Manila Electric Company (MER) Earnings Call Transcript & Summary

Good afternoon, investors and analysts and welcome to today's briefing. I'm Dinbo Macaranas from the Meralco Investor Relations team, and I will be moderating today's conference call. Before we proceed, please be advised that this teleconference call is recorded. Kindly follow the ground rules, which were sent to you beforehand. We will be presenting first quarter 2023 financial and operating results of Meralco. A copy of the presentation may be 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 L. Aperocho, Senior Vice President and Head for 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. We also have Mr. Raymond B. Ravelo, First Vice President and Chief Sustainability Officer; as well as Mr. Jaime T. Azurin, President and CEO of Meralco PowerGen Corporation. We will begin the presentation with the financial highlights followed with the operating results of Meralco's new business and then highlights from Meralco PowerGen. After all the presentations are done, we will allow time for Q&A. At this point, I would now like to introduce our CFO, Ms. Betty C. Siy-Yap, who will present the financial results.

Good afternoon, everybody, and I will be presenting the results for the first quarter of 2023. As shown on the screen is a financial summary for the first quarter. Our consolidated core net income grew 40% to PHP 9.047 billion. Reported net income was up prior year with a 26% for PHP 8.071 billion. Core EBITDA was at PHP 16.14 billion, 23% higher. Our gross revenues consist of revenues from the distribution utility, our gas power generation and pass-through charges. Distribution utility revenue accounted for 81% of the total power generation 7% and RPS at 10%. Non-electric revenues represent revenues from our subsidiaries, and this totaled PHP 3.3 billion. Our cost and expenses totaled PHP 98.38 billion. And out of this, the bulk of this pertains to purchase power, which accounts for 80% of the [indiscernible]. OpEx stood at PHP 9.5 billion, which is higher than last year's PHP 8.2 billion. Oil, fuel and power plant maintenance cost pertains to the cost of operating our power plant, and this is largely from global business power. Capital expenditures totaled PHP 5.1 billion, which consists of work for distribution utility and completion of the telecom's build-out as well as power generation. We ended the 3 months with cash and cash equivalent at PHP 57.875 billion flat compared with last year, and our borrowings is at PHP 102.2 billion. The next slide shows our revenues. Our consolidated revenues is at 105.642% higher. On the electric side, which totaled PHP 102.4 billion. This total -- this represents 97% of the total. Generation, transmission and others grew 28%, mainly because of the higher cable price, effect of purchase from WESM and the depreciation of the peso. Distribution revenues amounted to PHP 15.3 billion, flat compared with the first quarter of 2022 with the combined effect of 2% increase in volume and tariffs after implementation of the refund. Energy fees was at PHP 7 billion, this was higher by 25% coming from contribution of higher volume of Global Business Power. This period, we also had volumes from Baras and also we have a solar, our new 68-megawatt power plant. Non-electric revenues move from work accomplishment of our subsidiaries and additional circuits and accounts of Radius, including -- and also, we see this period lease income of MIDC or our tower lease business. Our cost and expenses totaled PHP 98.4 billion. Purchase power, as I mentioned, accounted for 80%. OpEx was 10%. The combined coal, fuel and operating cost of power plant was 5%. Depreciation accounted for 4% while other expenses was 8%. Note that for purchase power cost, the increase effectively reflects what was discussed with respect to our revenues, those same reasons. We also wish to highlight or note that the average Malampaya natural gas price increased to $10.08 per gigajoule versus $8.71 a year ago. This is mainly due to the gas restrictions that began in March 2021 and 15-day outage or maintenance in February of the gas and fuel. First gas had to source a liquid fuel, which was more expensive to ensure that there is continued supply to Meralco. The depreciation of the peso added to the cost of higher -- the cost of fuel. Operating expenses increased by 15% and borrowings, other than salaries contracted services were also due to higher bills management-related expenses as these activities are now normalized. OpEx is also included information technology license and maintenance, and higher manpower in cybersecurity incurred by our subsidiary with the increasing digitalization and there were higher work accomplishment of MIESCOR also added to increase costs. Coal, fuel and O&M incurred by GBP totaled PHP 5 billion, 27% higher. Depreciation relates to consolidation of capital expenditure of our distribution utility and also depreciation of towers, which were acquired as of December 31, 2022. Our other expenses, largely represents provisions for over economies. On the CapEx side, consolidated capital expenditure is driven by the DU capital expenditure for new connections, asset renewals and load growth. On the subsidiary side, this is largely communication facilities built out of Radius. Core power-generation, this included the development costs of Baras Solar Plant, Meralco Solar and site development of [indiscernible]. And our CCNI just grew 40% to PHP 9 billion, while a reported net income grew 26%. The increase in our CCNI is largely attributable to our share in net income from results of operations of PacificLight, which stood at PHP 3.1 billion compared with PHP 1.8 billion last year. San Buenaventura also contributed more than PHP 200 billion. So this year, it was PHP 464 million against PHP 194 million last year. The turnaround of GBP resulted in PHP 295 million CCNI versus negative PHP 518 million. On the DU side, while our CSI volume was higher, the cooler temperature and lower effective distribution rate resulted in slightly lower distribution revenue from distribution, contribution -- distribution income contribution. Our ES segment also contributed to the CCNI, although volumes were lower. For our CCNI -- from the subsidiaries, this is still lower mainly because the towers business is still in its early stages of operations and they continue to build out -- they're still in a building out of a portfolio. Overall, what we have noted was the share in CCNI. For this period, distribution utility share was 49% compared to the previous year over 70%. The power generation was at 41% and RPS 8%. The balance of 2% was contribution of our subsidiaries. Our core and reported EBITDA were at PHP 16.1 billion and PHP 15.2 billion, respectively. With our focus on power generation results of operations. MGen's contribution Meralco's CCNI grow 3x to over PHP 3 billion on account of PacificLight's strong performance and [indiscernible] of the other power plants. Singapore-based CLP recorded CCNI of SGD 101.1 or an equivalent PHP 5.1 billion as of the end of March, up from SGD 79.3 million or equivalent PHP 3 billion. And the increase is attributable to the higher blended nonfuel margins in Singapore, which averaged SGD 104.8 per megawatt hour higher from last year's SGD 73.8 per megawatt hour. PacificLight's 771 megawatts net LNG plant in Jurong, Singapore delivered a total of 1,464 gigawatt hours of energy. MGen's combined interest direct and indirect is 58%. SBPL or San Buenaventura's 455 megawatts net supercritical coal power plant in Mauban, Quezon delivered 610-gigawatt hours of energy to 100% plus availability. SBPL 100% CCNI was at PHP 911 million, and we have 51% in [indiscernible]. Global Business Power booked CCNI of PHP 294.6 million and delivered a total of 1,472 gigawatt hours of energy from its portfolio of coal and oil plants. With net sellable capacity of 896 megawatts, of which 782 are contracted under PSAs [indiscernible] contestable customers. The oil -- some of the oil plants have [indiscernible] services procurement agreements. The 55 megawatt AC power plant, [indiscernible] First Bulacan in San Miguel, Bulacan had an average plant availability of 98.32 [indiscernible]. They actually have 2 days outage this year. This plant delivered 30 gigawatt hours to Meralco under a 20-year ERC [indiscernible], The CCNI totaled PHP 44 million. Our consolidated interest-bearing debt was PHP 102.2 billion. Debt of our subsidiaries accounted for 51% or PHP 52 billion and this consists of debt of MGen's at PHP 45.8 billion, PHP 12 billion from MIDC and power sources and the balance from all other subsidiaries. Of the total, PHP 34 billion would be maturing within 1 year. So the balance, the difference of PHP 40 billion represents -- sorry PHP 50 billion, represents the [indiscernible]. Cash and cash equivalents amounted to PHP 57.9 billion. Short-term investments totaled PHP 17.9 billion. Our net debt at the end of the Q1 2023, you've seen calculated -- you have seen cash and cash equivalent and short term investment was at PHP 26.4 billion, with net debt to EBITDA of 0.44x. Our long-term investments and restricted cash balance is PHP 34.7 -- PHP 24.2 billion. Amount of debt is spread to 2037. The PHP 11 billion debt due in 2025 includes the PHP 7 billion 12-year increases issued in 2013, which is a [indiscernible]. The other maturities occurred in 2022 is the PHP 10 billion as loans drawn by Meralco in December of 2022. Average profit [indiscernible] is 5.2%, all of which are fit and denominated in Philippines peso [indiscernible]. The only foreign currency portion would be debt of [indiscernible] supplier [indiscernible]. We ended the period with core and reported earnings per share at PHP 8.027 per share for CCNI and reported earnings per share of PHP 7.161 per share. That ends my report.

Thank you very much, 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 who will provide in the details.

Good afternoon, everyone. For the operational highlights of Meralco's first quarter. Our energy sales grew 2% at 11,287 gigawatt hours compared to 11,069 gigawatt hours last year. Customer account grew 3% at 7.668 million customers. So that system input grew 1% compared to last year at 7,817 gigawatt hours. Meralco's peak demand was lower by 3% at 7.725 gigawatt hours compared to [indiscernible]. On service performance, our system loss was down 0.40 percentage points on a 12-month on an average at 5.62%. System Average Interruption Frequency Index for strategy was around 13% at 0.242x, while System Average Interruption Duration Index for strategy was down 8%, 23.452 minutes and Time to Connect was down to 1.5 days compared to 1.63 in 2022 were down by 8%. Electricity rate, average retail rate was up by 17% at PHP 10.41. Ferdie?

So good afternoon, everyone. We're happy to report that our first quarter consolidated sales again surpass pre-pandemic levels which sharply showed a 2% increase versus quarter 1 2022. Volumes rose to 11,287 gigawatt hours from 11,069 gigawatt hours from last year against the continuing economic recovery post-pandemic. The modest quarter 1 growth was driven by double-digit growth of Commercial segment, which grew 11%, while Residential Industrial segments declined by 3% -- both declined by 3%. The details of which will be discussed in the next slide. But it's also worth mentioning that our first quarter sales for 2023 is actually 9% higher than the pre-pandemic numbers of 2019, which was then 10,381 gigawatt hours. In terms of sales mix, we continue -- with the continued recovery of businesses and social activities, sales mix continues to move towards normalized pre-pandemic levels. So our sales volume share for the Commercial segment increased to 37% from 34% same period last year. Residential accounted for 33% this year, down from 35% last year first quarter. While industrial segment, it's almost the same at 30%. Next slide, please. Now for the details on the first segment, so the diverse. So Residential segment ended up at 3,701 gigawatt hours for first quarter this year. This is at least a 3% decline from the 3,808 gigawatt hours last year. Coming from a high base cost wide Omicron second quarter 1 to 2022 when serving post quarantine was observed. So this year, there is higher mobility and greater public confidence in conducting face-to-face school, business and social activities as well as longer time spent traveling and [indiscernible], which further reduced the time spent by our customers approval. Another factor that impacted the residential sales in the cooler temperature first quarter this year compared to last year. In fact, Quarter 1 this year -- temperature quarter 1 this year is one of the coolest in the last 5 years with a dry or summer season being declared a week later compared to previous year. Commercial, our commercial segment numbers showed up to 4,213 gigawatt hours. So this is an 11% increase compared to quarter 1 last year. So this growth at 4,213 gigawatt hours from 3,781 last year was due to the demand -- energy demand from education institutions, which continue to increase as classes move on full face to face. Hotels, restaurants, real estate sectors also posting positive double-digit growth as room occupancy, foot traffic and consumer spending were the highest as leisure to other social investment business conventions were in full swing. For Industrial, our Industrial segment ended up at 3,336 gigawatt hours, 3% decline -- sorry, 3,336 gigawatt this year, 3% decline from the 3,443 last year due to the impact of global economic headwinds and inflation, which is observed to affect the Industrial segment this year. There was weak demand for consumer electronics globally, which continue to dampen the growth of our semiconductor industry. There were also plant shutdowns due to maintenance activities and lower production cost due to high input costs which negatively impact sales from plastic and cement sector. So these 3 subsectors, electronics, plastic and cement, actually accounts for 40% of our Industrial sales. While there were modest growth observed on 3 segments, subsegments, embedded generation increased 5% as plants maximize renewable output and were advised to defer maintenance in the summer months, still increased 5% due to a new plant that we energized and ramp up increase of loan from time-of-use customers and food and beverage, which grew 1% vis-a-vis the demand from election last year. Next slide, please. So on our energization performance, we continue to grow our customer base to sort of strong energization performance, work or Project-Covered Applications and Ordinary Service Applications, driven by mixed use building subdivisions and telecom customers. So while it was observed that there was a slight slowdown, 2,358 energized Project-Covered Application quarter 1 this year, a 3% decline compared to last year. This is still actually much higher around close to 70% better than our pre-pandemic numbers in 2019. As catch up from the previous pre-pandemic regime is actually stabilizing. Ordinary Service Applications, likewise, declined by 7% versus 2022 but still more than 10% better than pre-pandemic 2019 levels. So because of the still healthy amortization rate, our Meralco customer or service count increased by 3% or more than 205,000 new customers compared to the same period last year. It now stands at 7.668 million customers. So Residential remains at a high share at 92% or more than 7 million followed by Commercial at 7% and 1% Industrial [indiscernible]. So that ends the customer report, and I'll now turn it over to Ronnie for the [indiscernible].

Thank you, Ferds. Good afternoon to everyone. Our consolidated net spent input or NSI for the first 3 months of the year at 11,870 gigawatt hours was the highest for the last 5 years. It's also higher by 1% operating the same period last year, driven by steady growth in the Commercial segment. For our power sourcing, 34% paid from our IPPs and old PSAs, 32% from the rest, 17% from the new PSAs, 16% from a spot market and 1% from special contracts. The fuel mix, natural gas of 22%, coal at 29%. Multi-fuel at 43% and 5% from liquid fuel and 1% solar. Next slide, please. For the peak demand -- for the month of March the peak demand in the Meralco franchise area lag at high 7.73 gigawatts. This was recorded last March 24. It's 1% lower over last year, while peak demand for Luzon was at 11.5 gigawatts that was recorded also on March 24, also 1% lower over last year. The demand was tempered by cooler average temperature in March, which was the lowest in the last 5 years as reported earlier by Ferdie Geluz. Actually compared to last year, the average of maximum temperature in March was down by 1.4 degree Celsius, while average minimum temperature was down by 2.2 degree Celsius. The Department of Energy has forecasted the highest Luzon grid demand this year at 13.12 gigawatts, which will happen in the second week of May. This will be around 8.4% higher than the 12.11 gigawatt peak demand last year. It was registered in May last year. Backing our franchise, the demand has surged since last week due to prevailing hot weather. And last Wednesday, April 19, we recorded peak demand of 8.12 gigawatts which is already slightly higher than the peak demand of 8.11 gigawatts last year. And for system loss, the 12-month moving average system loss as of March was at 5.62%. This is lower by 0.4 percentage points and still way below the current system loss cap of 6.1%. The downward trend is influenced by lower consumption ramp-up in March of 5 gigawatt hours only versus the higher ramp-up in March last year at 44 gigawatt hours. Higher ramp-up would result to higher NSI sales mismatch, which will artificially result in higher system loss per the reporting one, but will be normalized in the succeeding months. Aside from this lower system loss has been driven by our sustained efforts to reduce or [indiscernible] legal connections, reduction of unbilled sales, completion of CapEx projects that reduce technical losses as the execution of elevated meter center or [indiscernible]. Improved sales mix in favor of low loss share commercial segments also helped in lowering our 12-month loading average system loss. Our X-factor performance in GSL, our total SAIFI, SAIDI and MAIFI has delivered significantly March compared to the month of February and grew by 13%, 8% and 7% respectively and due to fewer power outage and result of our wireless maintenance projects. For customer indicators, we posted an 8% improvement for average Time to Process Applications, bringing it to 1.5 days. Average Time to Connect also improved significantly by [indiscernible]. Call Center Performance March also grew by 1.4 percentage points and these numbers are already at the rewards level. For GSL1, we have 10,225 incidents, GSL2 48 incidents, GSL3 103 incidents. These numbers are way, way below the dead band under our 5RP performance incentive scheme. For CapEx, year-to-date utilization is at 22% or PHP 4.48 billion of the PHP 20.28 billion budget for this year. So far, we have spent PHP 1.71 billion for new connections, PHP 1.2 billion for asset renewals and PHP 1.26 billion for load growth. For new connections, we energize -- we have already energized 876 Project-Covered Applications and 20,500 Ordinary Service Applications. And we also replaced close to 1,000 overloaded [indiscernible] consumption especially for our Residential customers during summer months. The PHP 1.26 billion spending for load growth was coming from the development of new -- 17 new substations, expansion of 6 substations and operating and construction of 6 substations. While the PHP 1.2 billion spending for asset renewals included [indiscernible], meter and substation equipment replacement and [indiscernible]. Next slide, please. For our major projects that we completed during the first quarter of the year. The first 1 was the La Mesa 115 kV switching station, which enabled us to serve STMicroelectronics in Calamba, Laguna by 115 kV service to accommodate the increase in demand from the current 7 megawatts to 13.5 megawatts in 2023 and 20 megawatts in 2027. This project has also allowed us to recover -- around 7 megawatts of STMI [indiscernible] that is being connected 24x7 [indiscernible] by generating such assets. Also during the first quarter of the year, we intensified our full [indiscernible] activities to support major BBB and PPP projects in government, namely MRT-7 then let's connect the road. For MRT-7, we installed [indiscernible] Batasan Station last January. And this was on top of the 440 proportionately installed and 129% proportionately retired along North Avenue, Commonwealth Avenue, Regalado Highway and Quirino Highway in Caloocan City to allow San Miguel Corporation to construct their failed construction works. In the case of NLEX-SLEX Connector, was partially inaugurated last March, Meralco was able to relocate a total of 1,220 poles since the project in the season in March 2020 despite the numerous right-of-way and engineering challenges, including the COVID-19 restrictions. And finally, major local project that recognition as March Real 115-34.5 kV stations in Calamba, Laguna. This is part of our RY2021 CapEx Filing with a budget of PHP 264 million. This project will unload the adjacent Calamba substation and will provide additional capacity and will improve power quality and reliability for residential, commercial and industrial customers in Calamba, Laguna and the adjacent towns, Tanauan and Sto. Tomas, Batangas. Thank you, and I'm now turning you Attorney Ronald Valles for the regulatory update.

Good afternoon. For the regulatory update, [indiscernible] report on the first quarter 2023 average retail rate. The average retail rate for the first quarter of 2023 is 17% higher than that of 2022, and this is due to higher generation charge. The average gen charge for the first quarter of 2023, registered at 32.7%, increased due to higher fuel costs, higher resin prices and peso depreciation. There was also no energy delivery from [indiscernible] Ilijan-baseload for the first quarter of 2023 due to the suspension of its Power Supply Agreement. The 5.7% increase in average transmission cost was due to higher power delivery service charges. We then received this implementation of higher margin reliable revenue 30 May 2020. Following the increase in generation and transmission costs, our system loss charges also increased by 27.6%. First quarter 2023 average distribution rate with the DRTU or distribution rate true up is PHP 92.99 per kilowatt hour. And when normalized, we're taking out the effect of DRTUs 2 and 4, the average rate decreased to PHP 1.4533 per kilowatt hour in quarter -- planning the first quarter of 2023 from the first quarter of 2022 of PHP 1.6280 per kilowatt hour. The subsidy taxes and universal charge increased by 13.2%, maybe due to higher effective taxes. Universal charge also increased with the implementation of the ERC approved UCME for the [indiscernible] stack rate of [ PHP 17.8 ] from the previous rate of PHP 15.44 per kilowatt. The [indiscernible] collection was suspended for the first quarter of 2023 following the ERC [indiscernible]. Going now to the distribution rate true up refund update. As of March 2023, Meralco has refunded a total of PHP 44.7 billion or 93% of the [indiscernible] pertaining to the DRTU [indiscernible]. DRTU 4 refund is expected to be completed within the month of May 2023, pending the refund scheme in that month. So let me give you an update on the past too over the recoveries of Meralco. For the year 2020, 2022, the net under recovery for generation transmission system was subsidies amounted to PHP 7.78 billion, including the over and underrecoveries of RPT and LFP for the year 2021 and 2022. The total net underrecovery [indiscernible] with the ERG is PHP 7.98 billion. The covered years for RPT and LFP started only in 2021 as the ERG rules pertaining recovery this pass-through taxes became effective in 2021. RPT earlier for the years prior to 2021 and a corporate under ERG rules, and will not be part of Meralco's obligation for recovery. Meralco will be proposing a recovery period of 12 months for all the charges except for lifeline subsidy over the recovery, which will be refunded in 1 month. Average impact of customer is PHP 20 Per kilowatt hour. Under ERC rules Meralco is scheduled to provide its application to confirm its passed through over underrecovery for 2020 to 2022 by March 31, 2023. On March 28, Meralco requested for extension to file until April 30, 2023. [indiscernible] Meralco requires application for recovery, which passed through over underrecoveries by April 30, 2023. Update on the emergency power supply agreements. Meralco executive emergency PSAs with GNPD for 300-megawatt. The return of until January 25, 2023, and February 25, 2023, are respectively. And despite Meralco's efforts, however, it was unable to secure an extension of this [indiscernible] beyond February 25, 2023. And given the [indiscernible] grant of the preliminary [indiscernible] to the resolution dated January 25, 2023, allowing suspension of the 2019 [indiscernible] PSA until the resolution of the main case, Meralco serve a Certificate of Exemption from the [indiscernible] CSP from the DOE to cover the [indiscernible] Luzon and SPPC. So last March, then the DOE granted a Certificate of Exemption for 670 megawatts for the period March 26, 2023, up to March 25, 2024. For TLI, 370 megawatt and SPPC 300 megawatts. [indiscernible] Following failed bidding and second round of CSP for the 180-megawatt baseload requirement and the negotiations with South [indiscernible] Power Corporation regarding [indiscernible] covering an indivisible plot of 180 megawatt, Meralco requested a Certificate of Exemption from the Department of Energy for the immediate implementation of Epsa. So the DOE granted the Certificate of Exception for the 180megawatt for the period, March 26, 2023, up to March 25, 2024, past March 29. So these efforts are intended to mitigate our recent exposure which we forecasted to be around PHP 9.85 per kilowatt hour. So shown on your screen, it's a table containing the details of the [indiscernible] we executed with SPPC for 300 megawatt and the additional 180-megawatt also with SPPC. And with TLI for 370 megawatts, so not at the planned gateways for the SPPC contracts is PHP 8.3505 per kilowatt hour. These are rated as no outage allowance. For TLI, however, the rate is -- the 1 shown in the screen is PHP 8.14 because we have included in this estimate the rating for the 44 days outage allowance, stipulated under the contract. Without the outage allowance of 45 days, the TLI rate -- or without replacement power being included in the rate that TLI to be below PHP 8 per kilowatt hour. Finally, for the 1,800 megawatt wind field baseload CSP, [indiscernible] power partners and excellent energy recently served a notice of termination with Meralco for the PSA that we have executed in -- the for the 600-megawatt of MVPC there than 1,200 megawatts of excellent energy. So we received the Notice of Termination last March 17 and the reason cited was that ERC have to issue a final approval for the PSAs, but PSAs last update and the termination became effective on April 1. According to the PSA, Last Update is defined as a day falling 6 months after submission in the year. So last March 20, we informed the ERC of the Notice of Termination through a manifestation and subsequently, on March 30, the ERC issued an order stating that the partnership by the motion to withdraw the PSAs, that PSA contracts included public interest as use of the electricity bears a social function, thus, parties “are reminded that any termination thereof cannot take effect without prior approval of the ERC. Meralco should provide information on whether it accepted or disputed the Notices of Termination. the Longstop Date extensions or requests thereof; any event or action that prompted MPPCL or Excellent Energy to issue Notices of Termination; and any due diligence measures MERALCO conducted upon receiving the Notices of Termination. And finally the parties must refrain from implementing any termination until ERC acted on any appropriate pleading filed before it seeking specific reliefs relative to the Notices of Termination. So last April 4, Meralco filed its compliant explaining that last updates were extended twice for 6 months each for a total of 12 months and Meralco saw a third extension about MPPCL and Excellent Energy said that it would start its option, including possible termination due to an approval of the PSA by last update. Last April 14, MPPCL and Excellent Energy filed with the ERC their Notice of Withdrawal, informing ERC that their termination is a matter of right pursuant to the PSAs and that applications have been mooted and no court or tribunal have power to extend the life of moot contracts, otherwise, it would be tantamount to grave abuse of discretion. And finally, last April 20, Meralco filed a comment to the Notice of Withdrawal confirming that the Notice of Termination was an exercise of Excellent Energy and MPPCL’s right under the PSA as a direct result of the lapse of longstop date. That's all for the regulatory update. Turning over now to Mr. Raymond Ravelo for the sustainability update.

Thank you, [indiscernible] Good afternoon, President, RCE, [indiscernible] Meralco and investors and analysts. Today, I'm very pleased to share with you that Meralco sustainability efforts were recently recognized at the 58th Anvil Awards. As you know, the Anvil is awarded by the public relation society of the Philippines to outstanding and distinctive PR programs, tools and practitioners across the country. In this year's Anvil, Meralco received 9 Anvil awards, 1 gold, 8 silvers. And 3 of those awards were actually sustainability related. The gold Anvil was received by our overseeing sustainability program for Powering the Good Life, wherein we communicate our multifaceted sustainability agenda. We also earn silvers each for our 2021 Meralco Sustainability Report by Kalinga as well as our diversity -- gender diversification program, which we call #Mbrace. Secondly, our 2021 reports -- 3 reports, first, our annual report entitled Bayanihan, our Sustainability Report entitled Kalinga mentioned earlier, now One Meralco Foundation invited Malasakit. These collectively were recognized at the Asia Pacific TVs with a Silver award. The APAC series are a premier business competition, honoring achievements and innovative contributions across 29 countries in the Asia Pacific. That ends a sustainability update. I'll now turn you over to Jaime Azurin for the power generation update. Thank you.

Thank you. Good afternoon, everyone. The Power Generation group delivered 3,577 gigawatt hours during the first 3 months of 2023. This is up by 12% due to our increased plant availability and strategically time preventive maintenance. Global Business Power or GBP saw a 31% increase in energy delivered at 1,473 gigawatt hours, as plant availability stabilized against the previous year's [indiscernible] impacted plant performance. Meanwhile, San Buenaventura Power Energy delivered at 610 gigawatt hours, 2% lower than the previous year's 625 gigawatt hours. Our Singapore-based subsidiary, PacificLight, expanded energy delivered by 11% at 1,464 gigawatt hours, coupled with the higher retail margins secured. Lastly, LNG delivered in our BulacanSol plant declined slightly to 30 gigawatt hours due to mostly clouding weather in the early months of 2023. Next page. As we continue our journey towards low carbon energy transition, we recently inaugurated our 68-megawatt solar plant in Currimao, Ilocos Norte last March 30. The project in partnership with Vena Energy started generating power early-January and was fully energized by mid-February. Moreover, we have energized 67.5 megawatts out of 75 megawatt solar plant project in Baras, Rizal, and have started generating power since March 27, 2023. The project in partnership with Mitsui is expected to commence commercial operations by May. Once operational, MGreen's total renewable energy capacity to almost 200 megawatts, including our first solar plant, BulacanSol. More renewable energy projects can be expected in the coming years as we strive to fulfill our commitment to deliver cleaner and more sustainable energy to the market. Thank you, and good afternoon.

Thank you, sirs, RCE, FOG, ROLA, JRVV, RVR and JTA. We will now open the floor for questions. [Operator Instructions] Any questions from the analysts? I'd like to recognize [ Somesh Agarwal ] Please go ahead. Somesh, please go ahead with your question.

Hello. Am I audible now?

Yes.

Could you please throw some more light on the 1.8 gigawatt PSA termination? How are you guys thinking about it? And what's the path forward?

So the 1,800 megawatts termination. So we -- what we did for Meralco so far is that we have complied with the directive of the Energy Regulatory Commission, which required us to submit a report on -- with the measures that we have taken in order to prevent the termination. And also if we have any information as to what figure the termination by SMC or by South Premier and -- I'm sorry, by Excellent Energy and Masinloc. And so far as the Notices of Withdrawal that were filed by the 2 companies of San Miguel, we have filed our comment on this, and we have emphasized the right of termination under the PSAs is right belonging to the power supplier just like in any other power supply contracts that we have executed. If the reason is the lapse or the last update, and please take note that the last update here was supposed to end 6 months from the time that we have filed the application with the ERC, and we have extended that twice. Now since we have already acquired our comment we shall await the quarter action from the Energy Regulatory Commission on our comment and on the Notices of Withdrawal filed by the 2 companies of San Miguel.

Thank you, JRV and thank you, Somesh, also for your question. The next question comes from Gio dela Rosa with Regis. Based on your presentation, Meralco appears to have effectively appears to the termination of the 2 PSAs with San Miguel Corp for future supply. With Meralco now have enough power supply to replace the 1,800 megawatts, does Meralco have a view on advocacy of power supply in Luzon for 2024 and beyond, since a shortage in Luzon would have a direct impact on Meralco regardless of whether it has [indiscernible].

Yes. Insofar as the replacement for the 1,800 megawatts, assuming that the Energy Regulatory Commission will already resolve the filings of the San Miguel companies sent the Notice of Withdrawal and Termination. Assuming that the termination is allowed by the ERC that we will already immediately proceed with the rebidding of the 1,800 megawatts by filing a request with the Department of Energy for the approval of the terms of reference. And then thereafter, we shall end the CSP for the 1,800 megawatts for the -- to forward the same period and forward the same commercial operations date.

Thank you, JRVV. The next question comes from Karisa Magpayo of Macquarie. Can we get an update on the PRP exercise?

For the [ PRP ], the evidentially hearing for Meralco's PRP is ongoing. We haven't heard from the ERC since the last hearing that we had sometime in, I think, in January. But according to the ERC, they are prioritizing the other rate basing activities from MBCP and the other utilities. But they assured us that they will proceed to the complete rate basin PRPs of Meralco in the next few months and that they said that we expect this to be completed within the year, probably third or fourth quarter this year.

Thank you again, JRVV. Sir, we would like to ask for the answer on the second question. Does Meralco have a view on the advocacy of power supply in Luzon for 2024 and beyond potential [indiscernible].

For 2024, for the Luzon?

Yes.

For the Luzon -- well, I'll respond first for Meralco supply and demand requirements in 2024 and beyond. Since that we forward the 1,800 megawatts that will be replaced and assuming that we will be able to find a replacement for the 1,800 megawatts, yes, we will have enough capacity to supply our requirements for 2024 and beyond. And with respect to the Luzon demand requirements, then maybe we can prepare that matter to the Department of Energy.

Thank you, sir. The next question comes from Gregg Ilag of BDO Securities. Can you share what is the revenues growth of PacificLight in the first quarter of 2023 and how much of it is from higher ASPs.

For the revenue growth of PacificLight, it's 36% higher, which is SGD [indiscernible] million in 2023 compared with the SGD 257 million last year.

Thank you, Ma'am. The next question comes from German de la Paz of Abacus. The first question is may I ask for reconciliation between CCNI and reported income in the first quarter 2023. The second question is how much was -- how much typhoon financial impact in January of 2022, and finally, how is sales volume growth so far in April?

Okay. For CCNI, the gap between CCNI reported net income is just ForEx and the day 1 accretion the ForEx is about -- is PHP 270 million in the day 1 gain is PHP 700 million. And then the typhoon impact -- I don't have the number. I'll get back to you in a while. I need to check the amount of the impact of Typhoon Odette.

Yes. For the April sales volumes been very lean because our 40% core revenues will come trying to move along based on our internal forecast conservatively 2% sure. Just April month.

German, the Typhoon Odette impact is close to PHP 300 million.

The next question comes from Joshua Generoso with [indiscernible] Securities. Would like to ask about the CapEx budget for full year 2023 to 2024? And how is the company planning to finance the said CapEx.

Joshua, well, the CapEx that we have right now is for the DU, that's about PHP 27 billion -- PHP 26 billion, PHP 27 billion and then about PHP 30 billion would be for -- and then the balance would be both a power generation in the towers business. And how will it be financed? Well, definitely -- well, if you look at the DU side, supposedly the target should take care of it on [indiscernible] because it's [indiscernible]. So a portion would be internally generated and then we'll definitely have to source our funding through loans.

Thank you, ma'am. The next question comes from Fiore de Jesus of Maybank. First, any updates on the rate you're basing. I think this was addressed. The second question, are [indiscernible] fixed rate contracts of GBP expired in what's earnings guidance for MGen in 2023. And the last 1 is what are Meralco's one off cost in the first quarter of 2022 reconcile CCNI?

For the fixed rate contracts, all our fixed rate contracts has either been expired or terminated last December of 2022. For the guidance of MGen's income in 2023 is too early, it's just the first quarter. We still have scheduled maintenance for all our power plants in the latter part of this year.

Thank you, Sir Jaime. The third question, Fio, I think this was also addressed earlier. The reconciliation of reported and [indiscernible] net income and I believe you are referring to the first quarter of 2023. The next question comes from the [indiscernible] [ SB ] Equities. What's your update that sales volume outlook for the full year of 2023? And do you think the generation business has strong performance is sustainable in succeeding quarters? For the full year.

I think for the full year, we forecasted growth of around 4.2% -- and yes, as it around [ 4.2% ] for the volume.

Thank you, sir. Sir Jaime, sustainability with the performance.

Well, as I mentioned earlier, it's too early to predict the full year 2023. But it started well, and we hope that we can sustain it.

The next question comes from Angelica Bautista from Citi. What's the status for the [indiscernible] PSA?

That make us continuing to supply power under the original PSA, it has not been affected by [indiscernible] issued by the Court of Appeals in favor of SPPC and that San Miguel has not terminated the contract.

Thank you very much, sir. Do we have any more questions from our analysts and investors? If there are none, I believe that concludes our briefing. Thank you very much once again to our analysts and investors who are attending, and we look forward to seeing you once again when we release our first half results on July. Thank you.