Annual Report 2024 (How We Create Value)

Our Materiality Matrix

The results of our 2024 double materiality assessment are presented below. As each of the 19 issues we considered was determined to be material, every issue in this matrix remains an important part of our strategy and reporting.

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Value Creation Framework

By aligning the use of our resources with our strategic thrusts, we leverage our growth pillars to deliver value to our stakeholders and drive meaningful outcomes for sustainable development.

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Input

Output

121 Years

of industry leadership

Institutional knowledge on laws, policies, and best practices in the electric utility sector

Expanded understanding of the market that enables us to develop better services for our customers and drive innovation

Input

Output

149 Substations

21,228 km power lines

2,437.2 MW

net sellable capacity across our diversified power generation portfolio

5.99% system loss, lower than the 6.50% regulatory cap, resulting in PhP 5.1 billion in customer savings

Shortened power interruptions for our customers, as indicated by 13% improvement in SAIDI

Equivalent of 348,000 households and businesses powered by MGEN with lower carbon energy

Reduced number of power outages in our franchise area, as evidenced by 13% improvement in SAIFI

Input

Output

5.2 million

Tonnes of feedstock coal

14.9 million

liters of feedstock oil

177GL

Of cooling water

2.7% increase

in Group-wide greenhouse gas emissions

10% increase

in DU water use through water recycling efforts

Kept solid waste out of our land and oceans, as proven by 95% DU annual waste diversion rate

Input

Output

19,623

employees

409

third-party workers

2% decrease in employee satisfaction

Helped unlock the full potential of our employees, as supported by 16% increase in average training hours

23% female representation in DU, more than twice the global industry average

−0.12% DU gender pay gap, lower than the 19% global industry average

Input

Output

PhP

618.0 billion

in assets

PhP

44.7 billion

in CapEx

Delivered greater value to our shareholders, as demonstrated by 21.6% increase in dividends

PhP 470.4 billion in consolidated revenues, an increase of 6% from 2023

PhP 45.1 billion consolidated core net income, up by 22% from 2023

Input

Output

Partnerships with communities and charitable organizations for CSR initiatives

5,183 suppliers and vendors

Provided 217 households access to clean and potable water with the energization of 1 community water facility

1,182 teachers and students empowered with better learning conditions via the electrification of 4 public schools

4,388 patients benefited from uninterrupted medical care through the electrification of 2 rural health centers

355 suppliers fully compliant with our sustainability standards, as a result of Meralco’s MS3 program

140 members benefited from solar mobile irrigation pump granted to 2 agriculture cooperatives

Key Enterprise Risks to the Distribution Utility

Revised Fifth Regulatory Period (5RP) Reset Application

The ERC’s Resolution No. 17 (2024) clarified Meralco’s Lapsed Period and required a 5RP reset filing. Meralco filed on February 7, 2025; hearings began on March 3, 2025.

Mechanism of resolving the Lapsed Period using Actual Weighted Average Tariff (AWAT)

Meralco filed an AWAT true-up application per ERC’s December 17, 2024 Order. Hearings began February 28, 2025. Related issues raised to the CA and SC may affect Meralco’s true-up applications.

Information Technology (IT) Systems Risk

Risk of IT system issues from hardware or software failures may disrupt operations or cause lost opportunities, especially due to insufficient innovation or investment in technology.

Business Interruption Risk

Natural disasters like typhoons and earthquakes pose risks of business disruption, property damage, and injuries. In 2024, four typhoons affected Meralco’s area; “The Big One” could impact 6.6 million customers.

Unbundling Decision/COA Audit Report

Meralco's rate unbundling faced legal challenges, leading to COA audit and multiple court rulings. The case, involving RAB valuation and expense pass-throughs, remains pending before the Supreme Court.

Failure to execute or delayed completion of capital projects

Delays in capital projects, impacted by manpower, project management, and new ERC Procurement Guidelines, may cause unserved demand, unplanned outages, and customer dissatisfaction. Tendering now takes four to five months longer.

Electric Power Industry Reform Act's (EPIRA) maximum contracting limit (50% of total demand) with an associated firm

Meralco must monitor compliance with EPIRA's affiliated contracting limit.

Human Resources Risk

Rising attrition, driven by demand for flexible work, risks service efficiency and project execution. Meralco's attrition rate grew from 3.96% in 2020 to 6.21% in 2024.

Continuing and changing persistent threats in ICT, OT and I/IOT environment

As Meralco advances digitalization, cybersecurity risks grow, requiring stronger IT-enabled controls. High cybersecurity maturity, skilled personnel, and increased resources are essential to protect Meralco's networks and operations.

Opportunities

Distributed Energy Resources

Enhancing grid stability through investments in demand response management and advanced asset control, enabling better service to customers with rooftop solar photovoltaic (PV) systems

Nuclear Energy

Advancing public awareness, regulatory engagement, and expertise in nuclear energy to enhance energy security and create local jobs

Advanced Metering Infrastructure

Investing in smart grid technologies (including smart meters) that will empower our customers to manage their energy consumption more efficiently

Electric Vehicles (EVs)

Growth potential in EV adoption and EV charging infrastructure development across the country

Our Outlook & Strategy

The imperative to transition to lower-carbon energy has never been more urgent. As climate change continues to intensify, businesses and governments around the world are gradually shifting from fossil fuels to renewable energy (“RE”) sources while balancing the demands of economic growth. In support of the Philippines’ ambitious climate action goals, we at One Meralco have developed a Long-Term Sustainability Strategy (“LTSS”), underpinned by a commitment to a just, orderly, and affordable transition to cleaner energy.