meralco presentation nov 18
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MeralcoNovember 18, 2013
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MERALCO SERVES A STRATEGIC MARKET
Powers more than five (5)million customers in 33cities and 78municipalitiesThe country’s center ofcommerce & industry
About 50% of the country’sGDP
An estimated 60% ofmanufacturing outputMore than 30 manufacturingeconomic zones
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HUB OF GOVERNMENT SERVICES & INFRASTRUCTURE
Providers of outsourced businessprocessesHQ of shared services of globalcompanies
Deustche Bank, Chevron, etc.
Hotels & hospitalsTelecoms & transportation
Internet backbone, LRT & MRT,airport, etc.
All major media companies
Malacañang, Senate & House ofRepresentatives, Supreme Court,Armed Forces, National Police &Office of Civil DefensePAG-ASA
Providers of outsourced businessprocesses
HQ of shared services of globalcompanies (e.g., Deustche Bank,Chevron, etc.)
Hotels & hospitals
Telecoms & transportation: internetbackbone, LRT & MRT, airport
All major media companies
Malacañang, Senate & House ofRepresentatives, Supreme Court
Armed Forces, National Police &Office of Civil Defense
PAG-ASA
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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
23,83424,660 24,806 25,078
26,21927,049 27,516
30,247 30,592
32,771 GWh7.1%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
4.054.21 4.32 4.39 4.46
4.574.70
4.855.03
5.19 mln3.2%
ENERGY SALES
CUSTOMER COUNT
CONSOLIDATED
Ave. Growth: 2003-09: 2.7%2009-12: 5.0%2003-12: 3.7%
Ave. Growth: 2003-09: 2.6%2009-11: 3.2%
2003-12: 2.8%
MARKET HAS BEEN STEADILY GROWING
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DRIVERS OF GROWTH (1 ST HALF 2013)
13,11814,950 14,781
16,215 16,863
2009 2010 2011 2012 2013
4,956 5,174
6,261 6,557
4,933 5,067
4.4%
4.7%
2.7%
4.0 % Total, in GWh
Share of
2013 Sales:Details:
• Food & Beverage• Electrical Machinery (semicon)• Miscellaneous Manufactures
• Real Estate (condominiums, BPO office space)• Private Services (hotels, malls, hospitals)• Trade
Movers for 1H 2013
• Increased household consumption mainly due to warmertemperature and benign inflation
30.0%
38.9%
30.7%
Industrial
Commercial
Residential
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ON POWER PRICES
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SUPPLY CHAIN OF THE POWER SECTOR
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1H 2013 Share per component
Generation Charge56.9%
Meralco17.6%
NGCP9.0%
Taxes, UnivCharge11.5%
System LossCharge5.0%
BILL COMPONENT1H 2013Overall Ave,
P/kWh
Generation Charge 5.38Distribution Charge(MERALCO) 1.66
Transmission Charge(NGCP) 0.85
System Loss Charge 0.47
Taxes, Univ Charge* 1.09
Total 9.45
GENERATION CHARGE: SINGLE LARGEST COMPONENT
* Breakdown :Universal Charges 0.25VAT 0.77Others (Local Franchise Tax, etc.) 0.07
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REGIONAL COMPARISON OF ELECTRICITY PRICESFINDINGS OF THE INTERNATIONAL ENERGY CONSULTANTS
Philippine tariffs are “fully cost -reflective, which issound economic policy”
Policy is similar to Singapore, Japan, and Australia
Rates in Thailand, Malaysia, South Korea, Taiwan,& Indonesia are low due to “government subsidies”
“Tariffs remain well below the cost”
“Poor economic policy … unsustainable”
John Christopher Morris, Ph.D.Managing Director
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COMPARISON OF AVERAGE RETAIL ELECTRICITY TARIFFS
0.00
15.00
30.00
U S c / k W h
Bundled excl taxesUnbundled Generation
Unbundled Transmission
Unbundled Distribution
Other Taxes & Charges
Notes:1. Weighted average tariff (all customer categories), excluding VAT2. Tariffs are for January 2012
Source: International Energy Consultants
“Cost -reflective” “Government subsidized”
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GOVERNMENT SUBSIDIES IN OTHER COUNTRIES
• Subsidy is up to 54% of the power cost• Subsidies are through: sub sidized fuel , cash grants , addi t ion al debt ,
deferred expend i tures
Source: International Energy Consultants
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OTHER FINDINGS OF THE INTERNATIONALENERGY CONSULTANTS
Dependence on the price of imported fuel“Fuel is the largest component of the tariff.Approx. 80% of generation on Luzon is fuelledwith imported coal & oil (at full internationalmarket prices) & domestic gas (pegged tointernational prices)” “Several (but not all) other countries with lowertariffs provide fuel to their utilities at below-market rates”, or Their government-owned power generation,transmission, and/or distribution companies aresubsidized, absorb costs, and/or incur losses
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Historical Fuel Costs vs. Tariffs
0
25
50
75
100
125
150
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
$ / t o n n e - $ / b
b l
c / k W h
Coal Oil Australia Singapore Indonesia Korea Meralco
Source: IECNB. Meralco, Indonesia & Korea are averages of all tariff classes; Singapore, Australia are residential tariffs only
June, 2012
Over the past decade, some markets have passed rising fuel costs on to customers(eg. Singapore, Australia, Philippines) but others have not (eg. Indonesia, Korea)
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• VAT• Royalty/Tax on
indigenous fuels or
Duty/Tax onimported fuels• Real Property Tax• Other taxes & fees
• 3% franchise tax,in lieu of all othertaxes
Transmission
• VAT• Local Franchise Tax on pass
through gen/ trans/ system loss
charges *• Local Franchise Tax ondistribution charges
• Real Property Tax• Energy Tax on residentials• Universal Charges incl FIT•
Other taxes & fees* not applicable to electric coops
DistributionDELIVERYGENERATION
Phl Power Market is a fully priced market No Subsidies and heavily “taxed”
THE POWER SECTOR IS HEAVILY TAXED
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POWER PLANT /LOCATION
GENERATINGCOMPANY FUEL
INITIALCONTRACTED
CAPACITYILIJAN,
Batangas
South Premiere
Power Corp.
Nat Gas /
Diesel1,180 MW
CALACA,Batangas
SEM-Calaca PowerCorp. Coal 210-420 MW
MASINLOC,Zambales
Masinloc PowerPartners Co. Ltd. Coal 330-430 MW
PAGBILAO,Quezon Therma Luzon Inc. Coal 350 MW
SUAL,Pangasinan
San Miguel EnergyCorp. Coal 200-500 MW
Combined capacity:> 2,270 – 2,880 MW
MERALCO &South Premiere Power Corp. MERALCO &
SEM-Calaca Power Corp.MERALCO &
Masinloc Power Partners.
MERALCO &Therma Luzon Inc. MERALCO &
San Miguel Energy Corp.
Completion in 2012 of negotiations for new Power Supply Agreements
MERALCO RECENTLY SECURED TIGHTLY PRICEDPOWER FOR ITS CUSTOMERS
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LOWER GENERATION CHARGES IN 2013 VS. 2012
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Generation Charges also went up duringpast major Malampaya maintenance works
6.77 6.74
3.50
4.00
4.50
5.00
5.50
6.00
6.50
7.00
J a n - 1 0
F e b
- 1 0
M a r - 1 0
A p r - 1 0
M a y - 1 0
J u n - 1
0
J u l - 1 0
A u g - 1 0
S e p - 1 0
O c t - 1 0
N o v - 1 0
D e c - 1 0
J a n - 1 1
F e b
- 1 1
M a r - 1 1
A p r - 1 1
M a y - 1 1
J u n - 1
1
J u l - 1 1
A u g - 1 1
S e p - 1 1
O c t - 1 1
N o v - 1 1
D e c - 1 1
J a n - 1 2
F e b
- 1 2
M a r - 1 2
A p r - 1 2
M a y - 1 2
J u n - 1
2
J u l - 1 2
A u g - 1 2
S e p - 1 2
O c t - 1 2
N o v - 1 2
D e c - 1 2
J a n - 1 3
F e b
- 1 3
M a r - 1 3
A p r - 1 3
M a y - 1 3
J u n - 1
3
J u l - 1 3
A u g - 1 3
S e p - 1 3
O c t - 1 3
N o v - 1 3
Malampayamaintenance(Jul 13-21)
Malampayamaintenance
(Feb 10-Mar 9)
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IMPACT OF THE MALAMPAYA AND POWERPLANT MAINTENANCE
Generation Charge will rise
Will affect December and January bills to customers
After conclusion of maintenance works, GenerationCharge will normalize in February
Malampayamaintenance
Use of alternate, but more expensive,liquid fuels
Power plantmaintenance
• Tighter generation supply situation• Greater dependence on WESM
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Meralco's Peak / Off-Peak (POP)rates program
Formerly "Time of Use" or "TOU"Alternative energy pricing scheme:based on the cost of supplying
electricity during a period of timeMeralco customers can avail oflower generation costs in theirtotal electricity rate during pre-defined off-peak hours
DAYS PEAK OFF PEAK
Monday to Saturday 8 am to 9 pm (13 hours) 9 pm to 8 am (11 hours)
Sunday 6 pm to 8 pm (2 hours) 8 pm to 6 pm (22 hours)
CUSTOMER OPTIONS TO LOWER THEIRGENERATION CHARGE
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RENEWABLE ENERGY ACT OF 2008
RE Act
Fiscal Incentives Non-FiscalIncentives
RenewablePortfolio
Standards (RPS)
Feed-in-TariffScheme (FIT)
NetMetering
Green EnergyOption
•Promotes the development and commercialization ofrenewable energy resources
• Provides incentives to investors in renewable energy
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Customer Exports Energy to the Distribution Network• Daytime with Energy generated by the Solar PV•
Household uses up a portion of the Energy generated by Solar PV for basic load• Energy generated in excess of the Household load is exported to the Distribution Network
Customer Imports Energy from the Distribution Network• E.g., Night time with no Energy generated by the Solar PV• Household Energy demand is supplied by the Distribution Network
EnergyImported
EnergyExported
₱ kWh Imported
₱ kWh Exported
₱ Net Billed Amount
l e s s
Import Meter
Export Meter
Import Meter
Export Meter
NET METERING: CUSTOMER AS SUPPLIER
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April 2013 Lifeline Data Customer
Count(in millions)
EnergyConsumption
(gWh)
Lifeline 1.88 96.6Non-Lifeline 2.90 846.6TOTAL 4.79 943.2
39.36%
60.64%
Customer Count
10.24%
89.76%
Energy Consumption
Lifeline Non-lifeline
Lifeline Non-lifeline
SUPPORT TO MARGINALIZED SECTORS
KWhConsumption Lifeline Discount
( of Charges*)
1-20 100%
21-50 50%
51-70 35%
71-100 20% * Applied to sum of Generation,
Transmission, Distribution, Supply,Metering, and System Loss charges
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POWER SECURITY AND ROBUSTDISTRIBUTION INFRASTRUCTURE
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STRATEGIC IMPERATIVES
Given the strategic nature of Meralco’s market,power security and competitiveness are verycritical concerns
Adequate, reliable and reasonably pricedpower supply
Customer-centric processes and systemsHighly robust and customer responsivenetwork and service infrastructure
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6668
5430 5339
60996869
9175 8890 9053 8748
10,321
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
INVESTING TO SUPPORT DEVELOPMENT
CPIP 115 kV Line, Calamba PremiereIndustrial Park (CPIP), Calamba, Laguna
Laguna Bel-Air Substation, Sta. Rosa, Laguna
Carmelray 83-MVA Bank No. 2, CarmelrayIndustrial Park, Calamba, Laguna
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REDUCING THE SYSTEM LOSS CHARGE
10.85 11.1010.21 10.10
9.65
9.28
8.61 7.947.35 7.04
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
System Loss Cap8.5%
9.5%
1 . 4
6 %
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I F R ( t i m e s ) / C I T
( h o u r s )
Total IFR (Reliability) improved by 23%, at 2.84 times
Forced CIT (Availability) improved by 29%, at 1.75 hoursPre-Arranged CIT (Availability) improved by 20%, at 1.11 hours
IMPROVING SYSTEM AVAILABILITY AND RELIABILITY
IFR: Interruption Frequency RateCIT: Cumulative Interruption Time
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Ave. Time to Process Application
improved by 14%, at 4.6 days Ave. Time to Connect Applicationimproved by 31%, at 2.12 days
11.42
8.185.94 5.34
4.6
2008 2009 2010 2011 2012
Ave. Time to Process Application(Days)
4.253.42 3.38 3.06
2.12
2008 2009 2010 2011 2012
Ave. Time to Connect Application(Days)
IMPROVING CUSTOMER SERVICE
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Country% Families with
Access toElectricity
Families withAccess
Total Number ofFamilies
Luzon 91.52 % 9,639 10,532
Visayas 81.55 % 3,010 3,691
Mindanao 75.04 % 3,172 4,227
Source: NSO - Number of Families by Presence of Electricity, Main Source of Water Supply, and Toilet Facilities and by Region: 2009
Meralco and the Philippines
Major Island Groups
MERALCO (2012) Philippines (2012)
Household 96.56% 77.60%
Barangay 100% 99.98%Source: DOE Accomplishment Report, 2012
Survey Population, in thousands
IMPROVING ACCESS TO SERVICE
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Fast response and isolation ofhazardous and life threateningincidents
Timely and accurate informationon restoration efforts and power
situation
Ready 24 x 7 to respond to ourcustomers’ concerns
ENHANCING DISASTER PREPAREDNESS
“ Habagat ” in Au gu st , 2012
“ Habagat ” in Au gu st , 2013
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MAKING A DIFFERENCE BEYOND OUR FRANCHISE
ASSISTANCE TO CABANATUAN ELECTRIC CORPORATION
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ASSISTANCE TO CABANATUAN ELECTRIC CORPORATION(CELCOR) ON THE REPAIR OF DAMAGED ELECTRICFACILITIES DUE TO TYPHOON SANTI (OCT 18-22, 2013)
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Meralco contingent in
Aklan, Capiz and Iloilo
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Assessment
Meralco assessment team with CAPELCO Gen. Manager Edgar Diaz
Meralco Sector heads Gary Festin and Bernard Castro at assessmentsites
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Arrival
Meralco Panay contingent line up along Aklan West Road on their way to theirrespective assignments in Kalibo in
Aklan, Roxas City in Capiz, and Sara inIloilo.
Meralco Sector heads give an overall briefing to the Panay contingent
Meralco crews arrived at the CaticlanPort in Aklan after almost 24 hours of
travel.
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Efforts Meralco crews at work in different areas in Panay Island
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MERALCO SMART GRID VISION 2021
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