Manila Electric Co. (Meralco) expects pressure on electricity prices to persist as geopolitical tensions in the Middle East continue to roil global fuel markets, even as the country's largest power distributor posted higher first-half earnings on stronger contributions from its power generation business.

"We expect that the energy industry will continue to face uncertainty caused by geopolitical developments in the Middle East. Consequently, global fuel markets are extremely fragile and volatile. We are encouraged by the efforts of the Department of Energy and the Energy Regulatory Commission, and the government as a whole to manage the impact on our economy,” Meralco Chairman Manuel V. Pangilinan said on Wednesday.

Meralco's core net income rose 3.8 percent to P26.5 billion in the first half from P25.5 billion a year earlier, while reported net income climbed 11 percent to P26.3 billion.

The distribution utility remained the group's biggest earnings contributor, accounting for P12.7 billion, or 48 percent, of consolidated core net income.

Its power generation arm, Meralco PowerGen Corp. (MGEN), posted an 11-percent increase in core net income to P10.5 billion, driven by higher energy output and contributions from its liquefied natural gas and renewable energy investments.

Retail electricity supply and non-electricity businesses contributed the remaining P3.3 billion.

"Meralco recognizes that the persistent conflict in the Middle East continues to exert pressure on global fuel supply and on prices and, consequently, electricity rates.

While many of these are beyond our control, we remained focused on what we could manage—working closely with our fuel suppliers and exercising prudent sourcing strategies, strengthening our network, and pursuing efficiencies to contain costs," Pangilinan said.

The company said its average retail electricity rate increased 15 percent to P13.09 per kilowatt-hour in the first half, reflecting higher generation and transmission charges, fuel costs, and other pass-through charges.

However, its actual distribution charge fell 5 percent to P1.36 per kWh following regulatory adjustments and higher customer refunds.

As consumers continue to contend with elevated electricity bills and the government pushes for lower system losses, Meralco said it is investing in network modernization and anti-pilferage measures to improve efficiency while keeping system losses below the regulatory cap.

Total capital expenditures reached P39 billion during the period, including P26 billion allocated for renewable energy and battery storage projects.

From January to June, MGEN delivered 14,178 gigawatt-hours of energy, up 12 percent from a year earlier, supported by the full operations of its LNG assets and newly commissioned solar plants.

"For us at MGEN, resilience is measured not only by how we respond to challenges, but also by how we continue creating value despite them. The first half of 2026 underscored our commitment, from restoring stability following the Mindanao earthquake and supporting the Visayas grid through periods of supply tightness, to advancing landmark projects like MTerra Solar.

As the country's energy needs continue to evolve, MGEN remains steadfast in delivering reliable, affordable, and cleaner energy that powers economic growth and improves the lives of Filipinos," MGEN President and CEO Emmanuel V. Rubio said.

Separately, the Meralco board declared an interim cash dividend of P11.758 per share, equivalent to 50 percent of core earnings per share, payable to shareholders of record as of 28 August.