By Myrna M. Velasco
Fulminating against unprecedented spikes in spot market prices especially during the summer months when it had to spend for replacement power, Aboitiz Power Corporation has announced that its reported net income in the first half had declined 5.0 percent to P8.6 billion from the previous year’s P9.1 billion.
And even with logged one-off gains, the company’s core income was still down 19 percent to P8.5 billion from a heftier P10.5 billion in January to June last year. That one-off positive entry in its six-month financial performance, according to the company, came from foreign exchange gains on revaluation of dollar-denominated liabilities.
As emphasized by the Aboitiz firm, “spot market prices were exceptionally high during the first half of 2019, and the company purchased replacement power due to outages and contracting ahead in preparation for incoming capacity.”
Aboitiz Power Chief Operating Officer Emmanuel V. Rubio had so far been more circumspect in describing that “the first half of 2019 was challenging (for the company) as Luzon faced supply issues leading to the elections.”
He was referring to the spate of “yellow” and “red alert” conditions in the country’s major power grid that triggered tightening of supply – which consequently resulted in higher spot market prices.
And for power generators which had suffered forced outages in their generating facilities, it entailed additional costs on procurement of replacement power.
Despite such dilemmas in recent months, Rubio stressed “we remained committed to serving our customers to the extent of providing them with replacement power that we bought from the spot market at rates higher than our contract prices.”
In the generation and retail electricity supply (RES) business segments of the conglomerate, it reported consolidated earnings before interest, tax, depreciation and amortization (EBITDA) of P17.8 billion, lower by 12 percent from last year’s P20.2 billion.
The Aboitiz firm further indicated the volume of its energy sales in the first half had been 6.0 percent lower to 3,035 megawatts (MW) from 3,213MW over the same six-month stretch in 2018.
It said the downswing in energy sales had been mainly “due to Therma Mobile, Inc.’s bunker-C fired diesel power plants being put on preservation mode in the first quarter of 2019.”
It has to be noted that a new interim power supply agreement (IPSA) had been sealed between Manila Electric Company (Meralco) and TMI in April, so the latter could help shore up supply during the reserve-strained summer months in the Luzon grid.
In the group’s power distribution segment, consolidated EBITDA hovered at P3.7 billion, it also tapered off by a scale of 5.0 percent from the year-ago level of P3.9 billion, primarily “due to lost margins from the decommissioning of the Bajada power plant.”
Conversely, the energy sales of the distribution group inched higher by 5.0-percent to 2,842 gigawatt-hours (GWh) from last year’s 2,719 GWh. According to the company, that was “primarily driven by the increase in new customers across all segments.”
Overall business outlook moving forward, according to Rubio, will be relatively favorable, as he pointed out that “with supply stabilizing and with our new capacity coming in, we are positive about exceeding our 2020 target of 4,000MW attributable capacity.” That in turn, he stressed, “will allow for a steady and sustainable long-term growth momentum.”