Manila Electric Company (MER) Earnings Call Transcript & Summary

Good afternoon, investors and analysts, and welcome to today's virtual briefing. I'm Dinbo Macaranas from the Meralco Investor Relations team, and I will be moderating [indiscernible]. Before we proceed, please be advised this teleconference call is recorded. I would also like to remind everyone to please follow the ground rules which are presented to you beforehand. We will start [indiscernible] and operating results of Meralco for the first 9 months of 2022. Copy of the presentation may be downloaded from our website, www.meralco.com.ph under the Investor Relations section. We have members of Meralco's management team in this call led by our President and CEO, Attorney Ray C. Espinosa. Other corporate officers who will be presenting are the following: Ms. Betty C. Siy-Yap, Senior Vice President and Chief Financial Officer; Mr. Ronnie Aperocho, Senior Vice President and Head of Networks; Mr. Ferdinand O. Geluz, First Vice President and Chief Commercial Officer; Attorney Jose Ronald V. Valles, First Vice President and Head of Regulatory Management, who is joining us online; Mr. Raymond B. Ravelo, First Vice President and Chief Sustainability Officer. We also have Mr. Jaime T. Azurin, President and CEO of Meralco PowerGen Corporation. We will begin the presentation with the financial highlights, followed by the operating results of both the distribution utility and Meralco PowerGen Corporation. After all the presentations are done, we would allot time for your questions. At this point, I would like to introduce our CFO, Ms. Betty C. Siy-Yap, who will present the financial result.

So good afternoon, ladies and gentlemen. I will be presenting the results for the first 9 months of 2022. Our CCNI is at PHP 19.6 billion with reported net income of EUR 19.8 billion and core EBITDA of PHP 37.2 million, all up versus last year. Power generation results of PacificLight in Singapore, San Buenavenura in Mauban, Quezon, our joint venture with [indiscernible] of Thailand and BulacanSol in San Miguel, Bulacan, our 50 MWac solar [indiscernible] were the main drivers of the 9-month performance. DU is stable, but these [ signs ] are offset by the distance, provisions reversals which we had previously accounted for because we have previously accounted for itself over the corporates. RES contribution decreased due to higher purchase power cost was net purchase from WESM increased to 952 gigawatt hours versus 412 last year at an average [indiscernible] of PHP 7.39 versus PHP 4.61 same period last year. Gross revenues consisted of DU rest, [indiscernible] power generation results of global business partner, BulacanSol, as well as non-electric subsidiaries [ consult ] PHP 314.9 billion or 36% higher. Our distribution revenue of PHP 44.3 billion was 14% the gross amount. Generation, transmission and other pass-through charges was 77% of the total, reflecting the higher coal and gas prices, WESM price exacerbated by the depreciation of the peso versus the U.S. dollar. This amounted to 77% of the total. Energy fees amounted to PHP 20.6 billion. Non-electric revenues grew 40%, with higher work accomplishment of [indiscernible] for [indiscernible] project, as well as net increase in circuit and accounts of [indiscernible] use. Our total costs and expenses amounted to PHP 298 billion, with purchase power cost accounting for 80% of the total. PPC grew 45%, reflecting the effect of higher fuel costs. The FCRA or the fuel [ cost ] recovery adjustment, which is spilled to the end of customers exactly as build by our supplier, and the cost of WESM [indiscernible]. Coal and fuel costs and power plant O&M combined total -- combined was at PHP 17.2 billion. CapEx for the first 9 months was PHP 20.8 billion, actually which pertained to the requirements of the DU network and development costs of power generation projects. Cash and cash equivalents amounted to close to PHP 40 billion, reflecting the effect of these funds implemented. Total borrowing is at PHP 90.2 billion. Next slide. The combined energy sales volumes of Meralco and Clark Electric of 36,553 gigawatt hours, 6% higher than 2021, which together with the volumes from the plants of [indiscernible] Power and BulacanSol generated gross revenues of PHP 314.9 billion, 36% increase from last year. On account of higher pass through charges with the unprecedented heightened [ cable ] price, higher Malampaya gas price, increasing spot market costs and the continuing depreciation of the peso. Generation transmission and the pass through charges grew 44%, the higher cost of which is power as reflected in the process contracted in the power supply is [indiscernible]. Any fuel cost recovery, as it relates to the captive market, will be subject to approval of the Energy Regulatory Commission. Included in the January [indiscernible] are aided by our power supplier [indiscernible]. To date, the [indiscernible] supplier totaled PHP 30.3 billion. Distribution revenues reflecting higher volumes net of -- is at PHP 44.3 billion, reflecting the effect of [indiscernible] net of [indiscernible]. Energy fees of PHP 20.6 billion represent power generation revenues, which grew over 100%. This is the combination of higher cost of power generation as well as the difference in period [ loan ], because we began consolidation of GBP in April of 2021 and BulacanSol [indiscernible] only in mid of May last year. Lastly, non-electric revenues grew by 40% to PHP 8.9 billion as a result of the growth from subsidiaries driven by higher work accomplishment of MIESCOR and Radius. Cost and expenses for the 9 months ended amounted to PHP 298 billion, a 44% higher, and this mirrors the increase in [ WESM ] sites [indiscernible]. Purchased power costs was 80% for above -- or 80% of the total. This increased by 45% to [ PHP 237.8 billion ]. Average WESM price increased to PHP 9.18 per kilowatt hour from PHP 3.01 [indiscernible] increased demand as well as FX of 3,469 megawatts of plant capacity and outage. The grid was placed under Yellow Alert for 7 days and Red Alert for 2 days in 2022 compared to [indiscernible] of Yellow Alert and Red Alert the same period this year. The First Gen plants had to use the more expensive liquid fuel at the Malampaya gas supply [indiscernible] that began in March of 2021. The Malampaya gas price increased to $9.86 per gigajoule from $7.16 last year. Meanwhile, Newcastle coal index rose to an average of $353.73 per metric ton versus $121.78 per metric ton. The peso depreciation paid off [indiscernible]. As of the end of September, the peso closed at [indiscernible] to the dollar versus $51 a year ago. Beyond September, the peso hit an all-time low. So they closed of [ PHP 59 ] [ fortnight ]. OpEx amounted to PHP 24.9 billion, 8% of the total [indiscernible] prices. Total salaries, wages and employee benefits were lowered due to the effect of higher discount rates to determine the defined benefit of [ vacation ]. Separately, with respect to our subsidiaries with the increasing business [ policy ] expansion, they incurred higher mine [indiscernible] costs. Contracted services were higher, with the bills management activities which restrained in 2021. This includes disconnection, reconnection relocation and [ messengerial ] services. This also includes subcontractor and other project costs for the construction and engineering subsidiaries. Taxes and permits were higher, with an increased and completed [indiscernible] expenditure, obtaining new property tax and business permits for our new substations, and also [ EIC ] regulatory and supervision funds. Depreciation and amortization grew by 34% to PHP 11.6 billion in 2022 as CapEx for build outs accelerated the depreciaton for retired assets and consolidation of GCP's assets resulted in higher depreciation. Our other expenses was at PHP 6.5 billion as compared to the same period last year. With respect to capital expenditures, this grew by 12%, largely driven by DU-related electric capital projects to support new connections, asset renewals and load growth. Meralco spent a total of PHP 20.8 billion in capital expenditures, of which 74% was for the distribution utilities. Networks cap expenditure included new [indiscernible] substation and switching stations, among others. The CapEx also included support for government-related B2B and P2P projects, more details of which are provided in the network's presentation. 19% or PHP 4 billion pertains to power generation capital expenditures, largely development of A1E in the solar power plant in [indiscernible]. While the balance of 7% or PHP 1.4 billion was CapEx for our subsidiaries for networks and facilities build out. This chart shows the quarter information, and I will highlight in the third quarter. The third quarter, CCNI amounted to PHP 6.5 billion, lower by 2.2% versus Q2 of 2021. Despite the 7% decrease in sales volume, the DU contribution was at PHP 4.6 billion, lower by 15%, due to the Asset True-Up Refund of PHP 3.4 billion. Without the Asset True-Up, the DU contribution would have been 32% higher without -- sorry, 32% higher. Power generation income was higher at PHP 1.3 billion from PHP 582 million in Q3 last year, largely from PacificLight. Meanwhile, core EBITDA and reported EBITDA for the 9 months ended were at PHP 37.2 billion and PHP 36.6 billion, respectively. We now present our power generation results of operations. Fully-owned subsidiary, Meralco PowerGen, contributed a total of PHP 3.6 billion of Meralco CCNI as of the end of September, significantly higher than the PHP 894 million in the previous year driven by earnings of PacificLight. PacificLight's CCNI reached SGD 230 million or PHP 9 billion, a turnaround from SGD 6.3 million or PHP 241 million net loss in the previous year. This was primarily attributable to the higher margins in the spot price, which averaged SGD 154 per megawatt hour as well as 3% growth in demand. PacificLight's 800-megawatt LNG plant in Jurong Island, Singapore, delivered a total of 4,162 gigawatt hours of energy during this period. MGen has a combined direct and indirect interest of 58% in PacificLight. For San Buenaventura, the 455 megawatt supercritical coal-fired plant in Mauban, Quezon, underwent 35 days of preventing maintenance shutdown in the first 9 months of 2022, yet they delivered 2,078 gigawatt hours of energy with an average plant availability of 87%. SBPL's CCNI was PHP 2.63 billion for the 9 months. We have 51% share in the company. The 55 megawatt AC plant of PowerSource First Bulacan, which is 60% owned by Meralco, has an average plant availability of 97.1% and delivered 88 gigawatt hours under -- to Meralco under a 20-year ERC-approved PSA. CCNI was PHP 200 million. Global Business Power incurred losses on account of the impact of Typhoon Odette in the first part of the year. At the start of the year and higher fuel costs on the implementation of fixed-rate contracts with its RES customers in the 70 megawatt contract with Meralco. GBP delivered 3,601 gigawatt hours of energy during the first 9 months. [indiscernible] filed for fuel cost recovery adjustment with the ERC for the 70 megawatt contract with Meralco under the CIC Fuel Provision in the PSA. A fuel recovery of the joint filing of Meralco and [indiscernible], and is awaiting decision of the ERC. MIESCOR Infrastructure Development Corporation is 51% owned by Meralco through MIESCOR, 49% of which is owned by Stonepeak Infrastructure, a U.S. based fund. On August 11, 2022, MIDC signed an agreement with Globe to acquire 2,180 telecoms towers and related passive infrastructure for a total consideration of PHP 26 billion in their [indiscernible] agreement, under which Globe shall be the anchor tenant of the tower for an initial period of 15 years. In addition, Globe has commissioned MIDC to construct 900 additional [indiscernible] over the next 4 years, of which Globe will be the anchor tenant. 50% of the funding requirement for Globe tower acquisition will be through a loan, and the remaining 50% is equity infusion. The share of MIESCOR is PHP 10.7 billion. On October 13, MIDC and Globe achieved the first closing milestone with the handover of the initial 701 towers valued at PHP 8.4 billion. Consolidated interest-incurring debt stood at PHP 90.2 billion, including debt of our subsidiaries, PHP 48 billion of GBP and PHP 1.3 billion from other subsidiaries. Of the total, PHP 33.5 billion are maturing within 1 year. Cash and cash equivalents amounted to PHP 39.6 billion. Short-term investments totaled PHP 22.8 billion. Net debt at the end of the 9 months was at PHP 27.8 billion, and net debt to EBITDA at 1.85x. [indiscernible] investments in restricted cash totaled PHP 24.2 billion. The lower cash balance is attributable to the four refunds that are being implemented as ordered by the ERC. The impact on the average fuel price of the increase in pass through charges was partly mitigated by the PHP 0.58 per kilowatt hour, the average refund covering the distribution rate true-up adjustments, which is an equivalent of PHP 21 billion for the 9 months. Of the total PHP 48.3 billion adjustments, DRTU adjustment ordered by the ERC for refund [indiscernible] has already been refunded to customers as of the end of September. [indiscernible] spread to 2037, PHP 11 billion will be due in 2025, which includes the PHP 7 billion [indiscernible] Meralco has issued in the [indiscernible] [ 4.875 ]. For the 9 months ended September, our quarter report earnings for [indiscernible] period is PHP 17.394 a share and PHP 17.560 per share. This ends my report.

Thank you, Ma'am Betty. We will now move to the operating results presentation to be led by our President and CEO, Attorney Ray C. Espinosa. He will be followed by the heads of the different business segments.

Thank you. On the business drivers and for the period ended September 2022, the energy sales grew 6% versus last year at 36,553 gigawatt hours, largely on the back of the robust growth of the commercial sector as well as strong growth from the [indiscernible] sector. On the customer count, rose by 3% versus last year at 7.572 million customers. Net system input grew 6% at 38,004 gigawatt hours, and the Meralco peak demands stood at 8.11 gigawatts, 4% higher than past year. For service performance, our system loss was at 5.88%, slightly up by 0.24 percentage points on a 12-month moving average. System average interruption frequency index or SAIFI was around 9% at 1.052 times, while system average interruption duration index or SAIDI was also down 7% at 102.507 minutes. Time to connect was down 6% at 1.65 days. The average retail rate for the period was PHP 9.40, significantly up by 17% compared to last year. Ferdie?

Good afternoon. So as mentioned, we are happy to report that our third quarter consolidated sales can surpass pre-pandemic levels. We reported quarter 3 sales growth registering at 7.2% versus same period last year, so this brings the 9-month year-to-date energy sales to 36,533 gigawatt hours, an increase of 6.3% compared to 2021. Monthly sales volumes [indiscernible] to stay around the 4,000 gigawatt hour level in the last 6 months of -- technically second, second and third quarter. It's about 4,000, with an assumption of face-to-face schooling, improvement in employment rates and a normalizing commercial and social activities, providing more legroom for business to recover and expand this quarter. As of end of September, Residential and Commercial segments accounted for 35% to the sales mix, while Industrial contributed 30%. Slide, please. On a per segment basis, Residential sales grew 1.4% to 12,926 gigawatt hours from 12,746 gigawatt hours last year, as customers returned to work on site and schools to turn back to face-to-face class setup. Sales volumes coming from aggressive energization during the pandemic as well as renewed demand from universities, dormitories and condominiums in the central business districts helped offset the decline in organic volume. For commercial sales, commercial sales grew as much as 14% to 12,841 gigawatt hours from 11,281 gigawatt hours last year in the month of August and September, registering about 20% growth levels. With less restrictions this year, demand continued to grow towards pre-pandemic levels in high-performing sectors such as Retail, Real Estate, Hotels and Restaurants. Onsite schooling also boosted sales volume growth in Education and Transport sectors. So just to run you down some of the growth rates, for Education, it grew 41% year-to-date. For Retail, 13%; Restaurant, [ 35%; ] and Storage at 12% year-to-date. Real Estate also grew at 13%, with more office spaces being leased as business returned onsite. As well as hotels, which also grew 16% on improvement and gradual return of domestic tourism and business travel. For Industrials, the Industrial segment. Industrial customers continue to be resilient amid high inflation and rising ForEx levels. Year-to-date sales volumes were maintained at 4% level at 10,677 gigawatt hours coming from 10,263 gigawatt hours from last year. Further, the opening of the economy pushed sales up for Food and Beverage, as well as Plastics sector. However, semicon, we a gradual decline in Semicon sales. While semicon managed to post a 2% year-to-date growth because of slow first half towards the third quarter, we're seeing a slight decline. So some of the growth, the growth for Food and Beverage, 6%; Plastics, 8% year-to-date; and Steel at 6%. Next slide, please. So we continue to grow our customer base as a result of our strong [ realization ] performance for both project-covered applications and ordinary service applications driven by mixed-use buildings, subdivisions and telco customers. Our year-to-date project-covered application is already at -- energized is already at 6,914. This is actually 37% better than last year and around 60% better than the pre-pandemic numbers of 2019. For ordinary service applications, we already energized 185,000 new services to date. This is up 7% compared to last year, 2021, and also 30% better compared to pre-pandemic numbers. As a result of strong energization numbers, Meralco customer count increased by 3% or 221,000 new customers compared to the same period last year. Our customer count now stands at 7.572 million, where Residential remains to have the highest share at 92% or 6.99 million customers. That ends the customer report. I'll turn it over to Ronnie for the networks report.

Thank you, Ferdie. Good afternoon, everyone. Our year-to-date consolidated net system input, or NSI, at 38,492 gigawatt hours grew by 6% driven by continued growth in commercial segment. This is also higher than the pre-pandemic levels. For our power sourcing, 40% was supplied by our IPPs and old PSAs, 31% by the retail suppliers, 32% by the new PSAs, 6% by the WESM, special contracts at 1%. On the fuel mix, natural gas at 36%, coal at 32%, multi-fuel at 28%, liquid at 3% and 1% from solar. For the peak demand, Meralco's year-to-date peak demand stays at 8.11 gigawatts, which was registered last May 13. This is 4% higher than the highest demand for the same period last year of 7.81 gigawatts. Year-to-date peak for Luzon stays at 12.11 gigawatts, which was registered last May 12. This is likewise 4% higher than the peak demand for the same period last year of 11.64 gigawatts. The year-to-date peaks for both Meralco and Luzon will most likely be the highest for the year because of cooler weather, notwithstanding the typhoons ahead. For system loss, the 12 month moving average system loss for September was at 5.88%, higher by 0.24 percentage points compared to the lower base of 5.64% last year due to the residual effect the recovery, 94 gigawatt hours non-current sales coming from the original 411 gigawatt hours unbilled sales in July 2020. We expect our system loss levels to improve in the last two months of the year, and we are still on track to meet the 2022 system loss target of 5.75%. We keep our focus in iron cladding our metering facilities and intensifying our anti-pilferage programs to keep our system loss performance way below the prevailing regulatory caps. Moving on to our S-Factor and GSL, we continued to perform well even with the tighter [ bit RP ] performance baselines. Our total SAIFI of 1.05x improved by 9%, and this is within the 1.43x rewards threshold. Our total SAIDI of 102.5 minutes also improved by 7%, and this is also within the 157 minutes rewards thresholds. MAIFI or momentary average interruption frequency index, which is a new [indiscernible] indicator that replaced SAIDI improved by 4% at 7.249x. This is still within the rewards level, which is less than 7.59x. The improvements in MAIFI could be attributed to the effects of our storm hardening programs. Please note that our September performance excludes the power outages related to Typhoon Karding last September 25 because it exceeded the major event day thresholds or [indiscernible] of 3.58 minutes. This is aligned with the prescribed report segment methodology of the ERC. For customer indicators, we posted another huge improvement of 30% for average time to process applications coming from significant 31% improvement in August. We have somehow gained so much momentum in improving the service application process. Average time to connect also improved by 7%. For call center performance, here, we are reporting also a new indicator under [ PIPRT ], which is percent of polls answered within 20 seconds. Our September performance of 97% was 10% better compared to the same period last year. For GSL 1, we had 1,262 incidents of customers experiencing a cumulative duration of sustained interruptions that exceeded the 15 hour threshold. For GSL 2, we had 0 violations, while for GSL 3, we have 12 incidents of customers affected by a fault in the secondary distribution networks that took longer than 12 hour threshold under the 5RP. During the third RP, the threshold was just 15 hours. For CapEx, our utilization now stands at PHP 13.53 billion or 62% of our PHP 21.91 billion by [indiscernible] networks. The bigger spending of PHP 5.27 billion is for new connections, the project-covered applications. For the month of September, we energized 794 projects and 19,900 ordinary service applications. CapEx spending for asset renewals is PHP 3.65 billion and PHP 3.5 billion for load growth. Asset renewals include pole replacement, conductors yielding, meter and substation equipment replacement and DPWH-related pole relocation works. For major load growth projects, we are now in the construction stages of 16 major substation and sub-transmission line projects, which are scheduled to be commissioned or energized within the year. Relocation of close to 5,000 poles to clear priority BBB, PPP infra and DPWH road widening projects is also ongoing. In September, we already relocated close to 2,300 poles. For our major load growth projects, we commissioned last July, our new Pamplona Uno 115 kV, 345 kV GIS substation, energizing a new 83 MVA power transformer. This is part of our RY2020 CapEx filing with a budget of PHP 383 million. This relieves the critical loading of nearby Pamplona Power transformer banks 1 and 2, and this also provides the needed capacity to accommodate the increasing power requirements in Las Pinas and Paranaque City. Further, we also completed in September the reconductoring of the entire 4.3 kilometers stretch of Binan-San Pedro 115 kV line from 795 MCM aluminum conductor steel reinforced or ACSR to 497 square millimeter STACIR or Super Thermal Alloy Conductor Invar Reinforced cable. STACIR is a special cable that has doubled the capacity of ACSR while maintaining the same weight and sublimits. From 900 carrying capacity, the said line can now carry 1,800 ampheres, thus addressing capacity, load shifting flexibility and N-1 deficiencies in Laguna sector and Sector 3 of our sub-transmission system. I'm now turning you over to Attorney Ronald Valles for the regulatory report. Thank you.

Good afternoon. For the regulatory update, the average retail rate for the first 9 months of 2022 is higher than that of 2021 mainly due to higher generation costs. The average generation charge for the 9 months of 2022 registered a 32.3% increase due to higher fuel costs, peso depreciation and higher WESM prices and kilowatt hour offtake. WESM share for the 9 months of 2022 is higher at 10% compared to 8% for the same period last year. The 18% increase in transmission charge was due to higher NGCP ancillary service and power delivery charges, and the absence of the transmission cost of the recovery refund in the 9 months of 2022. Following the increases in generation and transmission charges, system loss charge also registered a 45% increase. The absence of system loss over recovery refund in the first 9 months of 2022 also contributed to the increase. The average distribution rate with the distribution rate true-up 1, 2, 3 and 4 is PHP 0.94, PHP 0.95 per kilowatt hour for the first 9 months of 2022, and without the DRTUs 1, 2, 3 and 4, the average rate decreased to PHP 1.5314 compared to 2021's rate of PHP 1.5881 for the same period. Subsidies, taxes and universal charge increased by 10.9% mainly due to higher effective taxes following the increase in generation, transmission and system loss charges. With respect to the distribution rate true-up refund update, as on September 2022, Meralco has refunded a total of PHP 27.3 billion through DRTU 1 to 4 scheme. The DRTU 1 refund began in March 2021, DRTU 2 was implemented in March 2022, DRTU 3 or the asset true-up in May 2022 and the DRTU 4 implemented in July 2022. Meralco is expected to fully refund the DRTU 1 amount by December 2022, the DRTU 2 by January 2023, DRTU 3 by November 2022, and the DRTU 4 by May 2023. On other matters, we have received already the orders of the Energy Regulatory Commission with respect to the joint application of Meralco and South Premier Power Corporation and San Miguel Energy Corporation for price adjustment in relation to the claim of San Miguel for a change in circumstance. So last September 29, the ERC voted 3-2 did not -- and denied the joint motion for price adjustment and cited the following by the majority decision. As financial contracts, PSAs do not require SPPC or SMEC to exclusively supply from its Ilijan Gas Plant or the Sual Coal Plant, respectively. The fixed price nature of PSAs are meant to protect consumers from market volatility, such risks being assumed already by SPPC and SMEC. The grounds invoked do not fall within the definition of CIC as contemplated in the PSAs. Article 1267 of the Civil Code is misplaced as said provision is only applicable for obligations to do and not for obligations to give. Meralco should exhaust all available remedies under the PSAs in case it seeks to dispute the termination or on the ground cited for termination, or in case SPPC, SMEC fails or refuses to supply contracted energy. Two of the commissioners dissented from the majority, and they view that the claims should have been granted based on the following grounds. The PSAs allow parties to claim temporary price adjustment for a specific period based on CIC. And in SMEC Order, it was discussed that the proposed rate during CSP only covers prudent and reasonable cost, which contemplated only reasonable levels of risks at the time of PSA execution, and contemplated 3.5% escalation rate excludes changes or variations that have gone far beyond its contemplation and have become so highly iniquitous and disadvantageous. So based on the matters submitted and admitted in evidence, the CIC is satisfactorily found to exist to warrant price adjustment. Based on the rate impact simulations presented by the parties and evaluation made by the ERC's Regulatory Operations Service, denial of claims would expose consumers to unknown higher rates than granting the same, not only in the near term but until 2029. In another matter, so you will -- this is a further update to the November 2013 supply month price hike that was already decided by the Supreme Court last August 3, 2021. You will recall that the Supreme Court voted 6-5, with two justices abstaining, with the decision affirming the December 9, 2013 letter approval of the ERC that granted Meralco authority to stagger implementation of the December 2013 generation charges. The same decision voided the March 3, 2014 ERC order which imposed regulated WESM prices. So last October 11, 2022, the Supreme Court issued a resolution denying the motions for consideration and partial reconsideration filed by NASECORE, Bayan Muna and ERC, represented by the Office of the Solicitor General, on the ground that the basic issues raised have already been passed upon. So we are now coordinating with the leadership for the implementation of the Supreme Court decision. Finally, in connection with the NPC-Meralco settlement agreement, we have already received notice that Supreme Court has decided on this case. But as a brief background, last November 21, 1994, Meralco and NPC entered into a CSE or the Contract for the Sale of Electricity effective for a period of 10 years from January 1995 to December 31, 2005. So due to various economic reasons, Meralco failed to grow MEQ or the Minimum Energy Quantity, and was billed by NPC for the delinquent pay for the period 2002 up to 2004. Meralco argued that NPC committed breaches of its obligations to it under the CSE. So on July 15, after total negotiations between the parties and undergoing mediation proceedings, Meralco and NPC executed a settlement agreement, resulting in a settlement amount of approximately PHP 20.05 billion, and this amount was further reduced to around PHP 14.3 billion, and Meralco took more electricity from NPC than the parties had actually expected. So with the signing of the Settlement Agreement, the parties proceeded to file a joint application for approval of the pass-through provision with the ERC last April 15, 2004. However, the proceedings were suspended in view of the opposition of the OSG, which raised questions on the validity of the Settlement Agreement. On November 23, 2009, Meralco filed acquisition for Declaratory Relief on the validity of the Settlement Agreement with the Regional Trial Court of Pasig City, which rendered a decision on May 9, 2012 granting the petition and declaring the Settlement Agreement valid and binding. So the OSG appealed this decision at the Court of Appeals, and the Court of Appeals affirmed that -- this decision of the RTC. The OSG then appealed the matter to the Supreme Court, so the -- last September 28, 2022, the Supreme Court posted in its website a resolution issued by its first division denying the petition of the OSG and affirming that CA's decision dated April 15, 2014. According to the Supreme Court, the Court of Appeals correctly upheld the jurisdiction of the RTC over the division for the Declaratory Relief. The Settlement Agreement remains valid without authorization from the Office of the President, COA and Congress. The Settlement Agreement is not grossly disadvantageous and prejudicial to the government, nor is it contrary to low morals, public interest and public policy. The Settlement Agreement remains valid even when executed without intervention and guidance by OSG. And NPC cannot repudiate the Settlement Agreement, which is a product of the parties' mutual resolution to submit dispute to mediation. NPC cannot simply renege its obligations because of the change in mind, and NPC is bound by the terms of Settlement Agreement and must comply with it in good faith. So upon -- once the Supreme Court decision has become final and executory, Meralco and NPC will be filing a motion to revive the joint petition before the ERC. That's it for the regulatory update. Thank you very much.

Good afternoon, everyone. We're pleased to share that last August at the International Business Awards in the U.K., One Meralco was recognized with seven Stevie Awards for our initiatives in corporate social responsibility as well as in communication. We earned two Golds, four Silvers and one Bronze. For the Golds, this -- it was earned by our One Meralco Foundation School Electrification Program, which was pitted as the CSR program of the year. And as well, our Meralco Corporate Partners Viber Community was also awarded Gold in the Best Use of Social Media category. For our Silvers, this is led by our 2021 Annual Report: Bayanihan, Malasakit and Kalinga. Our Annual Report, our Sustainability Report and our One Meralco Foundation Report, respectively, and this is the highest ranked stand-alone report. The Gold was won by an integrated report in this year's Stevies. We also won Silvers for our One Meralco Foundation Household Electrification Program, our One for Trees Program and also One Meralco Foundation President, Jeffrey Tarayao, was hailed as Silver awardee for the Thought Leader of the Year category for non-profits. For our Bronze, it was awarded to our One Meralco Foundation From Farmers to Pantries Program, which was one of the [ non-trunk ] response programs that we have. Thank you very much. At this point, I will pass you on to Mr. Jaime Azurin for power generation update.

For the Power Generation Group, for the first 9 months of the year or as of September 2022, the group was able to deliver 9,929 gigawatt hours of energy, a 6% decline from the same period in 2021. This was mainly due to the outages in our Cebu plants caused by Typhoon Odette, as well as the scheduled preventive maintenance of our San Buenaventura plant. PacificLight performance, on the other hand, reflects a 2% increase in delivered energy and higher margins on spot market prices. Lastly, our BulacanSol plant, with a 97.1% plant availability, delivered 88 gigawatt hours of energy. Through our subsidiary, MGreen -- or MGen Renewable Energy, we have ongoing construction of two solar plants as we aim to increase our renewable energy portfolio by an additional 143 megawatt by first quarter of 2023. In August, we secured a PHP 2.65 billion, 15-year term project financing facility from RCBC to fund the ongoing construction of the 75-megawatt solar plant in Baras, Rizal, while we celebrated the continued progress in time capsule laying of the 68-megawatt solar plant in Currimao, Ilocos Norte. Both are expected to commence operation during the first quarter of 2023. We also have a 45-megawatt solar project under development which is located in Cordon Isabela. Lastly, we expect more renewable energy projects in the coming years as we march towards our target of 1,500 megawatts by 2030. Thank you.

Thank you RCE, FOG, [indiscernible], [indiscernible], RBR and JTA. We will now open the floor for questions.

[Operator Instructions] The first question comes from Karisa Magpayo from Macquarie. Number one, may we get an update on the rate rebating exercise, and when is this expected to be completed? Number two, how are volumes handling so far in October 2022?

I'll answer the volume first. For October 2022, a sewer tracking close to 7% in terms of month-on-month sales compared to October last year. So that's around [indiscernible] and [ 4,100 ] [indiscernible].

Maybe for the first question, Atty. Valles?

For the rate rebating for the 5RP, the hearings are still ongoing, the -- evidentially, hearings have not started, so we expect that there will be some delay on the part of the ERC in releasing the final determination. I cannot say for sure when it will be, but it will be likely first quarter next year.

Any other questions from our analyst [indiscernible]? I can see that Jelline Gaza's hand from JPMorgan is raised.

I just have three questions. First is for Ms. Betty, how much provision returns was recognized in the quarter, and what drove those provisions? And then secondly, on the PLT -- PacificLight, I just wanted to understand, can you please expand on your outlook on the Singapore spot price expectations next year? And how is your cost for procurement of LNG have locked the prices, and do you anticipate any increases in fuel costs for next year? And then lastly, on the emergency PSAs. Are there any updates with the DOE approval of this? And relate to the PSA of San Miguel, have you gotten notification of termination? And based on your view, on your legal view, what are the chances of them being able to wait to liquidate the damages as per the PSA?

Jelline. Just wanted to clarify, your question is on the amount of provision?

Yes, Ms. Betty. Reversal of provisions for the quarter.

The provision in the third quarter. Okay. So it's basically -- as it relates to -- remember, we're implementing a lower rate, right, because of the refund. So because we had previously provided the [indiscernible] half to the extent of the [indiscernible]. So for example, if during the period, we -- during the 3 months, if the reduction in the rate for dilution true-up one for implemented, assume that's -- let me check on what the refund is. So to the extent of the refund, that's what we reverse this provision.

The second question relates to PLT's outlook, sir?

For the PacificLight outlook of next year, let me just explain that. In Singapore, there is a tightness of capacity versus demand. And second, there was tightness in the gas supply. Of course, the Singapore government has been trying to address that issue, whether the spot prices for the full market will be sustained is really up to the Singapore government of how much do you have to intervene to control or bring down the prices.