Retail Competition and Open Access (RCOA) allows power suppliers to directly transact with any customer designated by the ERC as part of the contestable market. It also allows these contestable customers to decide which electricity suppliers to source power from. The establishment of RCOA is mandated by the Electric Power Industry Reform Act of 2001 (EPIRA).
Who are the main players in RCOA?
Retail Electricity Suppliers (RES) or power suppliers licensed by the ERC to sell electricity to the contestable market.
Contestable Customers (CC) may be a corporation or business establishment and even households whose average consumption during the last 12 months reached a minimum of 500 kW.
How does the RCOA benefit contestable customers?
How does the RCOA benefit contestable customers?
Being part of the contestable market allows customers to choose their own retail electricity supplier. This also allows them to pick clean and environment-friendly sources of electricity.
Are you eligible to avail our services? Determine now!
We value your time, so we’ve made it easier for you to check your eligibility to avail of our services. EDC’s contestability checker will help determine if your energy consumption reaches the requirement for you to choose your own energy provider. Check your eligibility now and shift to energy efficiency with EDC.
One of the most powerful cartoons I’ve come across in a while is one by To New Yorker Magazine which shows a man in a tattered business suit and around a campfire amidst a future wasteland telling three children, “Yes they destroyed but for a beautiful moment in time we created a lot of value for. Funny, but tragically so true of how the world works today.
We urgently need to overhaul how we relate with the Earth if we want to keep it habitable for humans in the decades to come. We don't have a choice.
The way we measure progress and success in our world is severely broken. Countries are judged by how fast gross domestic product (GDP) grows, and corporate stocks are deemed good investments also by how fast they can advance their net incomes regardless of how it’s achieved. Most successful business models are racing to spur consumption of their products beyond what consumers really need. As a result, carbon emission trajectories are leading us toward a catastrophic world that’s 3-6 degrees warmer. Human activity is warming the Earth 5,000 times faster than the most rapid natural warming occurrence in our planet’s past, and species are going extinct faster than at any period in geologic history. Microplastics are already being found in dwelling in the deepest reaches of the Marianas trench as well as the pristine Pyrenees mountains of France and Spain. These are but a few examples of the widescale destruction humans are wreaking on our only home. The international no organization (NGO) Global Footprint Network estimates that we already use up 1.5 Earths each year just feeding our current level of wants and needs; that’s 50% more than our planet’s ability to replenish 3the resources used up!
Dear Stakeholders,
Message from the EDC Chairman and CEO
With every passing year, it becomes increasingly tougher to deny that our climate is changing faster than previously imagined due to human activity. A large and growing number of the world’s largest corporations participating in the Carbon Disclosure Project, more than 75% as opposed to only 10% in 2010, now incorporate climate change into their business strategies. I believe that today, we are living through one of history's great paradigm shifts. An age wherein we’re only just beginning to realize the immense impact we’ve had on the planet and that we urgently need to overhaul how we relate with the Earth if we want to keep it habitable for humans in the decades to come. We don't have a choice. There is no Plan B or planet B, as some would say.
Real and lasting shareholder value can only be had when we place the interests of all our stakeholders, our customers, the planet, and humanity at the center of everything we do.
Of course paradigm shifts are never easy. They never have been throughout history. But as the environmentalist and author Bill McKibben rightly puts it: “the math is hard to argue with; business as usual and growth as usual spell an end to the world as usual. This is the one overwhelming fact of our lifetimes.” PricewaterhouseCoopers or PWC quantifies what the world needs to do to keep global temperature rise to less than 2 degrees Celsius. They emphasize that we must reduce the carbon intensity of the economy—the amount of carbon emitted per dollar of GDP—by 6% each year until 2100. Although this number looks modest, it is nine times the current rate of important being experienced in the world today; this only underscores the magnitude of the transformation needed. At Energy Development Corporation and parent company, First Gen Corportion, we believe our platform of businesses and our way-to-play are all geared toward this goal.
Message from the EDC Chairman and CEO
Our Geothermal plants are today the only large scale 24/7 sources of renewable energy The relatively fixed pricing we are able to offer our electricity customers is a massive advantage and gives them certainty at a time when our coal-based competitors cannot. In addition, the massive transformation taking place in the company is exciting and promises to transform us into a leaner but more robust and resilient player and competitor. Our Natural Gas plants at First Gen are key to bringing down the carbon intensity of the economy as they emit less than half of the carbon and only a fraction of the other pollutants per kilowatt-hour relative to an equivalent-sized coal plant. This is key to keeping the economy humming and our lights on, even as we transition to a decarbonized world. Today, these plants run on the country’s only indigenous gas field Camago-Malampaya, but we are currently preparing for the day these fields no longer have indigenous gas through the development of what could be the country's first Liquefied Natural Gas (LNG) import terminal. In December 2018, First Gen signed a joint Development Agreement (JDA) with Tokyo Gas Co., Ltd. to push this forward. It's an exciting time to be doing this as LNG suppliers worldwide are only just beginning to innovate and show flexibility on gas contracts never before seen in the world of LNG contracting. Just this April 2019, Shell and Tokyo Gas signed the world’s first coal-indexed LNG contract. This signals that gas producers are now willing to fight head against coal plants in competitive power markets, if they aren’t cheaper already. Our decision several years ago to slam the door on developing any coal-fired power for ourselves was prescient. Even as more coal- fired capacity comes on line globally, their utilization and capacity factors are falling. International Energy Agency (IEA) figures for 2017 show the average capacity factor of coal plants globally has fallen even more to 52.8%, down from 59.3% in 2013. This is alarming for a technology whose economics only makes sense when run at baseload rates of 70-80%. The implication is that many coal plants today are being run sub-optimally and expensively. The fact that they are required to ramp up and down frequently causes thermal fatigue of components, of materials, and corrosion that negatively impact efficiency and emissions even more. Aside from the fact that coal-fired power no longer has a place in a world that needs to decarbonize rapidly, its economics are being rendered uncompetitive in grids increasingly being penetrated by more intermittent renewable energy sources. Its days are numbered.
Message from the EDC Chairman and CEO
Our world today teems with change and disruption. At EDC, we’re all incessantly and purposefully “sensing the wind” and “reading the tea leaves”. And in such a world marked by so much complexity, we must also keep our organizations alert, as well as agile. But let me just say that real and lasting shareholder value can only be had when we place the interests of all our stakeholders, our customers, the planet, and humanity at the center of everything we do. The world’s paradigms are shifting yet again and, as a company, we intend to help that shift in the best way we can. It is amongst these great challenges where we intend to build the many great opportunities that will foster true shareholder value.
Thank you for your continued trust and unwavering support.
Federico R. Lopez Chairman and CEO
Message from the EDC Chairman and CEO
Due to climate change, only hell is hotter than summer.
We now live in a world that has increased its temperature by 1.5°C from pre-industrial times and at these levels 14% of the world’s population will experience intense heat waves at least once in five years. Should things deteriorate further by half a degree, at a 2°C increase from pre-industrial times, the effect will be 2.7 times worse: 37% of the world’s population will experience severe heat waves at least once in five years. In 2018, Australia revised their temperature charts and increased the upper limit to 55 degrees Celsius, or over 135 degrees Fahrenheit, given what was experienced for a sustained period in the south-central part of the country in 2018.
Hotter temperatures mean hotter oceans, because water absorbs an estimated 90% of the heat in the atmosphere and radiant heat from the sun. The “hydrogen bond" between water molecules is what allows water to absorb a significant amount of energy in the form of heat before turning to vapor. However, once in vapor form, water rises into the atmosphere, and the very same life-sustaining water becomes fuel for deadly typhoons and hurricanes that bring with them torrential rains.
If the earth did not have water and was dry like Mars, our average temperature would be negative 16°C. Because of the presence of water, the year-round average temparature of the Earth is now 14°C. Averages have a way of lulling us into complacency until we are shaken or impacted by terrible horrors, like Typhoon Yolanda in the Philippines, Hurricane Sandy in New York, Hurricane Maria in Puerto Rico, Harvey in Houston (the costliest hurricane on earth at USD125B in damage). The common thread among these events? They are all the worst in either the history of those areas or the worst in centuries. And they all occurred in the last 6 years.
The diametric opposite of typhoons, drought, is the other side of the same coin. From California to Cape Town in South Africa, to Greece and Australia, drought has affected millions of people. Closer to home, Manila is experiencing drought in this summer of 2019.
Dear Stakeholders,
Message from the EDC President and COO
Our 2018 cover follows the expressive and visceral nature of the images we have chosen in the past two years. It shows a striking image of what the future holds for us, if we do not heed the call of the planet to pivot. The harsh reality of climate change is already felt, and sadly, it is the most vulnerable members of society who bear the brunt of it.
We know the pivot will not be easy, especially in the face of significant vested interests.
The Intergovernmental Panel on Climate Change’s findings say that we may only have until 2030 to avert “catastrophic climate change.” Despite the warnings however, action has been slow. And in 2018, carbon emissions increased by another 2% from the previous year. Scientists remain optimistic and cite the growth of renewable energy as a reason to believe that the world can achieve the necessary reductions.
This continues to motivate us to do things better, to make a difference toward turning the tide. Over the past five years, the Energy Development Corporation (EDC) and the rest of the Lopez group of companies have decided to be the leaders in the business sector of the Philippines in sounding the warning about the worsening effects of climate change and the need for decisive action and enlightened choices. We know the pivot will not be easy, especially in the face of significant vested interests.
Our Performance Report tells the story of EDC’s work-in-progress this year: our efforts to achieve our business objectives, hand-in-hand with our sustainability aspirations. As always, we keep track of the metrics that matter most to our stakeholders in alignment with the framework of the Global Reporting Initiative (GRI) Standards.
Message from the EDC President and COO
Bouncing back from a tough year
We tempered our expectations for 2018, given that we began the year with damage to our facilities as a result of Typhoon Urduja, in December of 2017. Despite this setback, the concerted efforts of our operational units, and inspired action from our employees, helped us return our assets to service ahead of schedule. As a result of this, we ended the year with a recurring income attributable (RNIA) of PhP9 billion, slightly ahead of our 2017 numbers.
We continued to execute our strategy with excellent results. We ended the year above our target for generation. Our Nasulo and Palinpinon II power plants were also re-certified for the 40 megawatt (MW) (+10MW) Ancillary Services Procurement Agreement (ASPA), while our BacMan geothermal facility was fully contracted.
We adopted new ways of working and better practices in our operations with promising results. For instance, majority of our planned maintenance activities were completed in 60% of the time, versus the previous 5-year averages. Fundamental changes have taken place, such as the safety and medical clearances of contractors prepared a full month ahead of the start of the activities, versus the old practice of doing this just prior to day zero. We have also enhanced our reinjection management strategies to support our efforts to reduce wasted heat and to ensure the recharge of our geothermal reservoirs.
Message from the EDC President and COO
Taking the long view on sustainability and profitability
We are aware that challenges to the business will arise from time to time, such as natural calamities or extreme weather. In response to these threats, we made smart investments in resilience projects. Rather than implement risk reduction and resilience in potentially hazardous areas, such as the steepest slopes most prone to landslides, we looked instead at this through the necessary lens of high hazard against the potential value at risk from the infrastructure in the area. From there, we have now prioritized those works which mitigate the value at risk (VAR) of our assets relative to the hazard present. This way, we are sure that we are investing in the right places where we can have the greatest risk reduction. Using this VAR strategy, we completed 31 landslide mitigation projects in BacMan, Negros, and Leyte in 2018. This crucial investment in resiliency is being accelerated in 2019.
We are also investing in the growth and development of our people. People seek opportunities to work for us because they appreciate EDC’s strategy. We have found that EDC’s renewable energy focus has made us an employer of choice. Improvements in our ways of working have given our employees greater flexibility to participate in and contribute to over 100 simultaneous special projects, resulting in disperse decision-making and improved accountability.
Our business also faces systemic and market-driven challenges. For example, the energy sector will have to confront regulatory shifts and changes in tax regimes. This is par for the course. We will also experience market shifts, which can be disruptive, both from operational and pricing standpoints. An example would be the influx of non- conventional, non-base load (intermittent) energy, like solor and wind. These energy sources have significant impact on the grid, but do not have to shoulder the cost of ancillary services.
EDC is prepared to face these changes by maximazing the cash generation of our assets. We upgraded the capability of our plants in order to provide services that support grid stability. These plans have been implemented, with investments in ancillary services capability completed. Expanding our services offering has generated economic returns: revenue from the sale of electricity as contingency and dispatchable reserves increased 143.5% from 2017, to P970 million in 2018.
Message from the EDC President and COO
Making the shift to low carbon energy
While renewable energy is often seen as an alternative, EDC believes it is necessary and timely to mainstream clean energy. Renewable energy is not only the environmentally- responsible choice, but a wise business decision as well. EDC’s experience demonstrates this, and we hope to convince even the doubters that the future of energy is in renewable This commitment to clean energy is growing. In the United States, the mood on low- carbon energy is changing. So much so, that one of the major US energy utilities has pledged to go carbon free by 2050, and 80% carbon-free by 2030. This is only one utility, in a wave of energy providers that have announced carbon-reduction goals.
A common theme across those committing to renewable energy is that their customers are demanding low-carbon energy. And the energy providers, even mining companies are listening. Renewable energy is not only the environmentally-responsible choice, but a wise business decision as well. EDC’s experience demonstrates this, and we hope to convince even the doubters that the future of energy is in renewable.
In the capital markets, many large financial institutions have announced they will no longer finance coal fired power plants. It is their belief that the assets will neither have the capability to compete nor “the right to operate” based on the preferences of their customers and other stakeholders such as local communities. For this reason, providing financing for such assets are seen to be a poor medium- to long-term risk.
Increasingly, our customers are looking for cleaner energy choices, and we are happy to oblige. Our role is not only to advocate for, but to convert consumers to, renewable energy. More customers are signing up with EDC, with some choosing us because they want to be powered by a pure RE company. Companies that have chosen to make the switch believe it is a critical advantage: in fact, one customer that makes industrial building materials told us that they want to be known as the first company in their industry to be 100% powered by RE. We are encouraged by the small, but growing, population of enlightened consumers that are demanding that the businesses and brands they support show greater climate responsibility.
Message from the EDC President and COO
EDC is proud and happy to partner with businesses that want to make positive environmental change. Together, we will be part of a virtuous cycle that will contribute to positive climate action.
Staying committed to our sustainability journey
In the last quarter of 2018, EDC completed the process of its voluntary delisting from the Philippine Stock Exchange. Our delisting was a considered decision and part of an overall strategy to support EDC’s long-term growth. The move to delist allows us greater flexibilty over factors like leverage and dividend policies, without the need to excessively focus on short-term results. Our shareholders share this long-term focus with us. There is less attention given to quarterly earnings, in favor of deliberate growth. This gives us the latitude and support to explore investments in new Capital Expenditure, to test new technologies that alter our future prospects, without the expectation of immediate results or instant returns.
While the Philippine Stock Exchange and the SEC have established guidelines for mandatory sustainability reporting beginning in 2020, EDC voluntarily reported on sustainability for the past nine years. We will continue this practice because we believe that this is how we can best create and share value with society, and care for the environment upon which we depend, and the we all share.
Message from the EDC President and COO
Our clear path ahead
The strong beam from a beacon serves to shine a light on the way ahead, and while we made some gains in 2018, our journey is far from over. One the business side, we are confident in the path we are taking to grow and develop our portfolio, invest in our facilities and our PEOPLE, and continue to support our host communities.
Strategy is fundamentally a choice that is executed well. EDC is committed to our choice for renewable enrgy and we intend to deliver on our plans to optimuze our assets, mitigate our risks and grow the business and our talent pool. It is our hope that we can serve as a role model for the energy sector, our host communities, the local government, energy are bright, and by all indications, are getting better with each passing day.
