Total Revenues rose by 34% equivalent to PhP426.5 billion, an amount that reflects higher volumes and was primarily caused by pass-through generation charges. Total energy sales was also at its highest as it grew by 6%, totaling 48,916 GWh. The continuing upward trajectory in demand is driven by the renewed confidence of businesses and the public as the country bounced back from the pandemic. Double-digit improvements in commercial sector volumes were observed following the easing of movement restrictions in the first quarter. Record-high growth was posted in April as summer activities coincided with the election campaign period, and in September as schools resumed face-to-face classes. Higher demand in retail, malls, restaurants, hotels, leisure, and real estate was also evident as the government allowed full operations and most employees returned to on-site work.
Core Net Income increased 10%
Our core net income amounted to PhP27.1 billion, a record-breaking achievement largely driven by the higher contribution from the power generation business. Meralco PowerGen Corporation (“MGen”) contributed PhP5.4 billion, up 346% from PhP1.2 billion from a year earlier. This was motivated primarily by the contribution of Singapore-based PacificLight Power Pte. Ltd. MGen currently has a total power generation capacity of 2,251 MW (net).
Reported Net Income improved, reflecting a 21% increase and amounting to PhP28.4 billion. This is the highest ever level for the Group.
Capital expenditures amounted to P42.6 billion, 55% higher than the previous year. Meralco invested a great amount to launch power generation projects, upgrade distribution facilities, improve customer service and network, boost facilities for its fiber network, and investments in its towers business.
Other Updates
In August 2022, Meralco’s infrastructure unit, MIESCOR Infrastructure Development Corporation, signed a sale and leaseback agreement with Globe Telecom, Inc. (“Globe”) for the acquisition of 2,180 towers and passive telecom infrastructure for a total consideration of PhP26.2 billion. As of end-December, MIDC and Globe completed the handover of 860 towers with a cumulative value of PhP10.3 billion, representing 39% of the portfolio deal. Completion of the tower transfers and final closing are targeted for the third quarter of 2023.
Closing the year with over 7.6 million customers, Meralco continued to nurture and strengthen existing partnerships and forged new ones with both the public and private sectors:
• Meralco streamlined the process of issuing permits ultimately benefiting customers and contractors. This led to timely energization and execution of key customer and network backbone projects.
• The close collaboration with the Commission on Elections (COMELEC) ensured reliable power supply in schools / voting precincts for the National Elections, which was carried over to the re-opening of schools in August.
• An online platform was launched that allowed customers to access the services of electrical experts Certified By Meralco (CBM) for their added convenience in service application and to ensure that the safety standards of Meralco are followed.
Building on the momentum of the Customer Centricity Transformation Program + Digitalization (CCTP+D) launched in 2021, Meralco continued to innovate and transform the experience of our customers.
• 56 Business Centers equipped with Queuing Management system
• 40K daily customer capacity
• Upgraded handheld terminals for meter reading
• 31% eWallet payments
• PhP 2.9M customer savings for eWallet transactions vs credit cards.
• Geo-tagging customer locations for efficient response and outage resolutions
Digital Transformation
DATA AS GROWTH ENABLER FOR MERALCO
Meralco continues to see digital transformation with data in mind as a key enabler across business units. Through greater understanding and alignment of data, we are able to make sound decisions and. relevant action allowing Meralco to deliver more value to its stakeholders.
Through the Analytics and Data Communities of Practice (COP), Meralco is geared to further empower and advance the organization in its data management journey.
GOING DIGITAL AND DATAFIED
More and more, organizations are increasing their online presence, moving to mobile and datafying faster to conduct business and better serve the customers. Meralco has long recognized how this dramatically increased the power of data that is why in 2020, it embarked on a Customer Centric and Digital Transformation journey with a solid Data Driven strategy. It was designed to govern, capture, understand, and leverage on data to further level up operations and customer experience. This clearly echoes the strategic direction of Meralco’s President and CEO Atty. Ray C. Espinosa “to elevate utilization of data and technology to advance the Company’s goals of delivering value to the business and providing excellent customer service.”
POWERING CUSTOMER CENTRICITY THROUGH DATA
Meralco’s data-driven strategy was designed to integrate governance, processes, technology, and data into an informative, actionable layer across the organization. In 2021, Meralco launched the Meralco Data Platform (MDP) that allows the company to further improve customer experience, service delivery and operational efficiency. MDP, the technology enabler of the utility’s data-driven transformation, serves as the unified business intelligence and analytics platform that leverages on consumer data to extract insight and information. This addresses Meralco’s growing data requirements, provides the capability to manage data more efficiently by automating data processing activities that involve massive volumes of information from billing and payment platforms, Meralco online channels, electric distribution, and supply chain management systems, among others. The power of data available to Meralco was harnessed to make it useful, accessible, and efficient to support the business. MPD also enables the creation of management and operational dashboards and insights crucial for business decision-making. Its application was in customer service, which empowered responsible Meralco offices to immediately act on applications to ensure timely energization of customers. This resulted in improved turnaround time. The availability of in-depth analysis of customer inquiries and complaints also enabled Meralco to continuously improve customer satisfaction levels. Meralco launched in 2022 its management dashboard called M-Wing, a single-source, online and interactive reporting of key performance indicators (KPIs) accessible via mobile anytime, anywhere, any device. These business performance reports are presented internally in Meralco and to the Board, as well as externally to investors and the media. Powered by MDP, M-Wing enabled digitalization efforts towards improving efficiency of data processing and report generation.
Meralco also leveraged data science and analytic models with direct positive impact toward customer service experience. The adoption of the MDP resulted in the reduction of Meralco’s average service application processing time by 35% (from 2.96 days in 2021 to 2.20 days in 2022) as well as its average connection time by 5% (from 1.73 to 1.64 days within the same period). Moreover, Meralco, through the MDP and other data-driven solutions introduced by its Information, Communication, Technology, and Transformation unit, can now proactively identify distribution transformers in need of rehabilitation, sparing nearly 930,400 customers from potential unplanned outages in 2022. This represents a 365% increase from the estimated 200,000 customers in the previous year.
MDP has also enabled a faster turn-around time to conduct profiling analysis from vast sets of data down to five minutes for 39 million records and is key in data assessment requirements as we prepare to migrate to a new customer management system. With MDP, we are also able to achieve 50% faster turn-around time of dashboards and analytics enabling data-driven and timely decision-making. Moreover, by achieving an all-time high data quality index of 99.98% in 2022, we are able to increase confidence and trust in Meralco’s data. With those results, Meralco bagged Talend’s Data Masters Award in October 2022 and is among the exclusive ten global winners.
One Meralco continues to actively transform its business towards becoming a sustainable enterprise. Anchored on its long-term sustainability strategy (LTSS), the Group will drive its just, orderly, and affordable transition to clean energy. Its end goal is to be coal-free by 2050. Running in parallel to this carbon reduction effort is One Meralco’s social commitment to promote the well-being of communities across five social impact areas.
In its journey towards decarbonization, One Meralco faces intrinsic structural challenges in the Philippine power sector that may interfere with its progress in achieving sustainability:
Economic
While solar and other renewable energy (RE) sources have a potential for reduced levelized cost of electricity, their capacity factors are lower, requiring other technologies (including battery energy storage systems) to cost-effectively enable the provision of reliable, 24/7 power supply.
Regulatory
The government’s least-cost, technology-neutral mandate requires distribution utilities to undergo a Competitive Selection Process (CSP) in the procurement of power supply.
Technical
Solar farms require significantly more land (up to four times) than fossil fuel-fired plants.
The grid needs to put in place additional infrastructure to manage intermittent RE capacity to avoid system interruptions.
Despite these challenges, One Meralco remains fully committed to sustainability. While the Philippines’ emissions represent only 0.7% of the global total, the Group is linked to about 11% of total emissions of the country, presenting a unique opportunity and obligation for the Group to lead the greenification of the local power industry. Under a business-as-usual scenario through 2030, the Group’s total emissions are expected to grow at 2.9% versus electricity demand (a proxy for business growth) to grow close to 3%. Nevertheless, One Meralco aspires to be more sustainable as the Group focuses on reducing emissions over the three horizons of its LTSS, driving One Meralco to be coal-free before 2050:
