Manila Electric Company

Good afternoon investors, analysts, fund managers and valued stakeholders. Welcome to Moralco's first quarter 2026 financial operating results briefing. We are pleased to have you with us participating both in person and via MS Teams and we thank you for taking the time to be with us today. Before we begin, please note that this session is being recorded. Kindly observe the ground rules that were circulated prior to this meeting. Today, we will walk you through Meralco's performance for the first quarter ended March 31, 2026. The presentation materials are available on our website under the Investor Relations section. Joining us today are members of Meralco's management team, Mr. Ronia Perocho, Executive Vice President and Chief Operating Officer, Ms. Betty Siap, SVP and Chief Finance Officer, Mr. Emmanuel Rubio, President and CEO, Miralco PowerGen, Attorney Jose Ronald Valdez, SVP, Head of Regulatory Affairs, and Head of VU Regulatory Management. Our discussion today will begin with presentation over financial performance, followed by updates on our distribution utility operations, power generation business, and key regulatory developments and outlook. We'll open the floor for a Q&A session before concluding with a closing remark from our COO. At this point, I would like to invite our Chief Finance Officer, Ms. Betty Siap, to walk us through the financial highlights for the quarter.

and I for the quarter. It's March 31. Contribution. Stable distribution utility and the goal of our generation portfolio. The DU business continues to counter the largest share of our 11.4. Okay, sorry about that. So our CCNI for the quarter ended March 31, 2026, grew 2% from the combined contribution of a stable distribution utility and the growing power generation portfolio. The DU business continued to account for the largest share of our 11.4 billion CCNI at 5.3 billion, 46% of the total, although down from the 61% in 2025, with a higher share of power generation business. The DU sales volume was slightly lower at 12,273 GWh versus the almost 12,500 GWh in 2025. CCNI contribution of power generation grew by 51% to 5.1 billion and now accounts for 45% of CCNI, up from 30% in 2025. The sales volume of power generation was at 6,626 GWh, 25% higher than the 5,294 GWh in 2025, mainly driven by the full quarter volume of LNGPH. Thermal plants generated $1.2 billion in revenues from the reserve market versus $1.7 billion last year. On January 26, 2026, the ERC granted PEDC's change in circumstance or CIC claim representing unrecovered fuel costs from September 26 to December 4, 2022, allowing the recovery from Miralco customers of close to P381 million. On MGREEN, early this year, the ERC approved an advisory regarding feed-in tariff related to SP Calatagan. This allowed SP Calatagan to recover 69 million in feed adjustment. For Terra Solar, it achieved a key milestone in March, beginning with the delivery of an initial 85 megawatt of feed. Clean Energy to the Luzon grid on March 14. This output was progressively ramped up to 250 MW by the end of the month in line with the grid integration parameters of the NGCP. Complementing this, the project successfully energized The first branch of its battery energy storage system enabling the delivery of 450 MWh equivalent to 112.5 MW of stored energy to the grid during nighttime hours. Total energy sold for the month reached 10.6 GWh. Also in March, NGCP issued a PCAT-C for one of our other solar projects, a 450 MW power plant in Bugalyon, Pangasinan. LASO started delivering power to the grid at 50 MW, ramping up to 300 MW by March 31. This generated a total of 7.7 GWh. For retail supply business, sales volume was at 1,827 GWh, up 9% versus last year, mainly from new customers. For our financial highlights, CCNI for the quarter increased by 2% to $11.4 billion from $11.2 billion in 2025. Consolidated reported net income increased by 4% to $10.8 billion from $10.4 billion the previous year. The gap between CCNI and consolidated reported net income represents day 1. gain adjustment, accretion of day one gain adjustment, as well as foreign exchange gains from Cromite and SPNEC. Similar to our CCNI, our core EBITDA rose 2% to $19.6 billion from $19.2 billion in 2025. The total energy volume handled by One Moralco was 15,895 GWh up versus last year's 15,621 GWh. The Philippine volume was at 14,431 GWh, also higher versus the 14,218 GWh last year. The EU volume inclusive of sales of Pelco II, which we manage under an IMA or Investment Management Contract, was at 12,468, 52% of about 23,900 GWh total volume distributed by all DUs and electric cooperatives in the Philippines. RES volume, as mentioned, was 1,827, with 1,497 sold within the franchise area and 330 outside the franchise area. This was 26% of about 6,900 GWh total volume supplied by all RESs. The Mgen volume at 6,626 had 5,223 sold within the Philippines, 18% of approximately 28,100 GWh volume delivered by all Gencos in the Philippines. A total of 3,529 GWRs was sold to the Meralco DU and its local and affiliate resses. The contracted capacity of Meralco of 2,992.5 MW with M-Gen represents 38% of Meralco's franchise area peak demand or 25% of the Luzon peak demand during the quarter. This chart shows the segment information. On the right side are the contributions in terms of CCNI gross revenues and core EBITDA. The CCNI contribution of our regulated or distribution business represents the consolidated energy volume of Miralco, Clark Electric Distribution and Shin Clark Power. The total of which was 12,273 as mentioned 2% lower versus last year. For our unregulated businesses, the higher CCNI in terms of PESA amount came from the growing par-generation business with its share now at 45% from 30% last year. This is equivalent to $5.1 billion driven by the strong performance and a full quarter results of LGPH where Amgen holds 40.2% interest following its acquisition at the end of January of 2025. The retail electricity supply business and non-electric businesses, meanwhile, brought a combined P1 billion or 9% driven by continuing customer acquisitions for a REST unit. The DU revenues accounted for 82% of the total. REST and non-power subsidiaries and affiliates accounted for 12% and power generation at 6%. Out of the consolidated core EBITDA of 19.6 billion, DU contribution amounted to 10.4 billion and accounted for 53% of the total. Par generation core EBITDA contribution was at 7.7 billion pesos and contributed 39% of the total while RES and other non-par subsidiaries and affiliates accounted for the remaining 8% or 1.5 billion pesos. The consolidated revenues increased by 5% to $120.8 billion from $114.5 billion in 2025, driven by higher pass-through generation and transmission charges of the DU and higher power generation revenues. Electric revenues of P118.1 billion accounted for 98% of the consolidated revenues. Generation, transmission and other pass-through charges were 7% higher at P94.7 billion versus P88.6 in 2025. Generation charge for the period includes a 30 centavo per kilowatt hour combined contract price adjustment relating to additional fuel cost recoveries, which the ERC approved for four generation companies. These are ASEN, SPPC, SUAL, and Panay Energy. Also contributing to the higher generation charge were the higher fixed costs of the first gas plant, following the ERC-approved interim extension of the power purchase agreement with Moralco, and also the peso depreciation as the local currency weakened to an average of 59.102 pesos to the dollar versus 57.96. against the U.S. dollar during the first quarter. Transmission charge also increased due to higher ancillary service charges from the reserve market and NGCP's higher maximum average revenue, which is equivalent to 10 centavos per kilowatt-hour as approved by the ERC, and collection of all its under-recoveries from the period 2016 to 2022, resulting into a 4 centavo per kilowatt-hour additional billing. Distribution revenue decreased by 2% due to the lower volume sold and the 0.0023 per kilowatt hour downward rate adjustment for the Reset Expert Costs refund. Starting February of 2025, energy fee, which totaled $6.8 billion, increased by 9% from $6.3 billion to $6.8 billion from GBP's higher WESM revenues, SP Kalatagan's fit rate adjustment and the higher radiation of solar power plants, and PEDC's fuel CIC. The 2.7 billion non-electric revenues were largely from RADIUS for its enterprise and SME accounts and the billable projects to PLDT from NASCOR's EPC projects and MSERV's high-voltage solutions and integrated facilities management projects. Cost and expenses totaled 110.5 billion pesos, which is power cost accounted for 84%. OPEX represented 9% depreciation at 4% and the combined coal and fuel and power plant O&M at 3%. Purchase power costs increased by 7% to $92.7 billion from 86.4 reflecting higher generation and transmission costs billed by the generation companies as well as NGCP, the details of which have been previously explained as part of the revenue charges. Operating expenses amounted to 10.4 billion, 1% higher year-on-year primarily due to sustained cost efficiency measures and tighter management of controllable expenses, including optimization of operations and deferral of non-essential activities undertaken to protect customers from the cost pressures arising from the Middle East conflict. This initiative reinforced Moralco's commitment to reliable service delivery while prudently managing costs in a volatile global environment. Depreciation and amortization was higher by 10% with the completion of CAPEX projects during the period. Combined coal and fuel and power plant O&M amounted to $2.8 billion. due to PEDC3 and Cebu Energy's plants 2 and 3 maintenance in 2026, whereas in 2025 it was only Unit 3 of Cebu Energy. Fuel cost increased with GBP's higher WESM sales. Other expenses pertains to provision reversals after settling of various tax outreach and assessments, net of provisions for over-recoveries. The power generation business ended the first quarter with a 51% growth in CCNI versus the same period last year, mainly driven by full capacity operations, and full three-month contribution of LNGPH starting its acquisition end of January. The LNG business contributed close to $4 billion to the CCNI as LNG PH and Pacific Power delivered a total of 2,712 GWh and 1,464 GWh respectively. The thermal business contributed $1.6 billion, higher by 6% from last year's $1.5 due to the higher earnings from the WSM, partially offset by the weaker reserve market pricing. On capital expenditures, consolidated CAPEX stood at 19.5 billion in the first quarter. Of this amount, 71% was spent for MGEN's 3,500 MW DC Terra solar power plant with the 4,500 MW R battery storage, as well as 49 MW battery energy storage in Toledo, Cebu, and the 31.8 MW expansion of SP Terlac. The total DU capex of 5.7 billion were spent largely on new connections, asset renewal, load growth projects, pole relocation to support government infrastructure projects, and non-electric projects. Cash and cash equivalents amounted to 112.9 billion while our short-term and long-term investments totaled 172 million and 4.2 billion pesos respectively. Major cash transactions during the period include the Moralco Awat refunded to customers, amounting to $1.4 billion in the first quarter of this year. A total of $6.3 billion has been refunded since April of 2025 as part of the $19.96 billion Awat refund over 36 months. Note, though, that the refund period has been shortened to 12 months for the remaining amount following ERC's decision last April 2020. 22. Loan drawdowns of Moralco totaled $6.5 billion, mainly used to pay the working capital adjustment as well as the reimbursable cost to San Miguel Global Power in relation to the Cromite acquisition. Terra Solar's drawdown of 7.5 billion from its project financing, which now totals 76.1 billion pesos. Infusion by Actis of 3 billion pesos and dividends received from unconsolidated investees of 2.7 billion, largely from Pacific Light and San Buenaventura. are consolidated interest-bearing debts to the P238.1 billion, including the P125.1 billion debt of our subsidiaries. As of end March, our net debt stood at P125.1 with net debt to EBITDA a ratio of 1.7 times. Debt maturities are spread through 2040, most of which are in Philippine peso except with respect to the Pacific light debt. Our core EPS is at 10.137 per share, up 2% year-on-year, while our reported EPS is at 4% higher, at 9.611 per share. That ends my report. Thank you.

Thank you, Ms. Betty. Overall, the off-quarter reflects stable earnings growth and disciplined cost management, with core net income up 2% to $11.4 billion, supported by both EU and power generation business. We will now move on to the operating performance. I would like to invite our COO, Mr. Rony Aperosho, to present the operating performance of the distribution utility.

Thank you, PJ. Good afternoon. Thank you for joining us in today's briefing. The first quarter of 2026 began on a challenging note. Cooler than usual temperatures driven by weak La Nina conditions softened electricity demand across our franchise. At the same time, heightened geopolitical tensions in the Middle East increased volatility in global energy markets, placing upward pressure on fuel costs and power rates. These developments encouraged greater energy conservation and accelerated interest in rooftop solar adoption. Despite these headwinds, Miralco delivered solid operational performance, achieved meaningful improvements in service reliability, and continued to expand its customer base. Let me walk you through the key highlights of our first quarter performance. On energy sales, Q1 2026 energy sales reached 12,273 GWh, lower by 1.8% year-on-year, primarily due to the cooler weather conditions dampening demand. Recovery toward the summer months was tempered by intensified energy conservation measures following the escalation of the Middle East conflict. We estimate that three to five percent of potential energy sales were foregone due to the adoption of four-day work weeks, work from home arrangements, shorter mall operating hours, and similar demand curtailment initiatives. These effects were partly offset by faster customer energization. On net system input, the DU net system input declined to 12,640 GWh reflecting a drop of 2.3% compared with the same period in 2025. Veralko's peak demand settled at 7.91 GWh recorded last March 6, 2026. 5.1% lower compared with the same period in 2025, consistent with a milder temperature profile experienced in the quarter. Comparably, the Luzon peak registered 12.18 GWh on March 5, which is a 2.3% decrease as well. Our customer count continued to grow, reaching 8.26 million customers, a 2.2% increase year-on-year, highlighting sustained growth in electrification and service reach. On system loss, the 12-month moving average system loss improved to 5.72%, a notable 0.32 percentage point reduction year-on-year, This reflects our sustained investments in network upgrades, loss reduction programs, and stronger operational discipline. On SAIFI and SAIDI, reliability indicators also showed strong results as we attained double-digit improvements versus same period last year. Total site fee fewer by 19% at 0.15 times and site fee was shorter by 10% to 97.5 minutes. Meanwhile, our average time to connect customers was faster by 6% at 2.22 days over 2.36 days last year, reinforcing our commitment to customer convenience and service excellence. On electricity rates, our average electricity retail rate for the first quarter of 2026 was 12.39 pesos per kilowatt hour, 12% higher versus the same reporting period last year, primarily due to the following. First, it was due to higher generation charts, 10.2% increase mainly from the change in circumstances or CIC, recovery of some PSAs, recovery of Santa Rita's higher fixed charges and lower WESM share. Second is due to the increased transmission charges, 38.3% increase from higher ancillary services cost, higher power delivery service charges and collection of NGCP under recoveries. Third, it was due to higher fit all charges, 123% increase from higher feed-all rates implemented in Q1 of 2026. And the last was GIA-ALL was also implemented starting January 2026. Following the discussion on energy sales earlier, let us now look at the sector breakdown. The residential segment accounted for 33% of total sales or 4,111 gigawatt hours. Residential sales fell by 3.4% as cooler Weather softened demand. The commercial segment, which makes up 38% of total sales, posted a slight decline of 0.8% as cooler temperature reduced HVAC usage and vacancies offset gains from restaurants. The industrial segment accounting for 38% of total sales, likewise by 1% year-on-year as operational disruptions and still raw material constraints offset gains from Semicon and cement segment or cement industry. On updates from networks, especially for our major projects of networks, this slide highlights our key network investments completed in the first quarter of 2026 which directly support load growth and further strengthen system reliability across our franchise area in the first quarter we energized three major capital projects worth 959 million pesos significantly strengthening grid reliability and capacity This portfolio includes the development of new Bukawi GIS substation, replacement of 34.5 kV switch gear number 1 at Gateway substation, and expansion of Balagtas 115 kV, 34.5 kV substation, the second bank, 83 MVA, and collectively adding a total capacity of 166 MVA. Thank you, and I'm turning you over to Attorney Ronald Valdez for the regulatory report.

Good afternoon. Anyway, so for the regulatory update, first on your slide is the AWAT or the actual weighted average tariff decision of the ERC for ERC case number 2025-2025. So that's March 14. If you recall, last year, RALCO received the PA, the Provisional Authority, where ERC directed us to refund 19.96 billion at an average rate of 11.89 centavos per kilowatt hour for a period of 36 months starting April 2025. And this was subsequently on April 22, 2026, superseded by the ERC decision, final decision on the Awad case. In this decision, the ERC ordered Meralco to refund remaining unrefunded amount amounting to 14.17 billion at an average refund rate of 25 centavos per kilowatt are effective on May 2026 bidding. The implementation period shall be within 12 months or until the remaining amount is fully refunded. So apart from this we have two other AWAT pending cases offering the period of January to June 2025 which is for 4.69 billion and another one for during the period July to December 2025, which is 4.32 billion pesos. Next slide, please. On March 26, the ERC also promulgated the revised pass-through taxes resolution under ERC resolution number nine, series of 2026. This revised pass-through taxes resolution effectively superseded ERC Resolution No. 2, Series of 2021, which was the basis for the pass-through nature of the paid real property tax, local franchise tax, and business taxes by the EUs. The rules were published on April 2 and became effective on April 17. Among the salient amendments from the previous rules are the following. First is the removal of the provision of limiting the scope of taxes paid for the year 2021 onwards. Tax arrearages excluding interest, penalties, and other charges imposed on and paid by DUs for the years prior to the effectivity of the rules shall now be allowed recovery. For PDUs, the proposed recovery shall be filed with the Commission within 60 days from the effectivity of the rules or on June 16, 2026. The initial RPT amount for filing and collection on the part of MNALCO is around 3.9 representing the RPT paid in prior years up to calendar year 2020. But the revised rules also included RPT paid on properties covered by USFRAC agreements in the scope of pass-through real property tax upon finalization of the regulatory reset process for the next regulatory period. And also the provision on ERC post-audit requirement that the EU shall retain relevant documents for the last 10 years from the expiration of the EU franchise. So last March 31, 2026, Meralco filed our application for the pass-through of our over-under recoveries for the calendar years 2023 to 2025. In that application, we paid for the net under recovery of 555.48 million pesos, consisting of generation, transmission, and system loss charges, subsidies, RPT, and LFT. We are proposing a recovery or a recovery period of 12 months for all charges, except for senior citizens subsidy with a proposed one month recovery period. Total indicative rate for the proposed recovery period is only 1.62 centavos per kilowatt hour on the average. As an update on our first regulatory period application under PBR, so we filed our first RP application last February 2. hearings were conducted between March 3 up to April 16 and then we submitted already our formal offer of evidence and we completed the presentation or rather the presentation of witnesses or evidence by the intervenors namely Commissioner Nunn and another intervenor was completed last April 30. we are expecting that the ERC will release the decision by in June 2026 in time for the start of the first RP in July. For the CSP, Neralco's 2026 Power Supply Procurement Plan schedule of CSP activities had to be revisited and realigned due to significant delays in the conduct of CSP for the capacities covered. by the previously approved 2025 PSPP. So the summary of the updates reflected in the 2026 PSPP are as follows. For the 600 megawatt base load, the implementation in the first year will now be for 300 megawatt and with the remaining 300 megawatt to be implemented starting the following year. For the 900 megawatt base load, the implementation in the first year will now be only for 600 megawatts and the remaining 300 megawatts to be implemented starting the following year. The start date would also move from 2030 to 2031, but the commencement of CSP remains scheduled for September 2026 to allow for timely completion. For the 450 MW mid-merit CSP, the capacity was reduced to 400 MW. The start date was also deferred to 2030, and although the TOR for the CSP was already submitted to the Department of Energy in May 2025, Meralco withdrew its request for certificate of conformity since the CSP is no longer scheduled to commence in 2026. For the 500 megawatt mid-merit CSP, the start date was moved from 2032 to 2034, and the CSP is no longer for the renewable energy requirement. And finally, the 400 megawatt weighted CSP is a new requirement that we have reflected in our 2026 PSPP. So, thank you. We now turn you over to Mr. Manny Rubio for PowerGen.

Thank you, Ronald. Good afternoon, everyone. I'll begin with our number one priority across all sites, health and safety. For the first quarter of 2026, I am pleased to share that we maintain a safe working environment with over 91 million safe man-hours for both employees and contractors. As always, we emphasize we continue to strengthen and enhance our safeguards to ensure that every team member in MGEN returns home safely every day. Moving on to our financial and operational results, during the first quarter of 2026, MGEN delivered 6626 gigawatt hours of energy, which is 25% more than same period last year. The overall MGEN thermal group delivered 2,215 GWh of energy, marking a 6% increase driven by Global Business Power's higher dispatch and San Benaventura's higher plant availability. MGEN's liquefied natural gas investment in LNGPH through Chromide Gas Holdings delivered 2,712 GWh, 66% higher due to its first full quarter of operations in our portfolio compared to 2025. And meanwhile, Singapore-based Pacific Light Power Pvt Ltd. delivered 1,464 GWh due to increased plant availability. And finally, M-Gen renewables delivered 234 gigawatt hours, a 34% increase from last year, driven by the additional capacity from solar facilities commissioned after first quarter of 2025 for JAP, as well as new capacities from the energy station of M-Terra Solar, this March and higher irradiance. Overall, Emgen's energy delivery achieved a significant 25% increase versus last year, due to the new capacities in our portfolio, higher dispatch via Global Business Power, and higher plant availability of San Benaventura and Pacific Light. For Q1, Emgen's CCNI is now at 5.1 billion pesos, 51% growth compared to the same period last year. This is driven by stronger contribution from LNGPH, Mgen Thermal's higher Western sales and participation in the reserve market, and Pacific Light's higher volumes and fast start contribution following COT last May 2025. Our plant availability was at 92.3%, slightly lower from last year due to scheduled outages of several plants. But notably, we still generated 6,626 kWh of energy, which is 25% more from the same period last year. With all of this, Emgen now contributes 45% to the one Meralco CCNI, its biggest share today. Moving on to our key developments, the Toledo Battery Energy Storage System has successfully been energized as load last March 26, 2026. And on April 10, it was energized as generator with the grid compliance test completed on April 23. It is now undergoing ancillary service test until May 8th. um with um the first place with 25 megawatts or 56.44 megawatt high capacity will be completed by may but since we're already um uh compliant with the test as a generator we're now offering this for arbitrage um charging during the day and um offering during the evening given that the western prices in in in visayas have almost a 5x difference between day and night prices. This project is designed to enhance grid stability by providing fast response power support, regulating up and regulating down that helps balance supply and demand, improving system reliability and strengthening overall grid resilience and bring down ancillary service prices. Following the completion of Pacific Light's green transition financing for its planned 670 MW hydrogen-ready CCGT with 201 MW battery energy storage system power plant last December, we have been continuing pre-execution work such as environmental impact assessment, which we actually got two weeks ago. quantitative risk assessment and pollution control study. Part of the pre-execution works for the project. This power plant scheduled to begin operations in 2029 is the first CCGT unit in Singapore integrated with large-scale battery energy storage system, enabling dynamic energy management to align electricity supply with grid demand. We remain on track in fulfilling our 600 MW commitment to Meralco with Emterra Solar's continued progress for Phase 1 delivery in August. Just less than 15 months after its groundbreaking, we celebrated the first spark, marking its initial energization and synchronization last February, which was attended by Secretary Shannon Garin and other officials from the DOE. Last March 14, Emterra Solar was energized as a generator, delivering an initial 85 MW of clean energy to the Luzon grid, and marking the start of its contribution to the country's growing demand for reliable and clean energy. And this output was progressively ramped up to 250 MW by the end of the month, in line with grid integration parameters by NGCP. Complementing this, the project successfully energized the first tranche of its battery and storage system, enabling the delivery of 450 MWh equivalent to 112 MW of stored energy to the grid during nighttime hours. This tranche now represents the largest operation and best available in the Philippines. And to date, our peak power PV achieved 248 megawatts of dispatch last March 27, while the maximum best daily discharge was at 409 megawatt hours. With these milestones, phase one of the project has reached an overall completion of, as of end of April, 86.57%. following the award of its Engineering, Procurement and Construction EPC contract in October 2025. As of April 23, the project has a total installed PV capacity of 1,293 MW, demonstrating its full-scale potential fully commissioned. And this May 2026, MTERRA Solar is looking at commissioning an additional 500 MW AC of solar capacity and 225 MW of battery capacity. This will make Mterrasolar the largest integrated operational solar PV and best project in the Philippines and we just completed the bus in last night of the N-1 needed for this 500 megawatt energization of Terrasolar. And following these milestones, we are proving that a combination of a variable renewable energy integrated with a storage system like BES can provide a competitive source of mid-merit energy for the Philippines, which replaces traditional sources of mid-merit, such as diesel or even gas. With the ongoing crisis in the Middle East, that resulted to price spike of our fuel sources, the entry of M Terrasolar to the grid is not just timely, but critical as this project lessens our dependence on imported fossil fuels, which is subject to price volatility. And up to the time we declare COD, Miralco has option to get all the output of Terrasolar, depending of course on the demand and prices in the spot market. I am also proud to say that this project is proof that we Filipinos can build big and build fast if we get our acts together. Nowhere in the world that a project of this magnitude and at this scale has been made operational in such a short period of time as in this case, 15 months from groundbreaking. Mgen has recently signed a $2.8 million grant from the U.S. Trade and Development Agency, supporting efforts to explore nuclear energy as part of the country's long-term energy strategy. The grant will fund a comprehensive small modular reactor study assessing the viability of deploying SMRs in the country. And the study will evaluate available SMR technologies, identify a short list of suitable designs, and conduct preliminary site assessments for potential deployment. The initiative forms a key step under Meralco's Nuclear Energy Strategic Transition, or NEST. As an update, around 15 vendors have submitted their proposal for this initiative and a final vendor recommendation has already been made and it's for approval by the USTDA. The target schedule to start work on the SMR evaluation is this May and the study is expected to be completed by April 2027 and we will make the appropriate announcements on the vendor as soon as it has been agreed with the USTDA. MJED Renewables has been awarded also the Integrated Management System Certification by TUV-SUD, Philippines, covering ISO 9000 for quality, 14001 for environmental management, and ISO 45000 for occupational safety and health. And this recognition spans MJED's Renewable Head Office and key solar facilities in Nueva Ecija, Rizal, Bulacan, Isabela, and Tuelac. demonstrating consistent implementation of best practices across its sites nationwide. The suspension of the wholesale electricity spot market or RESN by the Energy Regulatory Commission last March and the implementation of an administrative pricing mechanism reflected a necessary regulatory response to the extraordinary market conditions brought about by the Middle East situation. In periods of system stress, prioritizing firm and dispatchable capacity, especially in baseload generation, remains critical to maintaining grid reliability and supporting overall energy security. So in response, Emgen remained focused on keeping its plants running reliably and efficiently under the updated rules. Our base load thermal plants continue to operate at full available capacity, supporting system reliability while we carefully manage plant performance and costs in line with the administered pricing framework. Through this, we were able to sustain dependable power supply for the country throughout the market suspension. And last Friday, the ERC has already lifted this suspension Power generation companies like Emgen are now allowed to offer at WESM in accordance with existing market conditions and rules and settlement based on clearing prices. So despite the challenges posed by geopolitical tensions and continued volatility in global energy markets, Emgen remains focused on maintaining reliability and stability across its operations. We have been managing our exposure to global market volatility through our diversified portfolio and a disciplined sourcing approach supported by a mix of firm contracts and flexible arrangements. This allows us to navigate market fluctuations while sustaining dependable operations. At the same time, we are strengthening our long-term position through ongoing capacity development and continuous optimization of our existing assets, including the advancement of M-Terra Solar, the completion of the Toledo Best Phase One, and the expansion of our thermal facility in Toledo Cebu, as well as other power plant projects we have in our portfolio. We're looking forward to participating in CSPs that will be offered by distribution utilities like Meralco, and in that case, looking forward to participating in the 900 megawatt base load CSP in September using Atimonan. These efforts are aimed at ensuring that we remain resilient, responsive, and fit for the country's evolving energy needs. We remain focused on strengthening self-reliance in support of long-term energy security for the Philippines in pursuit of powering a better tomorrow. Good afternoon.

Thank you, Mr. Aperolcho, Attorney Valles, Mr. Rubio. We will now open the floor for questions from our analysts and investors. You may raise your questions in two ways. Raise your virtual hand and wait to be recognized before speaking.

By the way, PJ, we still have the sustainability report. We can request Raymond. Well, on sustainability, before we go into the Q&A portion, I'll just report briefly on sustainability. So this is just a brief highlight on the progress across two key programs in Meralco, resource conservation and efficiency and embrace diversity and inclusion, as well as the recent sustainability recognitions. First, let me... Amid the ongoing energy crisis, we have further intensified our resource conservation and energy efficiency program. This was launched in 2020, and this program aims to reduce electricity and water consumption across our facilities, helping lower scope to greenhouse gas emissions, optimize operational costs, and strengthen compliance with the Energy Efficiency and Conservation Act. In March, we rolled out an employee-wide energy and resource conservation campaign across our offices, and as a result, total DO electricity consumption in first quarter of 2026 declined by 5.3% year-on-year. We also sustained sustainability advocacy through the Earth Hour 2026 with executives promoting conservation practices and continued advancing our Juan Meralco solarization program, encouraging employees and customers to adopt on-use solar solutions, either through a solar savings plan or a solar subscription plan. And moving on to our Embrace diversity and inclusion program, Embrace continues to drive our broader diversity and inclusion objectives with emphasis on increasing Women Representation and Empowering Women, LGBTQIA plus Individuals and Persons with Disabilities. In line with these objectives, last March we celebrated Women's Month with a series of events centered on empowerment, inclusion and well-being. Among the highlights was our forum entitled, Beyond the Glass Ceiling, Women Breaking Barriers, featuring Olympic champion, Nesty Petesio and DOE Assistant Secretary, Mandy Romero. And finally, moving on to sustainability recognitions, we are pleased to report that Wanderalco achieved another milestone at the 2026 Asia-Pacific Stevie Awards, earning a total of 12 distinctions, bannered by our first-ever Grand Stevie Award. Our top awardee was our microgrid project in Cagbalete Island, which earned the Grand Stevie Award, the highest honor in the APAC Stevies, along with two Gold Stevies, highlighting the youth's positive impact of our electrification and sustainability efforts on underserved communities we were also honored with Gold's TV for our inaugural 2024 Juan Maralco integrated report on the individual front our chief audit executive Melanie Oteza was honored as the thought leader of the year and likewise our Chief Sustainability Officer Raymond Ravelo was recognized for the third straight year for his leadership and contributions to climate and sustainability initiatives. We also won a silver stevie for greening the network program and received multiple awards recognizing initiatives across audit, community engagement, and purpose-driven marketing and communications. These recognitions affirm Juan Meralco's continued commitment to creating long-term value through sustainability, innovation, inclusion, and meaningful stakeholder impact. Thank you.

Thank you, Mr. Aperolcho. So we will now open the floor for questions. We have several questions on the line at this point. We read out some of them. First, on the DU side, Can you share why did DU profits decline in first quarter versus first quarter 2025? Other than the volume decline, what other factors contributed to the decrease in DU profits? I believe this is also in line with Carissa's question. What led to the 21% year-on-year decline in the CCNI of the distribution business, considering volumes were just down by 2%?

Greg, hi Carissa, thanks for your question. Other than the volume, the other factors that resulted in the decline were higher OPEX, slightly higher OPEX. As you know, it's manpower intensive and contracted services. On top of that are increasing IT costs. with our online subscriptions, and then the continuing repairs and maintenance of the facilities. We have also completed significant capital expenditures, the depreciation of which, for those that were completed last year, would have a full quarter depreciation for 2026. And if you also recall, we continue to refund on the AWAT. So that brings down the balance of investable cash. So while the AWAT refund does not affect P&L, as we have provided for this already, it impacts on the cash flow. So the investable funds are lower. In fact, in the coming months, the refund will be higher because the ERC has shortened the refund period from 36 months to 12 months. The remaining period should actually be about 24 months, so it's now down to 12 months.

Still on the DU from Peter of Unicapital. On Meralco's rate reset, can we get management's view on how likely it is to be approved given the potential inflationary impact of higher electricity rates?

On the Meralco reset, as I earlier mentioned, The expectation is that the ERC will resolve one way or the other the application of Meralco in time for the July 1, 2026 start of the one-hour peak. Now, it is, I think, very speculative if we say what rate will be approved or whether the ERC will grant the rate as applied for no but what I can tell you is historically the ERC has made these allowances from the rate that we have filed that's historically So we're fighting for the one RP is based on the regulations of the ERC. So if we comply with all the requirements, we're hoping that the ERC will give us a reasonable rate. Thank you.

Thank you, Attorney Valles. We'll shift the discussion a little bit to Mgen. What percentage of contracts entered into by Mgen have pass-through mechanisms? How much of the fuel cost increase can you pass through under your PSAs?

For Mgen, depending on the customers, but all of our contracts with the ECs including Meralko have pass-through provisions for fuel. Even our rest contracts in M-Gen have fuel pass-throughs. That's a small volume only for M-Gen in the rest market. There is no limitation with regard to how much of the fuel cost we can pass through, but as long as it's based on the agreed formula.

What was the impact of the 36-day West Ham suspension to Amgen's operations?

As it should be simple because we have administered prices, we know what the prices are given that the administered prices are based on the past four weeks, the average of the past four weeks for the same period. But there was an issue with regard to line rental charges. Some have been given, experienced high rental charges. High line rental charges. Some have gained from the line rental charges. So there are discussions now with DOE and ERC and I just got information that IMHOPA suspended the settlement. But hopefully in the original, in the In the original formula for administered pricing, land rental charges is neutral. The only reason why land rental charges came out as an issue is because coal prices have been fixed at a certain price, 6 pesos. and with that the issue on line rental charges came out but I think what the ERC is looking at and this has been the position of PIPA is to go back to the original formula and the spirit of administrative prices where line rental charges should be neutral so take it out the gains should be taken out the losses should be taken out so that's the result But no impact. In fact, for coal plants, it has been, to our open position, has been busted because we were selling at six pesos. Although the intention really of the market suspension is to bring out coal capacities. That's why DOE and ERC approved a six-peso settlement for coal plant that is outside of any bilateral contract arrangements. um just to make sure that um um the um we limit the output of the we limit the output of the more expensive um uh fuels like diesels and and in this case lng you know although um because of the demand that the demand is is there or the demand was there during the suspension and the the um The nomination has been accepted for LNGPH and we're operating with all the units in LNGPH at the time.

Thank you, Manny. We'll check the floor for questions. We have a question from Jillian Gazoff, JP Morgan.

Hello, thank you for acknowledging. I have a follow-up on what was discussed, Sir Manny. In particular, how do you balance the interest of the distribution utility as well as LNGPH as we see the mark-to-market commodity price get impacted by generation charges? I understand that there's a cap of 1 peso per kilowatt hour for the new generation charge increase. I'm not sure if that still holds. But if that's the case... How is Meralco as a distribution utility planning to work around that cap as well as your mandate of least cost as well as being a proponent of LNG-PH?

for all the output of TerraSolar to be released and get Meralco to take it. Usually we're looking at hopefully Meralco will not accept or will not take the capacity and we will sell it in Western. But they did. Everything that's coming out of TerraSolar is being taken by Meralco unless the price in Western is lower than the commissioning price that's pre-agreed with Neralco. So yeah, that's the way we are balancing that capacity and we're really bringing out all the coal during the market suspension of bringing out all the capacities that we can bring out from San Bernardino, from PEDC, CEDC, wherever, since initially we thought that the line dental charges would be neutral just to limit the output of LNG pH. um given that we bought um energy at um the highest that we bought it at was i think 23 dollars per mmbtu it has gone down now to around 16 17 but pre-war it was 10 dollars per mmbtu you know um i think the the peak is um well touchwood is fast past us um and hopefully uh with the additional contacts that we've um we've opened them with gun war with novatec and with the We will have access and we will have options for LNG from now on. Because we were just contracted and getting the supply from Vitol and Shell and Vitol declared force majeure on us. So we have to get it from other sources. We're even looking at Russian supply and we will be booking Russian supply. Those are not sanctioned. It's not sanctioned areas like Sakhalin and Yamal.

The nomination at LNGPH today is at what level?

It can be shut down one unit. They don't want us to shut down because just in case a whole plant shuts down, where the process want to react?

Understood. And the 50-plus percent effective utilization in one queue, was it because of a scheduled outage at LNGPH? The utilization, implied utilization at LNGPH in the first quarter is about 50-plus? Yes.

A planned outage for excellent energy. It's back now.

Thank you for explaining it all. My second question is on the tariffs again, attorney values. I just wanted to understand the nuances of the current discussions with the ERC, specifically the key inputs like WACC, RAB or volumes? Are you maintaining the priorly disclosed assumptions of a certain threshold on the RAB, revaluation of RAB, as well as SWAC and volumes of down 5% per annum? Is this something that the ERC is warming about, given that discussions are already ongoing? Anything that you can give us?

the application has been filed with the ERC and the breakdown of the rate that we have filed with the ERC are all in the application so we cannot change that anymore but as I mentioned last time for example in the regulatory asset base we added a 25% contingency which will likely be removed by the ERC because that is conditioned only upon showing that the regulatory asset base has not yet been determined and approved by Meralco Board at the time of the filing. But since we have already confirmed that the regulatory asset base that we have submitted to the ERG is the final regulatory asset base, then the 25% contingency can be removed. But for the others, every single centavo that we have included in the rate that we have filed, I believe we have supported that sufficient justification. to the ERC, including the computation of the weighted average cost of capital. Our witnesses have testified to the ERC and they have been lengthy cross-examined and not only by the interveners but also by the ERC consultants themselves. I believe there is sufficient basis for the rate that we are seeking and we're hoping that the ERC will give us a reasonable rate considering the lapse of so many years that we did not have any price adjustment.

How about the volume, sir, given that currently now the base is lower?

The volume that we have submitted with the ERC Again, it cannot be changed anymore, but we have already, the only factor that we have not included there at the time of filing is the impact of the Middle East crisis. Because at the time of filing, the war has not yet started. But we have mentioned that to the ERC formally during the course of the proceedings, and we're hoping that they can take that into consideration in finally approving the level of volume that will be determined by the ERC for purposes of calculating our maximum average price.

Thank you so much for the caller. And then lastly on volumes, may we get an indication of how it was as of April or maybe additional caller in March where we have started seeing some of the energy saving measures implemented on a broad level? And is there any guidance for the rest of the year?

Thank you. so actually our report only covered the first quarter but uh for for April we're seeing a again a lower volume in fact um we're looking at the four percent uh uh drop versus uh April of last year because April of last year still it was still a high base uh uh month uh in fact our April 2025 sales grew by 2.8% because last year was relatively April of last year was relatively a warmer month because it was the tail end of the El Nino phenomenon but you know we're seeing Science of Recovery already starting first quarter of last week of April. In fact, we hit a the highest daily msi 180 gigawatt hours last last April 28th and and that momentum has been sustained as we speak because of course because of this relatively warmer weather and for the month of May we're seeing a recovery already and take note that Pagasa has already declared a 79% of El Niño phenomenon starting June this year that will persist up to the first quarter of next year so because of that declaration we have requested or we have revisited our forecast and we're looking at at a 1.1 to 2% increase in our sales by year and compared to, of course, 2025. So we're seeing growth at 2% as we speak, but hopefully if we can grow more, there was a question earlier what are the interventions that the distribution utility is doing what we're doing right now is we are accelerating the energization of the service application pipeline and we're seeing a healthy pipeline of service applications especially for high load applications meaning five kilowatts and above in favor of the month of April we have energized more than a thousand project covered applications and that will translate to more than 100 megawatts addition in terms of capacity and we're looking at for the remaining nine months of the year we're looking at 900 megawatts to one gigawatt capacity addition out of the pipeline that we're currently handling so

yes we're looking at the positive positive growth this year though in the in the vicinity of two to three percent or things like that thank you uh to Mr Rupio we have an additional question here regarding the market just western suspension can you share that price range for LNG not gas during the market suspension

LNGPH is not affected because it's contracted with Meralco. Only open positions are subjected to settlement using administered prices. So, no, LNGPH is not affected.

The KBR, additional question from Lana of Atram. With the recent Western price caps, have these had any impact on Moralco's PSAs, supply costs, or contracts with GENCOs? With the recent Western price caps, have these had any impact on Moralco's PSAs, supply costs, or contracts with GENCOs?

contracted bilateral contract. So the governing price would be the agreement between the supplier and customer. I add this LNGPH. We're also, of course, participating with about 60 megawatts of regulating up and regulating down in LNGPH. So that one is operating in the spot market. When it was suspended, in fact, with the mortgage suspension, we have an idea of the pricing. We have an idea of how sudden it will be because it's based on the average of the past four weeks for that period. So, we know when we're going to make an offer where we can actually be accepted by NGCP. So, that's, in fact, a positive for LNG page as well.

I just don't know the numbers exactly, but per our PSA, if there's a cap on the WSM and we are required to source from the WSM either because of outages, forced outage or scheduled outage, and assuming there is already, the power supplier has already exceeded the allowance, then we pay only the lower of the PSA price and the Western price so if the Western price is lower because of the cap then that is the effect on Meralco PSA but I'm not sure whether there is future recovery by the generators because the capping is based on an intervention by the ERC

Thank you, Attorney Valles.

The company made mention about this line rental issue, but I think somehow our customers are protected with that because most, if not all, of our PSAs have this copy in terms of line rental. So we cannot, it's not a full pass-through, things like that.

Thank you for that. We'll go back on site. There are any questions? Okay, we go back online. There's a question from Julian Rojas of PEP. What is the CAPEX guidance for PowerGen in 2026?

We will complete the, I think we've shared already the CAPEX amount for TerraSolar, no? up to Phase 2 that we need to still buy land and pay for the additional batteries. I'll get the numbers in a minute. I'll say it later on.

Thank you, EBR. We have a question on MTERA solar and reimbursal execution. How does BESS improve returns and splashability of solar assets?

But the best way to improve the returns, depending on the price that you're selling it at, right? But I think the – well, given where we are today with NGCP already complaining with regard to the variability of solar-only installations, DOE has mandated that any – that future solar projects will always have at least 20%. energy storage capacity behind it, to at least smoothen the variability of the solar project. But in our case, if we can make a case for a big metal supply, I don't think we can already look at the base load using variable and energy storage, but for big metal We're looking for another project, but much, much smaller than TerraSolar, which is a TerraSolar 2. And we're looking at land of around 800 hectares. And we can probably close out the option to acquire this land by end of the year. So the contract that we talked about this year is 109 billion pesos.

Thank you, EBR. You have a question regarding REST competition and pricing changes. Can we talk more about it given the recent sector developments?

Depending on the generation that's backing up that REST, I don't think there's any REST now that's just trading using balance sheet.

I think it's too risky.

For OneMeralco, we're working together with Empowered, providing also the assets that we have, the generation assets that we have, to support their contracts, especially for Vantage. The one that's, when they enter into a contract in Cebu, for example, we will be looking at providing them capacity using CEDC or PNIC. But I think what's good for contestable customers that we're seeing really competitive rates, good for the customers. Miralco's neutral about it because it's the same kilowatt hours passing through the Miralco lines. Customers will pay the same pace of a kilowatt hour. What is at risk, of course, is the generation side. there's enough capacity that has been lost saved by the distribution utility and if it's Meralco to retail then they will probably be looking at carrying out contracts I've seen that when I was with the other company in Cebu where our generation was grabbed out by the cost of IDU when there was a penetration, a deep penetration of retail customers moving to to retail suppliers but for now I think what this is good for the contestable market and really getting its objective of providing competitive energy for contestables thank you EVR I don't see any more questions online we'll check on site you have another question from Jeline Gaza

Sir Manny, just as a quick clarification, how much of your coal capacity domestically was exposed to the spot during the time of western suspension?

So it's PEDC, CEDC, and Toledo. Our price forecast for Cebu was high Western prices that we decided to leave around 30% of our capacities to the spot market. And we said that out of that 30%, we're also doubling it to what is certified by NGCP to regulating up, regulating down, and contingency reserves. and um we believe that that's the optimum capacity but now um just to avoid the volatility we're also providing some um some energy to um to vantage in serving their customers about um about 45 megawatts to going up to about 82 megawatts sir and just to round off the capex discussion earlier do we have an updated budget for the distribution business for the full year state

Angeline will probably have that by the first half. Given all the changes, yeah.

Ms. Betty, how much was it before? 20 or 30 billion?

For?

The old budget for distribution.

Just distribution? Wait, our full year last year was, wait, let me try to check.

37 years.

Last year was... Last year was at 28.5 billion.

Yeah, where did he... I'll just... so it's going to be slightly higher the original is a little bit over 30. thank you miss betty and lastly sir manny can you talk about uh lng supply and your procurement how how far along are we secured in terms of deliveries

so much so much getting dispatched during the day although in the evening it goes up anywhere between 9 to about maybe 15 16 pesos no to me that's not telling us that there's this others coming in I think it's exposed coal plants and that are trying to make up for not getting dispatched during the day and recovering during the evening. So we're really seeing the duck curve manifesting already and we're expecting this given that the target of the government is to really push more renewable energy into the grid. And mind you, we're just dispatching 250 megawatts of tera-solar. So once we are in by mid-May, when we have 750 megawatts, that's going to reflect in the spot market.

Thank you, Jalim. With that, before we officially close, please be informed that an audio recording of today's briefing will be available on our website under the investor relations section. Thank you once again for attending today's briefing. We'll see you in our first half briefing come July. Thank you.