Oct. 30--Manila Electric Co.'s (Meralco) net income posted significant gains in the first nine months of the year as the company continues to reap the benefits from its new rate-setting scheme. In its unaudited financial report, the country's largest distribution utility reported a net income of P5.3 billion for the first three quarters, up 41.7 percent from P3.8 billion a year ago.

The increase was attributed to the implementation of its performance-based regulation (PBR) rate-setting scheme in May.

Under the PBR, a utility's rates are determined by the quality of its service to its customers. It also grants a utility a regular adjustment on its tariffs in consideration of inflation and foreign currency exchange fluctuations as well as its obligations to its franchise area.

The implementation of the PBR allowed Meralco to increase its rates by P0.26 a kilowatt-hour to P1.22 a kilowatt-hour.

The adjustment is Meralco's first distribution rate increase after almost five years.

From January to September, Meralco's revenues--97 percent of which come from the sale of electricity, dipped by 1.2 percent because of a P0.27-a-kilowatthour decrease in average generation and transmission charges.

The impact of this reduction was partially offset by the increase in kilowatthour-consumption for the period.

Meralco's sales were driven mainly by the residential and commercial sectors, which accounted for 72.3 percent of its total 20,392 gigawatthours sold.

Electricity consumption of Meralco's industrial customers who were affected by the global financial crisis at the start of the year continues to slow down, albeit at a slower pace compared the previous period.

The full effect of the devastation caused by tropical storm Ondoy--which affected part of Meralco's franchise area in Luzon--will be reflected in October as the typhoon occurred towards the end of the month.

"We look at the remaining quarter of 2009 with continued optimism as the country struggles to recover from the damages brought about by tropical storm Ondoy. We believe the Philippine economy will continue to grow. The rebuilding effort coupled with expected brisker business as the holiday season approaches should sustain the growth in the business," Manuel Lopez, Meralco chairman and chief executive officer, said.

During the launch of the Meralco Mobile Services, Metro Pacific Investments Corp. (MPIC) Chairman Manuel Pangilinan said that his group expects to conclude negotiations with the Lopezes for the latter's remaining shares in Meralco soon.