Is there a possibility to spin this off to SPNEC instead?
Well, we are looking at a number of options for funding. Of course, one of them would be an MGen IPO. Again, the right time is until we have probably a lot more projects on the pipeline, not with the current assets that we have. SPNEC is already listed. That is, I think, how we manage between SPNEC and MGen is MGreen, actually, the one that we are considering, is one of the things that we need to consider on when do we actually go for a listing for funding, if needed.
Thanks, Manny. Still more on the power generation questions from Germaine Guinto of Maybank Securities. Aside from normalizing prices, can you give us your view outlook on the growth trajectory of PacificLight in light of Singapore's plans to import more energy from neighboring countries?
As I said, we are submitting an offer, a technical offer, for Singapore's plan to put another 600 MW gas operational by 2029. Other than that, I think we've got to also mention that we have been given, for our consideration, a conditional license to export from Bulan 600 MW mid-merit supply from pure renewable energy. So it's going to be solar and battery, which PacificLight owns 37% of. These are the two projects that are in the pipeline.
There's one more question. Can you elaborate more on the recent participation of the Visayan plants in the co-optimized market? How does this reduce cost, and how much has it contributed to earnings?
Well, actually, the participation of the plants does not reduce cost. It provides us more opportunity to optimize between whether we will contract or we sell to WESM or we sell to the co-optimized market for ancillary services. I'm only talking about Visayan plants. Panay Energy Development Corporation, Cebu Energy Development Corporation, Carmen Diesel, and Nabas. The diesel units are operating for dispatchable reserves, and the Panay Energy Development Corporation and Cebu Energy Development Corporation currently certified with four units, are participating, offering services for contingency reserves.
Thank you, Manny. We have a question here regarding your income statement. Can you further expound the other expenses line item? What was the main reason behind its 50% decline?
The other expense line are largely our interest income, interest expense, and all others. For 2024, on top of the net of the interest expense would be the higher yield from our placements, which we did highlight in the summary page. In addition, there were gains on sale of assets by the power generation unit.
Thank you, Ms. CFO. I have a question here from CLSA. Have you secured the necessary debt portion for Terra Solar? If so, which banks? If not, when?
Yes, we are in discussions with the banks right now for Terra Solar. There are likely six participating banks. Until we have signed or finally closed, we will not be disclosing yet. But it's the usual suspects. But six of them on the Terra Solar operating unit and three for the land company.
Thank you, ma'am. We will try to go back online for the live questions if Jeline Gaza of JP Morgan is still online. Jeline, let me try opening your mic.
Hello, can you hear me now?
Yes, we can.
Okay. That's great. I think just a follow-up on the LNG deal conditions precedent. Will there be a drop-dead deadline for the CPs to be achieved?
Jeline, I do not think there is any.
Okay, understood. Would you have any guidance on deal closure now, or is it still very fluid and dependent on government?
Well, we are still waiting for the PCC approval. I think that is the most critical.
Okay, understood. Second question is on the PacificLight. I understand that many things have been said already, but would you be able to disclose how much of the capacity is currently exposed to the spot, and how much of the contracted capacity will be expiring in the next 12 months?
Yeah. The declared contracted capacity is anywhere between 78%-80%, Jeline, and the rest is actually offering for vesting to provide certain reserves for IEMOP and those that were not accepted by IEMOP will be offered to the pool. I also forgot to mention that we are constructing a 100 MW gas plant in PacificLight, which should be hopefully operational by around April of 2025 to provide. Actually, that is what we call a contingency reserve. It is a fast response plant that is not synchronized. Sorry, it is a dispatchable reserve in our lingo. 100 MW.
Sorry, Sir Manny. The 78%-80% is the contracted level?
Yes. Singapore, as you know, is a merchant market, so we are competing with other plants in coming up with contracts. Typically, the contracts are around two to three years.
Okay, understood. Thank you for that. Just another question. I saw in Bloomberg that you mentioned that you are upping the full-year net income guidance from PHP 43 billion. Is there an updated number, and what would be the driver of the increased guidance? Thank you.
Okay. Hi, Jeline. The number, as MVP mentioned earlier, is north of 43, so we will keep it at that. What would be the drivers? Well, across all the three business segments, we actually expect them to deliver very good results. In fact, for the distribution utility, the energy sales volume remains strong, although we know that the second half is usually weaker because of the shorter operating days. But minus that one, overall, we expect the volume to still be positive. As indicated earlier, we will be ending the year at 53,000 GWh.
Yeah.
53,000 GWh. For power generation, of course, Manny is quite confident that our contracted capacities are okay. We are out of the woods already with respect to fixed-rate contracts, and opportunities in the reserve market is what we are looking at for Visayas. For RES, we think it will taper off a bit for the remaining months, given the WESM prices.
Thanks for that, Ms. Betty.
Thanks.
I think for my last question with regard to the ERC decision to just take the 5th RPS just a laps period until June 2026. How does this change management's view on provision reversal going forward?
Betty.
Hi, Jeline. Well, number one, we will have to wait for the ERC decision to come out for us to have basis for any reversal or provisions. Number two, once it comes out when there are no MRs, then any MR will determine our way forward with respect to the provisions.
Okay. Thank you for that, Ms. Betty.
Thank you, Jeline. We'll open the floor now for Mayank. Mayank?
Can you hear me now?
Yes, we can.
Okay. Thank you. My first question was again, a bit of an extension to earlier question on Singapore. A lot of the peers for PacificLight have signed long-term supply contracts of even 15 and 20 years. Are there any contracts or what is the average life of contract for PacificLight? Is it just two to three years, or you guys are seeing longer-term contracts being signed at your level as well?
Are you referring to power supply agreements?
Power supply agreements. That is correct.
Yeah. Okay. Actually, I just got the latest numbers. 760 MW out of 830 is actually contracted today, and now it is varying anywhere between one year, going to three. I am not aware if we have those long-term contracts. I have to get back to you on that one. As you know, the retail situation in Singapore is that even households can actually get supply. These are actually the ones that are more volatile. But we have a few of those. The contract profile that we have is mostly around one to three years.
Is it fair to say your current SGD 86 odd per MW are kind of a margin kind of rollover from next year because the two-year time frames are getting contracted on the retail side? Or do you see that number as being fairly stable now going forward on a spot spread basis?
We are still seeing some downtrends. We are trying to address that by really competing hard with others on the retail market. As demand actually grows and supply also grows, as you know, there will be another 600 MW of new gas plant that will be available towards the end of 2025. It will be very competitive, and the prices in the contracting market will be reflective of also the trend in the pool market.
Got it. The second question was more related to CapEx going forward for this year and maybe potentially next year. Can you just give us a bit of a breakup in terms of CapEx on the generation distribution as well as the, I think if you can break the generation up into renewables, non-renewables, that would be great. Thank you.
Sure, Mayank.
Well, for the distribution for the next two years, we are setting a budget of PHP 25 billion each year. Basically, the bulk of this is to upgrade our network, provide the capacity for our customers, and also we're supporting the build-up of the hyperscalers here in the Philippines. That's the target in terms of the CapEx for distribution utilities. And moving ahead, beyond 2026, we're targeting a much higher CapEx, shall we say, in the tune of PHP 30 billion each year or more. Well, basically, part of the resiliency strategy of the company, because we're being hit by typhoons every year, so we should start putting some of our lines underground already to avoid massive disruptions, and to really prevent major business disruptions because of typhoons. And of course, smart grid program and automation will form part of the CapEx plan of Meralco in the next five years.
Okay. Over a five-year period, is it fair to say that Meralco will be spending around PHP 350 billion-PHP 360 billion in terms of distribution CapEx?
Yes, around that number.
Got it. On the generation side, if you can give us a similar kind of a view of how we are thinking about CapEx there.
Yeah. I do not have the exact numbers with me for next year, but a significant portion of the CapEx for next year would be covered.
We pay for Terra Solar. Chromite, there is an inspection CapEx that we are looking at for Ilijan in order to prepare for the re-life of Ilijan. As you know, that plant is 25 years today. For Chromite, we are looking at around PHP 3.2 billion, then PHP 101 billion for Terra Solar. For the normal businesses that we have now in thermal, it would just be mainly for the periodic maintenance that we will be doing for the facility. Really the bulk would be for Chromite and Terra Solar.
Mayank, just to add, with respect to the capital expenditure, Manny did mention it is 101, about PHP 100 billion for Terra Solar in 2025. Then if we look at the succeeding years, we have about close to PHP 60 billion for Terra Solar also in 2026, and the balance in 2027. As you know, phase 2 will be up by February of 2027. Then beyond that, it would be a smaller amount already if we conclude on the gas project. Just to also emphasize, all of this will be on a project finance basis. Okay.
Perfect. Thank you.
Thanks.
Thank you, Mayank. Mindful of the time, we would just want to ask here on the floor if there are any questions. Aaron?
Good afternoon. My question would be on the chromite deal. As I remember, there is a pending case against the Ilijan plant some years ago versus PSALM. I would just like to ask if, as you acquire the plant, will it be included or will it remain inside?
That will remain with San Miguel.
That will remain with San Miguel. Thank you.
Thank you, Aaron. We have two more questions on power gen. I think we can wrap up from this. From Regina, here's just a question. Just to clarify, the 73% completion rate of Terra Solar is for phase I only?
Yes, for phase I.
A follow-up question from Derrick of CLSA. Can you remind what the current attributable capacity and megawatt of MGen and how much is in the pipeline?
I don't have the numbers with me.
Give me a second.
You have that in your records? Okay.
Sige. You continue.
Total is 2,400 MW at net attributable today.
All right. That wraps up the briefing for this afternoon. We thank you all for your presence. Thank you for gracing us with your attendance. We look forward to seeing you on our full year results come February of next year. Thank you.