Manila Electric Company (MER) Earnings Call Transcript & Summary

Hello, good afternoon, everybody. Starting in 1 minute, those who are online guests. Good afternoon, investors, analysts, fund managers and key stakeholders. We welcome you to today's full year 2024 results briefing. I am Paul Jayson Ramos, Chief Investor Relations Officer of Meralco, and I will moderate today's briefing here at Grand Hyatt Manila. Welcome our guests, analysts and investors present here at the venue with a conference call facility via MS Teams available for our online participants. Before we proceed any further, please be advised this conference call is recorded and everyone is expected to follow the ground rules, which were sent to you prior to this meeting. We will be presenting the financial and operating results of Meralco for the full year 2024 ended December 31. A copy of the presentation may be downloaded from our website at www.meralco.com.ph under the Investor Relations section. We have members of Meralco's management team in this call, led by Mr. Ronnie Aperocho, EVP and Chief Operating Officer; Ms. Betty Siy-Yap, SVP and Chief Finance Officer; Mr. Ferdinand O. Geluz, SVP and Chief Revenue Officer; Mr. Froilan Savet, VP and Head of Networks; Attorney Jose Ronald Valles, FVP and Head of Regulatory Affairs and DU Regulatory Management; Mr. Raymond Ravelo, FVP and Chief Sustainability Officer; Mr. [indiscernible] [Technical Difficulty]

[Technical Difficulty] Representing the results for the full year ended December 31, 2024. On your screen is the highlight of 2024. So 2024 was a year of achievements highlighted by key transactions, milestones and exceptional operating results. For the full year 2024, our CCNI hit PHP 45.1 billion, exceeding the 2024 profit guidance and 22% higher year-on-year. In terms of -- the share of the Distribution Utility of the CCNI, it accounted for 62%, Power Generation at 24% and Collectively RES and non-Power subsidiaries delivered 14%. Although the percentage share of CCNI of the Distribution Utility and Power Gen were lower compared with 2023, in absolute terms, the DU amounted to PHP 28.1 billion or 5% higher, while Power Generation was at PHP 10.9 billion or 10% better. RES was a turnaround -- sorry, delivering PHP 5.7 billion compared with only PHP 2.8 billion in 2023. The year 2024 also saw the completion of the following: the Philippine Competition Commission approved the Chromite transaction on December 2023, that allowed us to invest in the gas plants of San -- and the terminal of San Miguel. The consolidation of the tower business of Miescor Infrastructure Development Corporation with Phil-Tower Consortium was completed in September 30, 2024. With the consolidation of MIDC and Phil-Towers in Pylon Holdings, Miescor now holds 25.5% of Pylon and Stonepeak at 24.5%, which collectively we continue to hold majority or 50.1% and the remaining 44.8% is held by Macquarie Infrastructure. PLDT also invested in Radius, resulting in dilution of Meralco's ownership interest in Radius to 65.1%. Meralco did a 27.5% investment in Kayana Solutions, Inc. and Kayana acquired 10% equity in Bayad. Total dividends received from unconsolidated investees totaled PHP 10 billion, of which 88% is from PacificLight and San Buenaventura. S&P raised the long-term credit rating of Meralco to BBB, a notch below sovereign grade credit rating; with Stable outlook. The Meralco stock price hit a high of PHP 503 in October of 2024. The next slide shows our summary financial information. The 22% increase in consolidated core net income or CC&I for the year ended December 31, 2024, was backed by the steady growth of our core Distribution Utility business, which achieved all-time high sales volume owing to the sustained increase in demand, particularly from the Commercial and Residential segments. We also saw significant bottom line contribution from our major business segments, which are Power Generation and RES, which both posted impressive growth. Consolidated reported net income similarly increased by 21% to PHP 45.9 billion from PHP 38 billion. The gap between CCNI and consolidated reported net income represents day 1 gain adjustments, gain on sale of assets. These are the PEDC transmission assets, among others. And also the present value of over under recoveries that we had recognized as well as foreign exchange losses. Consolidated revenues grew by 6% to PHP 470.4 billion from PHP 443.6 billion in 2023, mainly due to the 6% increase in volumes sold by the distribution utility as well as the increase in pass-through transmission charges. Costs and expenses increased by 4% to PHP 425.3 billion, the bulk of which still pertains to purchased power costs, which accounted for 81% of the total. Capital expenditures totaled PHP 44.7 billion, largely for the distribution network improvements, development of solar power plant and the purchase and construction of telecommunications tower. Our cash and cash equivalent amounted to PHP 84.5 billion, while consolidated debt stood at PHP 94.8 billion. This chart shows the break between our regulated and unregulated business. For our regulated or distribution business, the PHP 28.1 billion contribution was from consolidated sales volume, which grew 6%, ending 2024 at 54,325 gigawatt hours from 51,044 gigawatt hours the previous year. Volumes attributable to Meralco and Clark Electric Distribution Corporation increased by 6% and 4%, respectively, while Shin Clark brought in an additional 4 gigawatt hours. For our unregulated businesses, the higher CCNI contribution came from the strong performance of Power Generation, owing to operational stability and efficiency of its operating assets and its strategic participation in the optimized market bidding for both energy and ancillary services in the Visayas Grid; and the substantial growth of RES from a mix of organic sales and market participation. On revenues, electric revenues of PHP 456.9 billion accounted for 97% of the consolidated revenues of PHP 470.4 billion. Generation, transmission and other pass-through charges were 7% higher at PHP 359 billion from higher volumes sold and increase in transmission charge due to the higher ancillary service charges for additional -- from additional capacities sourced by the National Grid Corporation of the Philippines from new ancillary service procurement agreements and the reserve market. Generation charge, meanwhile, decreased on a per kilowatt hour basis due to lower wholesale electricity spot market prices as the Luzon supply situation improved, the decrease in international coal prices as well as generation cost over recovery adjustments, which were implemented based on an ERC resolution. These factors more than offset the impact of the peso depreciation, which weakened to an average of PHP 57.274 per U.S. dollar in 2024 versus PHP 55.627 in 2023. The higher Malampaya natural gas price and the cost related to the use of liquefied natural gas of Santa Rita and San Lorenzo of the gas -- of First Gas Power Corporation. With the ERC approved interim average rate of PHP 1.35 per kilowatt hour, distribution revenues increased by 6% to PHP 73.4 billion from PHP 69.1 billion, which is same as a growth in volume. Energy fees, which totaled PHP 24.6 billion decreased by 5% due to the lower fuel and coal prices, partially offset by revenues from the strategic participation of GBP's Visayas power plant in the co-optimized energy and reserve market. This slight increase in non-electric revenues was due to higher transaction volume of Bayad, project accomplishments of MServ, and additional towers that were turned over and built by MIDC, which totaled 1,829 towers. And this was offset by lower revenues from third-party customers of MIESCOR. With respect to MIDC, note that Meralco subsidiary MIESCOR through MIDC along with Phil-Tower completed the formation of a joint venture called Thailand Holdings, which owns 100% each of MIDC and Phil-Towers. Collectively, it has a nationwide coverage and is well placed to support the growing connectivity needs of the country. As a result of the transaction, MIESCOR's effective ownership is down to 25.5%, although with Stonepeak, we continue to control Thailand Holdings. However, with this transaction, Meralco deconsolidated MIDC from its books beginning September 30, of 2024. Costs and expenses, this totaled PHP 425.3 billion. Our costs accounted for 81%, OpEx represented 10%, while depreciation was at 4%. The combined coal and fuel and power plant O&M accounted for 3% and other expenses accounted for the remaining 2%. Purchased power costs increased by 6% to PHP 346.5 billion, consistent with the movement in pass-through revenues. OpEx increased by 9% to PHP 41 billion due to higher manpower and contracted services costs to address the [indiscernible] relating to repairs and maintenance of the Distribution facility, increase in salaries and related expenses of MGEN's improvement [indiscernible] expanding portfolio of Power Generation projects, inclusion of expenses of SPNEC, following MGEN's acquisition of a controlling stake in December of 2023, higher IS/IT-related expenses, including those relating to cybersecurity to ensure integrity and reliability of our network and [Audio Gap] increased by 5% to PHP 17.5 billion due to the completed capital expenditures of the DU, the acquired towers under a sale and leaseback arrangement and build-to-suit structure and the completion of first phase of PH Renewable solar power plant in the first quarter of 2023, and Phase 2 in August of 2024. The combined fuel and power plant O&M amounted to close to PHP 14 billion, 23% lower with the decrease in fuel and power, coal prices, partly was offset by the increase in maintenance costs. [indiscernible] Our consolidated capital expenditures was at PHP 44.7 billion, bulk of which or PHP 24.7 billion pertains to capital expenditures of the Distribution Utility, of which PHP 21.4 billion was utilized by Meralco for distribution network projects that included new connections, asset renewals and load growth, while continuing to execute pole relocation in support of the government's infrastructure projects. Power generation capital expenditure accounted for 31%, largely for the development of three solar plants, namely Phase 2 of the Baras solar power plant, which was completed in August of this year; the 52.8 megawatt AC of Greenergy for Global Business Power; and 19.8 megawatt AC of Greentech solar energy in Bongabon. We have also made significant land acquisition and development related to Terra Solar project. Our other subsidiaries' CapEx are represented 14%, majority of which was related to the tower business with an additional 475 towers during the year. The next slide shows Power Generation results of operations. MGen's Power Generation entity sustained their strong performance ending 2024 with a 10% increase in CCNI from a year ago, owing to operational stability and efficiency of its operating assets and its strategic participation in the optimized market bidding for both energy and ancillary services in the Visayas grid. The Power Generation business closed the year with a net sellable capacity of 2,436 megawatts across its diversified portfolio in the Philippines and Singapore, delivering a total of 15,296 gigawatt hours of energy, which was 7% higher than 2023. Singapore-based PacificLight reported core net income of SGD 299.7 billion or equivalent PHP 13 billion, lower compared with 2023 due to market correction that led to lower average margins at SGD 86 per megawatt hour compared with SGD 104.7 per megawatt hour affecting non-fuel margins. PacificLight delivered a total of 5,820 gigawatt hours in 2024, 2% higher from a year ago with the completion of turbine blade upgrade and cash dividends received by MGen for its 58% investment in PacificLight totaled PHP 7 billion. Global Business Power, excluding its retail electricity arm recorded a CCNI of PHP 3.5 billion, a significant growth of 411% from a year ago. This was primarily due to additional earnings from the strategic participation in the Visayas power plants in the co-optimized market even as the combined energy generation of its power plant in Visayas and Mindanao declined by 4% to 5,652 gigawatt hours due to the scheduled maintenance activities. The San Buenaventura power plant in Mauban, Quezon, delivered a total of 3,205 gigawatt hours, 36% better than 2023. SBP ended the period with core net income of PHP 3.2 billion and dividends received by MGen amounted to PHP 2 billion. Renewable energy unit of MGen, which is MGen Renewable or MGreen maintained more than 93% availability rate and record 619 gigawatt hours of clean energy [Technical Difficulty] The next chart shows our consolidated debt and cash balance. Consolidated interest-bearing debt stood at PHP 94.8 billion, including PHP 53.7 billion of debt of our subsidiaries. Debt maturities are spread through 2039. Net debt as of the end of 2024 was PHP 1.5 billion with net debt-to-EBITDA of 0.02x. All of Meralco's consolidated debt are denominated in Philippine peso. Cash and cash equivalent amounted to PHP 84.5 billion and short-term investments totaled PHP 8.8 billion. Our long-term cash investments totaled PHP 5.5 billion. Our core EPS amounted PHP 40.052 a share, up 22% versus last year's PHP 32.925 a share. Today, the Meralco Board approved declaration of final dividends amounting to PHP 13.736 a share to all shareholders of record as of March -- payable on April 4, 2025. This brings the total dividends declared out of the 2024 CCNI to PHP 24.031 a share, equivalent to 60% of our core earnings. Using the December 31, 2024, closing price of Meralco of PHP 488 million the dividend yield stands at 5%. Finally, in 2024, S&P upgraded Meralco Credit rating to BBB from BBB- On Robust Financials; with a Stable outlook report.

Thank you, Ms. Betty. Before we proceed, we'd like to announce that you can ask questions using the QR codes found on the tables of your [indiscernible] Moving on, we would like to call our EVP and CEO, Mr. Ronnie Aperocho, followed by the heads of the different business segments.

Thank you. Thank you, P.J. Good afternoon, everyone. Thank you so much for joining this briefing. Well, on behalf of the Meralco management, I am pleased to report that 2024 was about [indiscernible] year for Meralco, as we ended the year with a generally remarkable operational performance as we celebrated our 8 million customer and achieved all-time best in key metrics such as energy sales, peak demand and service reliability. Energy sales for the full year 2024 stood at 54,325 gigawatt hours, which grew by 6.4% from the previous year. This is an all-time high, driven by growth in all customer segments, especially Residential. That's basically because of the effects of El Nino during the first half of 2024. The DU Net System Input or NSI for the year was 56,293 gigawatt hours higher by 6.9% than in 2023. Meralco's peak demand reached another all-time high at 9.32 gigawatts attained back on April 2024, posting an increase of 10.4% than the 8.44 gigawatts in 2023. Our customer count reached the 8 million mark, and we ended the year with 8.043 million customers, growing by 2.7%. For system loss, we closed 2024 with a 5.99% system loss performance, still below the indicative system loss cap of 6.5%, but a 0.11 percentage point increase than in 2023. The increase was generally or primarily due to the higher share of high loss to serve residential customers, which grew close to 10% and took up a larger share in the total sales mix. Our reliability performance attains another all-time best with double-digit improvements versus last year. Our total SAIFI dropped by 12.8% at 1.041x, reflecting fewer power interruptions. While our SAIDI or system average interruption duration index, likewise improved by 12.5% at 108.21 minutes, showing reduced power interruption duration. And meanwhile, our year-to-date average time to connect customers increased by 5.1% at 1.45 days over 1.38 days last year or in 2023, but still within the rewards level of the ERC. And finally, our average electricity retail rate for 2024 was PHP 10.54 per kilowatt hour, almost flat compared with the 2023 average, primarily due to the lower generation charge from lower WESM and coal prices, which offset the higher transmission charge from ancillary services with the implementation of reserve market in 2024. Thank you so much, and I'm turning you over to Ferdie Geluz for the customer report. Thank you.

Good afternoon, everyone. So, as Ronnie alluded to, so we're happy to report that in terms of sales, our consolidated energy sales was at an all-time high of 54,325 gigawatt hours, a 6.4% or more than 3,200 gigawatt hours increase versus the same -- versus 2023, warmer temperatures due to extended El Nino in 2024 as well as strong energization numbers as we surpassed 8 million active customer connections and ending 2024 with 8,040,000 million customers connected. So this is 210,000 more customers than 2023. Residential posted a 9.4% growth, up close to 1,700 gigawatt hours, driven by warmer temperatures, which actually increased organic consumption or same-store sales per capita by more than 6%. The rest of the growth was through new connections, which accounted for around 482 gigawatt hours. Commercial increased 7.3%, up by around 1,400 gigawatt hours with business expansions and more business activities driven by hotel and restaurant subsegment, which grew double digits as well as real estate and retail trade, which grew between 7% and 8%, respectively. Industrial meanwhile, modestly grew only up by 1.5% or around 205 gigawatt hours as increases in semiconductor, food and beverage, plastics and non-metallic or cement was tempered by declines in the steel industry as well as embedded generation and wheeling charges -- wheeling kilowatt hours. So in terms of year-to-date sales mix, residential and commercial increased to 36% and 38%, respectively, versus 35% and 37%, while industrial declined because of the slower growth from 28% to 26% in 2024. That ends the customer report, and I now turn you over to Froi for the Networks report.

Thank you, Mr. Geluz. Good afternoon, everyone. We are happy to share with you that in the fourth quarter of last year, we commissioned eight major CapEx projects, with three of these completed in October. First, the interconnection of Maragondon Solar Power Plant last October 10. The project will enable MSPP to deliver its 50-megawatt power output to the 115 kV system of MERALCO, augment the power capacity requirement in the Cavite area. Second, on October 30, we energized the Arcovia GIS Substation, which will benefit Pasig City, including major customers such as Arcovia City, E-PLDT’s Vitro Pasig Data Center, ComClark Network and Universal Robina Corporation. Third, at the end of October or October 31, we completed the replacement of a Switchgear at New Teresa Substation. This is to ensure reliable service in the areas of Antipolo, Baras, Morong and Teresa, Rizal. Moving to November, we completed three major CapEx projects: one new GIS substation and two replacement projects. On November 14, we energized the new Sampaloc GIS Substation. This project will benefit the City of Manila. Critical customers benefiting from this substation include the Jose R. Reyes Memorial Medical Center, Dominican School of Manila, and the University of Santo Tomas. In addition, we also completed the replacement of Switchgears in Novaliches and Urdaneta Substations. The replacement project in Novaliches will provide reliable service in the areas of North Caloocan and Quezon City. Likewise, with the project in Urdaneta, Meralco can also provide the same benefits to the customers in the Makati Central Business District. And finally, last December, we energized two major CapEx projects. First, on December 1, we energized a new 300 MVA power transformer at Duhat Substation. This will enhance the service reliability and power quality in the areas of Santa Maria, Bocaue, and Marilao, Bulacan. And finally, on December 2, we commissioned the replacement of Switchgear at Novaliches Substation, ensuring reliable service in Novaliches, Quezon City, including major customers such as San Lorenzo Hospital and SM Fairview. Thank you. I'm now turning you over to Attorney Valles for the regulatory updates.

Thank you very much, Froi. Now for the regulatory update, we start with the actual weighted average tariff or the AWAT application. So last December 17, 2024, the ERC issued an Order directing MERALCO to file the application for the true-up of its maximum average price or the MAP equivalent to PHP 1.3522 per kilowatt hour versus the AWAT covering the period declared as lapsed from July 1, 2022 to June 30, 2025. This is part of the original 5RP of Meralco. And we were directed to file this within 30 days from receipt of the order or until January '27. So the AWAT application was filed as January 28, and it covers only part of the lapse period with actual implemented rates. A new application covering the period from January 1, 2025 to June 30, 2025, shall be filed once the actual implemented rates are available. So that will be on top of the one filed last January 28. So the difference in AWAC versus the MAP yields an over-recovery of PHP 19.9 billion, and we are proposing to recover the PHP 862 million that was over-refunded in the implementation of the distribution rate through 1, 2, 3 and 4. The final proposal is to refund to customers PHP 19 billion net of the DRTU over-refunds. We propose that the refund covering the period July 2022 to December 2024 be implemented in 36 months at an average rate of PHP 0.1138 per kilowatt hour. Going now to our 5RP application. We filed our 5RP -- our new 5RP application last February 7, in accordance with ERC Resolution #17, which is the resolution adopting the amendments to ERC Resolution #10 that was issued in 2021. So in the order of February 10, the ERC already set a series of hearings for this application from March 3 to April 4, 2025. We expect ERC to decide on our new 5RP application before the start of the new 5RP on July 1, 2025. So shown on the table on your screen are the proposed 5RP revenue requirements and prices. So on the average, the average rate that we will be filing for the 5RP is PHP 1.6884 per kilowatt hour. Next slide, please. So this new 5RP application includes a proposal for recovery of PHP 30.6 billion carryover projects on top of the forecast CapEx. PHP 215.4 billion new projects comprised of customer load growth, 50%; advanced metering infrastructure, 20%; sustained reliability and quality projects, 15%; and automation, innovation and technology, 10%. So a total of PHP 246 billion forecast CapEx. So last December 17 also the ERC promulgated Resolution #18, which is a resolution directing all Distribution Utilities to refund all collected and unutilized regulatory reset expert costs and cease any future collection thereof. So 16 private Distribution Utilities were ordered to refund the collected regulatory reset expert cost, including interest. So for Meralco, the refund amounted to PHP 987 million to be refunded for a period of 1 month at a rate of PHP 0.2264 per kilowatt hour. This is just a onetime refund. Private DUs were also directed to no longer collect, as part of its distribution wheeling rate the regulatory reset expert cost. For Meralco, this is equivalent to about PHP 0.0023 per kilowatt hour. So this deduction shall be reflected as a separate line item in the Meralco to its customers. Going now to Power Supply Agreements. The ERC, through a notice of resolution last December 10, granted a final approval for the Power Supply agreement, including the applicable rate, subject to adjustments in accordance with the formula pricing as set forth in Schedule 1 of the PSA between Meralco and Energy -- Excellent Energy Resources Incorporated or EERI. This is for the 1,200 megawatt capacity -- baseload capacity. So the total non-fuel -- non-fuel rate, including the escalation is PHP 2.26 and the fuel fee as adjusted based on the formula approved by the ERC is PHP 6.49. So for a total contract price today of PHP 8.7547 per kilowatt hour. Fuel is a pass-through cost, again, based on the formula as approved by the Energy Regulatory Commission. So on December 23, also the PCC or the Philippine Competition Commission announced in a press release that this transaction involving the Meralco PowerGen, San Miguel Global and Aboitiz Power was allowed to proceed. The ERC also posted Notices of Commission Action that the following Power Supply Agreements with Meralco have been approved. However, the ERC has yet to issue a Notice of Resolution or ERC Order. These are the GNPower Dinginin Limited for 300-megawatt baseload, Mariveles Power Generation Corporation for again 300-megawatt baseload, Gigasol incorporated for 139-megawatt midmerit, and San Roque Hydro Power for 340 midmerit. The midmerit PSAs are intended to comply with Meralco's RPS requirement under the DOE. So last November 2, 2024, ACEN or Ayala ceased to supply Meralco covering 200-megawatt baseload capacity under our Power Supply Agreement executed last September 13, 2019, on the ground of change in circumstances. So considering that the resulting deficit of baseload capacity and approaching peak demand during summer months, MERALCO notified the ERC of our need to enter into an EPSA or the Emergency Power Supply Agreement, while it revisits our PSPP, while we revisit our PSPP to determine need to conduct CSP for the remaining term of the PSA. So MERALCO requested for proposals from power suppliers and received offers from six of them. These are MPGC or Mariveles; Sual Power; Southwest Luzon Power Generation Company; First Natural Gas; Therma South Incorporated; and South Luzon Thermal Energy Corporation. SPI or Sual Power emerged as a supplier with the lowest offer as indicated in the contract price below. So the rate is PHP 5 -- PHP 5.05 Plant Gate plus a line rental cap of PHP 0.10 per kilowatt hour. This is for a 200-megawatt net baseload PSA for a term of 1 year from January 26, 2025 to January 25, 2026. And finally, for our franchise renewal update, you will recall that last January 28, Senate already approved our bill on the second reading and subsequently on February 3, it was approved on third reading. And on February 4, our representatives concurred with the Senate and approved the same. So the next step will be the House of Representative is supposed to review the amendments to the bill as approved by the Senate and to capture the same in the final house bill that will be approved and turn over to the Senate. So we expect this to be transmitted to the Senate anytime soon before it is transmitted to the office of the President. That's it for the regulatory update. Turning over to Mr. Ravelo. [ Sorry, Mr. Manuel Pangilinan. ]

Thank you, Ronald. Good afternoon, everyone. So I'll begin with a report on our top priority across all sites, health and safety. In 2024, we maintained a safe and risk-free work environment with an achievement of over 39 million safe manhours, both for employees and contractors. We're also happy to report that the year ended with zero lost time accident, zero first aid case, zero fatality and zero recordable case. These records highlight our commitment to maintaining industry-leading safety performance while we ensure stable and reliable energy supply. Now on operations, Global Business Power, now rebranded as M Thermal, delivered 5,652 gigawatt hours of energy for 2024 despite a 4% decline from the prior year due to major overhaul and preventive maintenance activities. I'm happy to note that M Thermal's CCNI contribution more than doubled due to its participation in the optimized market. Notably, this was achieved even though we only had 6 months of the operations and only with 56 megawatts of capacity that we're offering, proving its substantial revenue potential through this strategic involvement. For 2025, we're looking at adding another 33 megawatts to this market. Meanwhile, San Buenaventura Power Limited generated 3,205 gigawatt hours of energy, a 36% increase year-on-year, supported by a higher plant dispatch. A Singapore-based subsidiary, PacificLight recorded a 2% increase in delivered energy with 5,820 gigawatt hours. This is driven by successful blade upgrade, turbine blade upgrade. And following this, PLP's plant has also increased its capacity by 30 megawatts and enhanced its efficiency. As a result, PLP is now the first plant in Singapore to exceed 60% efficiency compared to its peers. Lastly, MGreen, the renewable energy unit of MGen, delivered its highest record of 619 gigawatt hours of clean energy, which marks a 77% increase from 2023. Thanks to the contributions from the Philippines Calatagan Corporation and Solar Philippines Tarlac Corporation, both of which were still improving its capacity factor, increasing it from 15% to what we expect to be around 17% to 18% this year. All in all, MGen delivered a total of 15,296 gigawatt hours of energy in 2024, which is a 7% increase compared to the previous year. This performance reflects our strategic planning, operational stability and active participation in the optimized market. As you all know, MTerra Solar project was certified as an energy project of -- as an Energy Project of National Significance by the Department of Energy in July. And later on, it also secured a Green Lane Certification from the Board of Investments, which is beneficial in permitting and approvals and -- facilitate approvals and processing. In November 2024, our flagship renewable project celebrated its groundbreaking with no less than President Ferdinand R. Marcos Jr. leading the event with other high-ranking officials. We also awarded Engineering, Procurement and Construction contracts to Energy China for the West side and Power China for the East side, Huawei for the Battery Energy Storage and MIESCOR to connect the solar plant to the grid. These EPCs are industry leaders, and they will help drive seamless execution. At the end of 2024, the overall project completion is 22%. Currently, we're reporting 25% to 27% of our project execution completion. Land acquisition phase is already complete, while Phase 2 is halfway done at 50%. We have also secured 83% of the required towers -- tower sites for the project's transmission line, and this has so far increased with the balance having letters of interest to sell. Lastly, we are on track to close with Actis on the USD 600 million investment for 40% stake in MTerra Solar with Phase 1 of 2,500 megawatts targeted to be delivered by first quarter of 2026 and Phase 2 to follow a year after. So looking ahead, we are preparing to boost MGreen's capacity further with new solar power plants. Bongabon, Nueva Ecija has just been inaugurated last week with a capacity of close to 20 megawatts AC. Baras, Rizal will complete Phase 2 this year, generating an additional 12.6 megawatts, and this brings the total plant capacity to 80.1 megawatts. A new solar facility in Cordon, Isabela is also on its way with 52.8 megawatts AC and expected to be switched on in April. All these solar plants will add 85.2 megawatts AC of clean energy scheduled to start commercial operations before middle of the year. Meanwhile, our subsidiary, PacificLight has secured the right to build a hydrogen-ready 600-megawatt CCGT facility on Jurong Island, scheduled for operations by January 2029. This will complement PLP's 800-megawatt combined-cycle gas turbine and the 100-megawatt Fast Start capacity or what is considered here, despite of this, more reserves to be launched by April of 2025. On the local front, last December, the Philippine Competition Commission approved our acquisition of the country's first and most expansive integrated LNG facility in Batangas. With its close last January 27, MGEN now holds 40.2% attributable interest in South Premiere, which was Elian contracted supposedly for 1,200, but we just have a PA for 910 and waiting for the 290. Excellent Energy Resource or EERI with 1,200 megawatt contract, but has a capacity 1,275 megawatts and Linseed Field Corporation, which is the LNG import terminal and onshore regasification facilities. All of these strengthen our LNG portfolio and reinforce our commitment to a sustainable energy future for the country. MGen continues to uphold our commitment to powering the good life by championing initiatives that prove the way for a more sustainable future. Once again, we take pride in maintaining a risk-free environment throughout the year, achieving over 39 million safe manhours in our operations. And as mentioned earlier, solar plants at MGreen generated, its all-time high record of 619 gigawatt hours of clean energy. We are excited to deliver more than -- more through our solar plants in Bongabon, Cordon, and Baras before middle of this year. Our initiatives have also extended beyond energy production in Iloilo City, Iloilo, the La Paz Plaza, Koi Lagoon and Butterfly Garden received an investment of PHP 8.5 million, which enhances local biodiversity and boosting tourism. As part of One Meralco Foundation, Foundation One For Trees program, we have successfully planted over 100,000 trees in the fourth quarter to total more than 1.6 million trees to date. We've also had initiatives on healthcare, education and energy access. We ended the year with Handog sa Pasko ng MGen with employees raising PHP 1.3 million, aiding 3,600 beneficiaries of our host communities. And overall, MGen has impacted over 110,000 beneficiaries last year with a total investment of PHP 74 million in programs that foster sustainable progress and community resilience. Thank you, and good afternoon.

Good afternoon, everyone. I'll be presenting some brief updates on the sustainability front, particularly on our ESG assessments as well as on recognition we received in the tail end of 2024. So first, 2024 saw us maintain our inclusion in the Bloomberg Gender Equality Index, which is the only ESG assessment in the world focused on gender equality in the workplace. We actually kept our place in the index, which we first achieved in 2023 as Bloomberg cited our distinctive management of diversity and inclusion areas as evidenced by, first, our Board-approved diversity and inclusion policy, a very strong women representation in our management ranks as well as a low attrition rate among our female employees. I'm also pleased to share that we ended last year with a number of recognitions from international and local organizations for our sustainability agenda. First, in the first ever or inaugural Triple P Sustainability Awards organized by the International Association of Business Communicators or the IABC, Deloitte Consulting and the Makati Business Club, we actually earned top honors in particular, for our sustainable business practices and impactful communications. More specifically, we earned awards in the Excellence in ESG Performance in Energy Distribution as well as the ESG Thought Leader of the Year Award. Next, we were recognized in the 2024 edition of the United Nations Women Empowerment Principles. In particular, our diversity and inclusion program called Mbrace was awarded first runner up in the Gender-Responsive Marketplace category. And this is owing to our efforts in supplier diversity and development as well as an inclusive corporate marketing. Finally, for the fourth straight year, we earned a podium finish in the X-Trash Challenge, which is an Intercompany Waste Management Competition led by the Philippine Business for Social Progress, or the PBSP, and Basic Environmental Systems and Technology. We actually placed second in the competition as we donated close to 20,000 kilos of recyclable waste comprised primarily of wires, container bottles and cartons from our operations. Our win actually translated to 200 food backs, which were donated through our One Meralco Foundation.

We will now open the floor for question and answer. [Operator Instructions] So we have a phone-in question here. Given that the co-optimization market has made notable contribution to bottom line, do you think this is sustainable moving forward?

Well, reserves are actually required by the grid. Reserves are provided in the grid code. The co-optimized market, particularly in Visayas is sending price signals that capacity is needed. That's why we believe that adding another 33 megawatts, which we hope to be certified by March 11, I think it's a testing date for one of our plants. And we're looking at adding battery storage in our -- one of our diesel units to be able to provide regulating reserves should bring the prices down. For Luzon, we're looking at certifying both plants, both EERI and South Premiere. We're prioritizing South Premiere, Ilijan. Hopefully, 290 megawatts can help provide either regulating or contingency reserve also to bring down prices, particularly of regulating reserves. So it's not a matter of that being sustainable, but it's actually a requirement in the grid, particularly with the massive penetration or the planned investments in solar coming from [indiscernible] I think the more we will be needing regulating facilities.

We have an online question here. May I ask what was the stand-alone core profit of Global Business Power in full year 2024? What was the stand-alone core profit of Global Business Power in full year 2024?

It's PHP 3.5 billion.

Another phone-in question here. How do you anticipate current and immersion policies and regulations will shape the strategic direction and operational priorities of your utility over the next 5 to 10 years? And what proactive steps are you taking to adapt to these changes? I believe this is a question on distribution.

Well, right now, the Energy Regulatory Commission is focusing on fast tracking retail competition in open access. So they have recently allowed our retail aggregation to include household level, and this is no longer contiguous area. So anybody can participate. We expect the ERC to issue more resolutions, lowering the threshold on retail competition, as a result of this once the pilot implementation of this has become successful. Also for PBR, we expect ERC to fast track PBR not only for Meralco, but also for the different distribution utilities affected by the long delay in the implementation of this rate setting methodology. And today, only Meralco has directed to file an application, but we expect that in the next few years or few months, all other Distribution Utilities will also be directed to make a similar application.

For the generation side, I think -- well, as demand grows, the incremental requirement year-on-year for baseload also grows. So today, I think Luzon is requiring about 600 to 700 megawatts of new capacity year-on-year to meet demand, including reserves. One of the things that we're asking for DOE to consider is to revisit the grid limits. As more and more investments are actually needed, investments become more significant, right? And when EPIRA was crafted limiting the grid limits to 25% on a grid basis and 30% national. I don't think there was any anticipation of solar plants. So solar plants are only providing anywhere from 16 to maximum 18 capacity factor, but the megawatts counted, is the same megawatts as you count baseload plants. So I think, there has to be a correction factor or a capacity factor multiplied with the total installed capacity instead of just counting the installed capacity in order to determine the grid limit of the participant. So I think, that's one limiting factor for investments in power, and this has been communicated to the Department of Energy by -- not just by us, but also by PPA.

PJ, if I may add also. Regarding emerging regulations, well, of course, as mentioned by Ronald, ERC has already allowed this aggregation. But on the part of DOE like Meralco, to support this aggregation, we need to invest heavily on automation or technology like smart metering or AMI. And based on our submission, our AMI program will entail huge CapEx. And hopefully, ERC will approve this. But definitely, there will be a lot of business casing value propositions that we need to articulate. That's why we're bringing in global experts. In the case of our AMI program, we're bringing in experts from EDF. EDF is the electric utility in France. They have rolled out their own AMI program, 34 million meters. And hopefully, they can help us justify our own AMI program. At the same time, we know that there's already this -- well, heavy penetration of DERs or distributed energy resources, or shall we say, rooftop solars, that even for commercial and industrial customers, they have -- we have been receiving a lot of applications already. But things like this will really impact heavily on quality and reliability of our service. So to avoid that deterioration in terms of service reliability and quality, we need to invest also in terms of grid edge monitoring and all that and deploying as well mounted batteries, and we need to implement investments just to support the energy and renewables. So this will entail a lot of -- of course, a lot of presentations to ERC for them to be able to appreciate why is Meralco proposing these investments.

Another point here, can I ask about MGen's plan for LNG PA pertains to [indiscernible] and overall direction and the news of gas as our country's energy source?

Well, gas has been declared as a transition fuel and chromite is voice to actually be LNG [Technical Difficulty] given the size to provide and just by the megawatts that we are waiting to optimize [indiscernible] So for the [indiscernible] to the pipeline from the discussing with prime on gas offtake and asking how much gas can actually be -- is still available that we can buy as competitive with imported LNG given also the provisions in the gas bill non-discriminatory of having providing access to all of the plants that can take it. And we are interested actually from sourcing to that existing line from Tabangao going to Ilijan.

Another MGen-related question here. With the government's renewable portfolio standard, is there any plans for MTerra Solar 2, considering MTerra Solar 1 has been very exciting.

Yes. Well, what we have proven in MTerra Solar is that a combination of variable renewable energy and energy storage can be as competitive as traditional sources of mid-merit. If it's supplying from 8 in the morning to 9 in the evening, I think you change the delivery period, you will change the configuration. And that's why we're looking for -- we are land banking and still looking for other opportunities for mid-merit supply. I think, it would be smaller than 850 megawatts. We're looking at anywhere between 300 to 400 megawatts of mid-merit supply, which will probably be around 1,500 to 1,800 megawatts of PV and probably about 1,200 to 1,300 megawatt hours of energy storage. So the answer is yes. We will not stop with Terra Solar 1. And as we speak, we're already looking at land that can host that capacity for Terra Solar 2.

Another phone-in question here on capital management. Can I clarify what is the guidance for CapEx? And where is this allocated in dividends for 2025?

The capital expenditure that we would need would be a combination for the Distribution Utility and Power Gen. So for the Distribution Utility, obviously, the tariff is important. So the approval of the ERC of the CapEx would drive also the tariff that we will be getting. For the first regulatory year -- for the 5RP, the first regulatory year, the total capital expenditure that was filed is about PHP 54 billion, including a PHP 20 billion carry-over from the previous -- from the uncompleted projects of the last period. So the question is, if -- well, if the ERC approves our -- are filing as is, assuming they do, then the basis for funding of the CapEx will be the target. Of course, there's a little timing, then we will have to cover it through either internally generated funds or through debt. On the Power Gen side, in terms of the major project, for example, [indiscernible] though, we have funded that already. And this is basically purchasing the investment. So we drew a PHP 75 billion debt to fund the acquisition, and that covers only the existing Ilijan and [indiscernible] Energy for the 425-megawatt plant that PBR or Mr. Ronnie mentioned, that's still a work in progress for us. The ongoing project, which is Terra Solar, we are -- we have drawn on bridge financing for now, and we hope to be able to sign the PF within the week. For all other projects, then it will be a combination of internally generated funds and debt. So for projects, in general, we go for a PF under a 70-30, 75-25 arrangement.

Thank you, Ms. Betty. [ Philip, ] we have questions on the floor.

Germaine from Maybank. So I have two questions in relation to chromite. First is just to clarify, how much is operational right now, the capacity? And when do you expect any capacity additions to come online, if ever?

SPPC, Ilijan is available for 1,200 megawatts of generating capacity, while Excellent Energy 2 units have been commissioned and running as nominated by Meralco. The third unit is actually on commissioning, and we expect the final acceptance by end of February, end of the month.

So that's around 2 gigawatts of operation?

2 gigawatts of operants, but Meralco is not nominating the full capacity given the prices in the spot market.

And then I just have a question in terms of the competitiveness of LNG. How does the price of LNG compared to indigenous gas?

Compared to indigenous gas, it should be competitive. In fact, that's the condition that we have asked Prime, the price that's coming from [indiscernible] if there's gas available for Ilijan considering that they're also supplying today first Gen. I thought your question would be, how is LNG compared to coal.

I can also ask that. How is LNG compared to coal?

I think the difference between power coming from LNG compared to coal is very compelling. We've done our numbers. We presented to DOE, at least PHP 3 difference. And that's why I think that's the case that we're making or the case that we've made for Toledo, expansion in Cebu also given that it's probably difficult to justify an LNG investment in Cebu, right? And that's why we're trying to expand Toledo with another unit, a similar unit and existing one. And we are still waiting for DOE to release an official letter confirming that Atimonan as coal is outside the moratorium. And we're hoping that we'll get that soon, again, basically for that compelling reason of cost.

And I'm sorry, one last. Do you see any near-term or say, long-term power supply contracts for the LNG terminal? Is there any right now? Or do you plan on securing some soon?

Long term?

Supply contracts for the LNG terminal.

We actually have contracted 10 years with Shell and Vitol to supply our requirements. We're looking for another one, but we believe that what Vitol and Shell can supply is good for -- at least for the next 2 years given the situation. But beyond that, we can still enter into other long-term contracts.

We have two more at the back.

I guess since we're on the topic on capacity for the Power Gen business, I just want to understand. So since there's a lot of capacity additions, I just would like to ask regarding the comparative figures for attributable capacity and total capacity overall for the generation business. That's the first question.

For 2025, we will -- we expect to end our attributable capacity around 2,610 megawatts, which is still below our grid limits. We still have space -- even if -- in 2026, when we commission Terra Solar, we believe we'll still be within the grid limit capacity, although very close. And that's why we really would like to work with DOE in considering changing the way variable renewable energy should be counted as part of the grid limit calculation.

All right. Sorry, my next question will be on the CapEx. Just for 2024, I just want to understand how the low up in CapEx specifically for the Power Gen because in 2023, the CapEx was about PHP 507 million, and I understand it grew to PHP 13.6 billion in 2024. Can you just give us like a breakdown on how it went for 2024? And what's your expectation for 2025?

The 2024 CapEx of Power Generation was largely for the Baras plant Phase 2 and Bongabon and part of that would be the development cost and acquisition of Terra Solar. So that's -- that constitute the Power Generation capital expenditure. And then well, moving to 2025, though, well, we have very raw numbers, because the power generation unit is currently revisiting which projects to prioritize. But initially, we were looking at -- if we just focus on the current project, which is Terra Solar, the total capital expenditure of that is over -- slightly above PHP 100 billion. And yes, that's for -- the question was Power Generation, right? Yes. So that's it. About PHP 100 billion, PHP 105 billion for Terra Solar.

I hope that answers your question.

I have four questions. So first is on Chromite and Terra Solar. Just wondering, once fully operational, how much do you expect these two plants to contribute to attributable net profit of Meralco? And then second, sticking with renewables, can you explain to us in layman's terms, the economics of running a battery storage? And can we actually see renewables displacing coal and LNG in the baseload capacity? And then third, I noticed that part of the budget of Terra Solar's CapEx is allocated on setting up its own transmission line. Just want to find out how much is the additional CapEx for setting up your own transmission line? And do we actually see this as the trend moving forward? And then last is, I noticed that the sales growth assumption or the proposed distribution tariff is, I think, half of current GDP growth at 3% annually. So just wondering the assumption -- why we're assuming a slower sales growth for the fifth RP tariff competition?

Give me a few seconds. I'll just get the numbers for [indiscernible]

I'll answer the issue -- the question on transmission. I think, this is not new. A lot of plants, actually, the ones that were built before Terra Solar, including plants that I built in my previous company, we advanced the cost of transmission with an agreement and ERC approval with NGCP to co-pile for reimbursement. Then ERC will decide on the cost, based on the cost that we presented and of course, the terms of payment and the number of years that we can collect the cost of the transmission. All of these have been, of course, considered part of the project cost as in case ERC does not -- or approves a lower cost than what we have actually incurred in the project. I didn't get the question on the battery. Can you repeat that, please?

Yes. So for the battery storage, if you can explain to us in layman's terms, the economics of running a battery storage and if we can actually see renewables displacing coal and LNG in terms of providing diesel capacity in the future?

Yes. So battery is a source of energy. We store the battery. We store the energy in the batteries at the time when we're producing surplus energy coming from the solar plants. That's why to deliver -- in the case of Terra Solar to deliver 850 megawatts of energy megawatt hours of energy, we have to install 3,500 megawatts of solar. So all of the capacities that are needed to charge the batteries will be coming from the solar plants. If there's excess, then we feed to the grid. Our estimate is that actually, we will probably have in certain months given the radiance, anywhere between 100 to 200 megawatts of excess capacity from the 3,500 that we need to charge the batteries. And then, from the time solar batteries -- sorry, solar plants stop generating, because there's no more sun, which is around close to 6:00 p.m., it will be the battery that will take over in providing that 850 megawatt hours from 6:00 p.m. to 9:00 p.m. And the expectation is that by 9:00 p.m., the battery is drained, okay? And then, we do the cycle again the following day. We are looking at also at optimizing this battery given that it has -- it's the largest and it's quite huge. And we can actually offer also regulating the service to the grid as part of the optimization in case the -- depending again on the charging and discharging profile, dependent very much on the capacity that we're getting from the solar plants. So I don't know if that's layman enough, but because of the cost of the batteries, they have cut down quite significantly. That's why I'm saying it's really now economical to provide midmerit from 8 a.m. to 9:00 p.m. because you have a specific generation profile coming from solar plants that we will be using to charge the battery. But if we supply, say, from 6:00 a.m. to 10:00 p.m., then that's going to be a very different configuration. And I'm not sure how much that's going to cost and what kind of capacities need to be on the ground. So I'll just focus on the 850-megawatt hours from 8:00 a.m. to 9:00 p.m., and that's competitive.

On the last question, so the filing actually for 5RP is based on the EIU forecast. And this is the model used by the ERC in the past resets. So we just adopted the forecast released by the EIU. And part of the reason also is that there are more solar PV rooftops and the impact of the energy efficiency low, I think also tend to hold back on our -- on consumption. So that also lowers the forecast.

Okay. So with respect to the -- the contribution of Terra Solar will come in only in '26, okay? So -- it would be about just half of the year on the assumption -- well, that is on the assumption that we go live by February or maybe the second quarter of 2026. The contribution is a little bit -- a little over PHP 200 million. For Chromite, the contribution starts this year. So you'll see the numbers already in the first quarter. Although in the first year, we estimate that the contribution should be about anywhere between over PHP 5 billion to PHP 6 billion probably. So that's the estimate. So we still have to see what it comes out, but it's going to be a meaningful contribution to the P&L.

Answer the last -- the question related to transmission. It's about -- the estimate is about PHP 20 billion, including land. That's why all the costs and the design, we need to coordinate with NGCP. So just in case we file the case for reimbursement, NGCP is already -- is in agreement with the asset design and asset acquisition.

Chairman, are you okay with Anders? Okay. Checking again on the floor for any more questions.

Sorry, just an additional question on -- in terms of funding, because -- yes, I understand that -- sorry, just starting first on the maturities. I've seen based on the trend, you have a chunky debt maturity until 2030. I just want to understand your refinancing plans in terms of like the interest rate spreads and of newly acquired or refinances and how much has been refinanced already given that we're expecting, of course, more rate cuts. So like how does the interest rate look like in terms of your refinancing?

Our maturities are actually spread throughout 2030. There's -- for this year, for example, our maturity would relate -- well, at the Meralco level, okay? So the maturity pertains to the fixed rate note that we issued back in 2012. There's still a balance of close to, I think, PHP 3 billion, a little close to PHP 3 billion, which we will have to redeem. That one -- well, right now, that one is at PHP 4.375 okay? If you look at the average borrowing rate of Meralco, we're still currently at sub 6%. Although at the subsidiary level, for example -- well, at the MGen level, it's a little bit above 6.5%, so about 6.8%. There are opportunities for refinancing, but -- which we will consider. But if you look at our financing plan, for example, in terms of our debt, for those that we have recently contracted, we are actually pricing it on a 3-month basis, repricing under the terms with the banks, we have the opportunity to fix it in 2 years. So we're waiting for where the interest rates will land before we fix on our maturity. For the GDP debt, though, a significant portion has been refinanced in the last 2 years. So we continue to look at opportunities to refinance if there would be any need depending on where the [indiscernible] lands. So similarly, for the debt that we will be signing for Terra Solar, it's a long-term debt, but we will not fix it. We have -- we can fix it within the first 2 years.

Since we're on the topic of funding, I just want -- is there any chances that like we're considering an MGen IPO on the table given that, of course, we're expecting a lot of RE developments from your side? Or better to -- is it -- given the current market conditions, is it better to spin off [indiscernible] Like how will that work if that's the case?

There are lots of ways for us to raise capital. That certainly is one of the possibilities. Although right now, the focus -- we have two listed companies, Meralco and SPNEC. And SPNEC has the bigger project, which is the Terra Solar. It's currently listed. If we look at the other -- on the green side, the portfolio is -- there are quite a number of projects, but in terms of capacity, they are not yet as big. So at the proper time, we will consider that. On the MGen side, it's also an option, but we need to see how the market would respond to a company with full portfolio, right? So it's something that we continue to consider various ways of raising capital. So at the proper time, we'll let you know what it is.

Sorry, last question for me. Just on the trend for the distribution sales volume. Since we're still seeing that industrial demand remains sluggish versus the commercial and the residential, what's your current outlook for the demand this year? Are you seeing any pickup on this specific segment? And given -- without the effect of the El Nino this year, how do you see volumes for this year tracking given that for the past 2 or 3 years, you're growing more than 5% in terms of sales volume? That's it for me.

Yes, I'd like to answer that question. So yes, I think, we'll be challenged in terms of volumes, especially on the first quarter and because first quarter is relatively cold with La Nina compared to the tail end of El Nino last year. So for example, in last year, we saw organic or same-store sales for residential alone increased by 6%. But for now, I think in January, we see same-store sales contract by 3%. But February, we're looking at a positive growth, 3%. So all in all, quarter 1 will be flattish. Quarter 2 might have a little increase due to election spending as well as economic activities, especially in the commercial sector. And well, we're seeing a better growth in the second half because second half last year, I think temperature somehow normalized and at least it cancels out the impact of temperature. So I think last year, we grew 4% in the second half, and we kind of forecasted a reasonable growth on the second half. As far as industrial is concerned, yes, there are challenges, especially for some industries like steel because of unfavorable -- some of the smelting plants have parked their operations, because it's actually more economical to import the billets rather than recycle here, because of short supply of recycled metal. And -- as far as semiconductor, there's still growth amid more this one because I think, from the declaration of -- while globally, I think the declaration is a rebound for semiconductor. Locally, [indiscernible] has pronounced that it will have growth, but not as high as the global forecast basically because for new products, I think more of the new products -- for the traditional products, there will be growth, but for new products, I think most of them have been relocated to Vietnam. I think, there's a new facility for some silicon to build the new products. But there are certain companies semicon like Samsung, which has actually going talks in terms of a 20-megawatt expansion to expand their multilayer ceramic capacitor product, which actually is a new product that supports the EVs and some of the cell phones. So it's a mix. But I think, as far as commercial, we're seeing maybe an uptick due to the data centers. So we've energized several large data centers last year as well as this year, we'll be energizing the one of Bloom. So last year, we energized the one of PLDT as well as the digital edge Sator. And I think their load ramp-up is forecasted to happen this year. So data center is one industry that we're looking at to expand here in the country. Well, as far as other commercial subsegments, I think, again, the elections will drive consumption so that the food and beverage might have a slight uptick. Last year, we grew 4%. So on starting second quarter, I think we're forecasting a much significant growth for food and beverage. Yes. In total, I think we're looking at closing 2025 at around 56,000 gigawatt hours or more. So that's around 4% to 4.5% increase over this year.

Mindful of the time, we have two questions online, and then we will go back to the floor to wrap it up. But the two questions, we'll start with PacificLight seem to have done better in the last quarter of 2024 relative to 9 months '24. What was the reason for the fourth quarter rebound? And has the trajectory been sustained so far in 2025?

Well, basically, after the upgrade of PacificLight, the units is now one of the most efficient units in 2024 among its peers, the competitors. It's a merchant market, very competitive, so the lowest cost wins. And I guess that's the main driver for PacificLight and a much higher availability compared to 2023. There will be a new 600 megawatts capacity in H-Class, almost just a little bit higher in terms of efficiency that will be built and operational in 2025 from a competitor, but we don't see that to be really affecting our income for 2024. We expect PacificLight to sustain its performance in 2025 as in the numbers in 2024.

Thank you, Manny. The second and last question online is for regulatory. Can you share with us what were the factors criteria that the ERC considered before that led to the lower approved rates during the 2RP and 3RP compared to what was originally filed by the company? Are you expecting that the same thing can happen for the 5RP?

Yes, for the 2RP and the 3RP, the ERC reduced the rates from what we have applied mainly, because of the reduction in the proposed capital expenditures and operational expenditures and partly the regulatory asset base. So of course, as a matter of prudence, we always expect the ERC to review very carefully the proposal, the CapEx and the OpEx that we have submitted to them and to think whether -- to decide whether there is a need to optimize the proposal, the CapEx and the OpEx as well as that. So that's the prerogative of the ERC, but we think that we have -- what we have filed has been carefully reviewed by the management. And what we have filed is a reasonable proposal for the customers. Thank you.

Just one more round on the floor. Any more questions before we wrap this. Okay. Well, thank you, everyone. Thank you for attending and joining us in the full year briefing. We look forward to having you again when we report first quarter 2025 results. Kindly note that we can access a recording of this briefing in our online, and you can visit it in the Meralco website. Thank you, and see you again.