SPC Power’s profit drops 27%

Publicly listed SPC Power Corp. posted a 27.6-percent decline in its consolidated net income in the first semester to P186.4 million, due mainly to the termination of some of its power supply contracts.

In a disclosure to the Philippine Stock Exchange, SPC Power noted that its wholly owned subsidiary, SPC Island Power Corp. (SIPC), in particular, registered a net loss of P3.4 million from a net income of P164.9 million a year ago because its power supply contracts have yet to be renewed and approved by the Energy Regulatory Commission.

SIPC also has pending applications for proposed ancillary service agreements with National Grid Corporation of the Philippines (NGCP).

Ancillary services refer to standby power supply that can be tapped in case regular supply to the grid falls short of the requirement. The procurement of ancillary services by NGCP was said to be crucial in maintaining the stability of the three main grids. These capacities were also needed to maintain a stable and reliable operation of the interconnected transmission system.

For now, SIPC is trading the capacity of the Panay and Bohol diesel power plants at the Wholesale Electricity Spot Market (WESM), which started to pick up only in the second quarter of this year.

SPC Power further reported that combined revenue for the first six months of the year amounted to P750.4 million, or 17.1 percent lower than the P905.4 million posted in the same period of 2010.

Despite the decline in its net income and gross revenue, parent firm SPC Power managed to record a positive net equity share of P19.4 million and P1.2 million from the operation of its associates in the first half of 2011 and as of end-2010, respectively.

SPC Power explained that the higher equity share could be attributed to the energy generated and sold by Kepco-SPC Power Corp. during the commissioning stage of its coal-fired power plant in Cebu last year.

The coal facility’s two power units can generate a combined 200 megawatts, one of which started commercial operations on February 28 and the other on May 31 this year.

“The equity share in the earnings of KSPC should further improve substantially in the coming months,” SPC Power added.