Lopez Holdings


Good morning.

With much controversy and media interest, we conduct this year’s stockholders’ meeting. We thank you all for coming to show your interest and support to your Company.

The results of our operations for 2007 and major events in Meralco are already contained and comprehensively explained in the Information Statements distributed to all of you. Major performance indicators and issues are also highlighted in the Annual Reports made available today at the registration area. In his report immediately following, our President and Chief Operating Officer, Mr. Jesus Francisco will further enlighten you on our operational results and our financial statements for 2007.

By now perhaps, you may have an overdose of the issues surrounding Meralco. I will not bore you with them nor try your patience by repeating them. Let me therefore focus my report to you this year on those areas which seem to escape public attention but remain to be the very fundamentals of an efficiently running electric utility.

First, all of you, our customers become aware of the electric company when the lights go out or they do not turn on when we flick on the switches. In 1983, customers in our franchise experience on the average 43 incidences of no lights. Please take note that it was 36 times in 1986, when this management took over the Company. In 1993, due to lack of supply, the number of brownouts and even blackouts increased to 278 where only 37 were due to Meralco. We were able to reduce this further to only 8 times from 2005 to the present. All our efforts right now are focused on even improving our performance in this area to the level of the most sophisticated electric distribution systems in the world like Japan with less than 5 interruptions per year. And indeed in some of the localities in our franchise, this world class level is already attained. We know that to reduce this further will take a lot of investments in the electric distribution system. We are fully aware that the highest quality of electricity is a basic requirement of a robust economy.

Your Company also measures the length of time there were no lights. From a high of 42 hours on the average in 1983 and 32 hours in 1986, we were able to improve our performance to only 7 hours last year. In some areas where we were able to put in new facilities, the length of time with no lights is even measured now only in minutes, which means less than an hour.

The third major performance indicator I would like to present to you this morning, is the level of customer satisfaction. A third party research and survey company regularly conducts a survey among our customers to measure your Company’s performance in all customer interactions. Even with the rates or the price of electricity, we have maintained a satisfactory rating of more than seven points in a 10-point rating scale. This result is regularly validated with other surveys such as those of Pulse Asia and mystery client interviews both by our own internal research group and another external research company.

Of the 10 survey parameters we use for the satisfaction survey, rate or the price of electricity as expected has the lowest rating even if distribution only accounts for 12 centavos in every peso our customers pay. With the public’s emotional reaction to the total price of electricity, some of us seem to forget that the last increase in the distribution rate of Meralco was in 2003. It is due to the prudence of this management and the efficiency of our employees that in spite of the delayed adjustments in the distribution rates, we were able to maintain the lights on through good maintenance and friendly weather.

I invite you to focus your attention to some comparative figures on the share of distribution in the total price of electricity. Compared with other electric companies worldwide, Meralco, your distribution company, has the second lowest share at 20 % of the total customer bills. This 20% is composed of 12% for Meralco and 8% for the government in the form of taxes.

With this performance, we are therefore confident that when we submit to the Energy Regulatory Commission our performance targets as required by this new era of Performance Based Ratemaking, we will not be in any penalty situation in any area.

I will not bore you with all the other performance indicators we rigorously monitor throughout the Company, from the corporate level cascaded to all the organization levels up to the individual employee levels. Indeed, Meralco is a model to all other companies here and abroad, that never a week passes without local and foreign visitors requesting for orientation from our officers.

With this record, please allow me to publicly acknowledge all our employees who being owners of the Company they work for, are also here with us today as stockholders. Like you, they are most concerned both on the price of electricity and the returns on their investments. There are no discounts for all employees on their electric bills. We all pay the same rate like any other customer. If anyone fails on paying, the same penalty is given and those caught with pilferage offenses are dismissed. To all of our employees, let me publicly express today, your management’s deepest respect and gratitude for all the hardwork, fortitude, loyalty and malasakit to your Company and everything that it stands for, and is now fighting for.

The numbers again speak for themselves. The number of employees at 5,990 at the end of 2007 is at the same level as it was 24 years ago. From the 1986 level of 6,400, after the EDSA Revolution, we reached a high of 8,765 in 1993. With increasing productivity of 6 % a year, as measured by our customer per employee ratio, we were able to improve our performance with the use of less resources. Our record in this area can be compared very favorably with both local and foreign utilities.

As I was doing this report to you, several thoughts and realizations come to my mind.

First, I am reminded of what the engineers and the analysts always tell me - numbers do not lie. People interpreting them or should I say misinterpreting them do. The numbers which I have just presented to you and those of many others I did not include in this report and in Mr. Francisco’s are verifiable and therefore unquestionable, or should I say. should be unquestionable. They are in our records for everyone to see and scrutinize and they are in all our reports to all our regulators, like the ERC and the Securities and Exchange Commission and the public.

Every year, Meralco is always cited among the top twenty corporations in corporate governance. This is based on international standards of good corporate governance as contained in the annual survey conducted by the Institute of Corporate Directors.

Second, through all these more recent controversies, each and everyone of us here in Meralco is encouraged by the fact that no one has ever assailed our service. We have kept the lights on and we have maintained the standard of our service in spite of all the attacks and the unkind words directed to all our employees and management. At the height of the bitterest controversies, I am very proud of how our employees have stood as one and faced everyday, 24 hours of service, 365 days a year, without missing on their work nor reneging on their responsibilities.

Hearing cruel words and unfounded criticisms everyday has not been easy for us here in Meralco. We have repeatedly told all our employees that whatever they hear, however bad they feel, we should always give the best service, as we have always done and will always do.

Third, through all these days of attacks, we have kept our heads up high as we know we have not done anything wrong and like all other controversies and challenges we had faced in the past, we pray as we always do, that this too will pass and we will come out with the truth in our side as God is our witness. As always and will be, we are guided by transparency, efficiency, and integrity - values that have kept us united and successful through the 105 years of our service.

Imbued with customer service, we are also inspired as a Company not only by our service levels to our customers but also in our corporate social responsibility activities which our employees call, Service Beyond Duty.

Volunteerism is very much alive among our employees, not only with their material contributions, but more importantly with their time and talent. Education as a long-term social investment, environmental management, community service on electrification and nutrition, and emergency assistance are the four priority areas of our corporate social responsibility projects.

Even now as we speak, 19 of our employees in six fully - equipped vehicles are helping in the restoration of power in Dagupan, Pangasinan. We dispatched them last week immediately upon learning of the extent of the damage to the electrical facilities in said province. As we had also helped several areas in Bicol, particularly Albay for three months in 2006 till January 2007, our crew will stay in Dagupan for as long as needed.

As of this date, we had launched 570 projects benefiting more than 885,000 recipients. This reach was made possible mostly by the support of our employees through more than 87,000 volunteer hours given during the employees’ off-hours.

From 2005 to the present, we had built 18 Meralco Sibol Schools in Gawad Kalinga villages to provide a good foundation for the pre-school children in depressed communities. This project was conceived and being implemented in close partnership with Gawad Kalinga specifically with its founder, Mr. Tony Meloto, who had provided the guidance and inspiration for this project. This year, we are committed to build 10 more Sibol schools in priority GK villages. The other major consideration in the choice of the areas where we are going to help most is the prevalence of pilferage or the high system loss areas. Partnership with the communities is one of our major strategies in the reduction of system loss.

Noteworthy to mention are some of our other CSR projects such as :

-the Liwanag Learning Centers which are school buildings in public schools which need them most;

-the continuous teacher education using our own volunteer employees and our DepEd certified curriculum in computer education, zero-waste management, and values formation, among others;

-an enhanced feeding program in Lugao-con-Love where the health examination of children is a major input;

-the electrical assessment for safe public schools especially during summer before schools start, participated in by our engineers and linemen;

-electrification programs in depressed areas now also in coordination with Gawad Kalinga;

-rehabilitation of other public school facilities such as sanitary facilities through donations of toilet wares from our customer;

-he Christmas outreach of our executives and spouses who give assistance and help from their own money to less fortunate children every Christmas;

-a franchise-wide gift-giving every Christmas by all Meralco offices; and

-the hosting of orphans and school children here in the corporate headquarters to enjoy the lights and the programs for children as our company’s Christmas celebration.

With the most positive effects these projects also have on our employees, we are committed to continue with these CSR activities especially on education. They also take our minds away from some of the unfair issues we face and they help us go through some of our most difficult days.

It will be remiss on my part as the Chairman and CEO and therefore the leader of this Company to take all these attacks on management inefficiency without setting all the records straight. I singly or alone, is not management. I do not manage this Company by myself. With me and the President and COO, are seven other senior officers heading the Company’s seven operating groups. Together, these officers make up the Management Committee who together with five senior consultants, collectively manage this Company. Based on the applicable corporate laws and corporate governance manuals and principles, Meralco has an approved and documented management system that defines authorities, determines approval levels and establishes responsibilities and accountabilities. This management system is implemented strictly, regularly updated and is the basis of internal and external audit engagements.

Each member of this Management Team is a most qualified officer for the position who can be compared with the best in their lines of work. They are all here with us today with all their people and I encourage you to talk to any of them.

I am very proud of this Management team and would like to take this occasion to thank them for their loyalty, Malasakit and resilience through all the natural and man-made challenges this Company has faced through the years. Mga beterano ang mga ito ng anumang bagyo! I wish to thank the Board of Directors for their various contributions towards the goals of the Company.

I assure all of you here and the rest of our 4.4 million customers, we are all here to serve you the best way we can. There are people who may think otherwise. For all of us here in Meralco, we have only one basic performance measure – when you turn that switch on, you will have light. This much we can assure you as we have most of the factors that will make this possible in our hands. With regard to the price of electricity to our consuming public, we strive to work very closely with all our other partners in the industry, most especially the government. We commit to do this no matter what the obstacles are.

Maraming salamat sa inyong lahat – sa Meralco, may liwanag ang buhay!

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Lopez Holdings Corporation 
16/F North Tower, Rockwell Business Center Sheridan, Sheridan St. corner United St., 1550 Bgy. Highway Hills, Mandaluyong City, Philippines

  • Trunkline: (632) 8878 0000
  • Fax: (632) 8878 0000 ext 2009