Executive Messages

Federico R. Lopez


Dear Stakeholders,


As I write this message for our very first Integrated Report, the whole world is in varying stages of lockdown from the COVID-19 pandemic. With the prospect of a vaccine not yet in sight, we’re all still in a dangerous “dance” with the virus—simultaneously avoiding it, yet trying to regain some of the normalcy of our past lives that now feel like a world away. Prescient voices warned of this possibility. We all assumed that dystopian events like this only happen in movies and sci-fi novels and most of us dismissed the probability of it even occurring in our lifetimes. We convinced ourselves that modern technology and medicine will always come to the rescue. So we went on with our lives.

What is overwhelming us today in this pandemic is but a sneak preview of the geologic-scale changes that will result from an unabated climate crisis. These changes are already evident in record-breaking temperatures and natural catastrophes hitting the planet every year now. Early this year, a record-high temperature of 20.75 degrees Celsius was set in the Antarctic. At the time of this writing, the Arctic also broke historic records with a high temperature of 38 degrees Celsius. The incessant rise in the world’s carbon emissions has put us on a trajectory of a global temperature rise of between 3.7 to 4.8 degrees Celsius by 2100. That’s an unlivable planet!

Today, we have a narrowing window left to keep warming within the desired 1.5 degrees Celsius agreed to in Paris under COP 21, or watch it run away from us irreversibly. The upcoming decade of the 2020s will critically determine whether we succeed or not. To succeed, humanity needs to reduce carbon dioxide emissions by 6 percent every year until we achieve net zero emissions in 2050. For perspective, the lockdowns and passenger transport restrictions resulting from the pandemic are expected to bring emissions down this year by about 8 percent; which means we need a COVID-scale catastrophe every year until 2050 just to achieve the 1.5 degree Celsius target! How did we get into this existential crisis?



Central to all this is the all-too-common mindset that man is apart from, and not a part of, nature—that nature exists to serve our wants and needs, regardless of the toll we inflict upon it. Today, our global population of 7.8 billion humans consumes an estimated 1.75 Earths per year. That’s 75 percent more resources than our planet’s ability to replenish. According to the Global Footprint Network, US lifestyles consume an average of 5 Earths, which many others on the planet aspire to attain. Yet the pattern of growth is broken: instead of lifting all boats, it has left too many behind. The top 10 percent of the world now owns 82 percent of the wealth, a trend that’s set to worsen over time. The populism that’s sweeping the world is a symptom of this growing disenchantment with business, politics, and life as usual. Clearly, our planet’s natural environment and its social fabric are already ripping at the seams.

The natural, social, and political forces being unleashed in the coming decade will likely make it the most challenging and most disruptive business has ever seen. The COVID-19 pandemic is but a mere “fire-drill” for what’s coming and demonstrates the scale at which things need to change. We are living in a time of great paradigm shifts, and businesses that seek to thrive in this era must be able to reimagine and redesign themselves for this new world.


In this kind of a world, Corporate sustainability that seeks to simply “tick the box” or do less harm is no longer good enough.


Sustaining our trajectory today will result in disasters that are not only greater in scale, but also are more unjust towards those who do not have the capacity to cope with the devastating changes that are already here and continue to escalate.



Businesses need to align themselves, their resources, and their capabilities toward a mission that seeks to elevate everything they touch—their customers, employees, suppliers, contractors, the environment, communities, and, of course, their investors.


There is an urgency for all of us to go beyond incremental sustainability and transform into regenerative forces that align our profit engines with the need for a better world and a safer planet.


There is an urgency for all of us to go beyond incremental sustainability and transform into regenerative forces that align our profit engines with the need for a better world and a safer planet.

This year we crystallized our mission at FPH and our group of companies and that is: “To forge collaborative pathways for a decarbonized and regenerative future.” It’s a deliberately high bar and we’re nothing short of humbled by it. But we expect this short phrase to be the beacon that guides us through this turbulent decade and beyond. We’ve also put into words our purpose and chosen path, etching out the role we see for ourselves in the coming years with greater clarity. The ideas and principles behind our words are not new. We’ve been living and breathing most of those principles the last decade. At times we felt we may have been getting ahead of ourselves and where our investors wanted us to be. But even back then, just like today, we’ve always been playing for the long term, reading the tea leaves, and conscientiously transforming ourselves into what the world needs us to be.

I hope you enjoy reading our recrafted mission and purpose as much as we did rewriting them. More importantly, I hope you’re encouraged to come along with us on what will be a rewarding and purposeful journey.



Federico R. Lopez
Chairman and Chief Executive Officer


Richard B. Tantoco


Dear Stakeholders,


2019, while still in the very recent past, seems like an eon ago. Lest we forget, allow me to recall a breakthrough year for the company during which we recorded a number of firsts:


  1. Our highest Recurring Net Income Attributable of PhP11.6 Billion, despite resource constraints.
  2. Geothermal generation hit a high of 7.9TWh, up 9% vs the average of the previous 5 years.
  3. Planned outage rate was down to 2% through scheduled outage optimization efforts that focused on the most assiduous planning and execution (vs the average of 2.2% of the previous 5 years).
  4. Forced outage rate was 7.3%, down from the 10.7% average of the past 5 years. It is nowhere near where it should be but still, we celebrate the 32% improvement
  5. Leyte plants reported a full year of normalized operations for the second year in a row. Negros and BacMan geothermal plants reported higher revenues driven by the higher Wholesale Electricity Spot Market prices.
  6. As a result of all these operational improvements, our EBITDA grew by 15% vs the prior 5-year average.
  7. We also registered an overall employee engagement score of 91%—our highest score ever—despite conducting the survey a mere 60 days after the most significant reorganization we’ve ever done. Our employees are truly our partners, and these results indicate that they are willing to go the extra mile to support EDC. There is a rational, emotional, and behavioral attachment to the company.
  8. We stood unscathed and quickly recovered from a series of earthquakes in Mindanao, including one with a 6.5 magnitude, and strong typhoons Tisoy and Ursula, thanks to our resiliency investments. Our Natural Catastrophe Risk Mitigation Program has enabled us to plan for key risks and implement cost effective solutions that protect assets that have the highest value at risk.
  9. Our BINHI forest restoration program continued to take root, as we were selected by the International Union for Conservation of Nature (IUCN) to be their only local partner in the Philippines. The IUCN’s secretariat, Botanic Gardens Conservation International (BGCI), the world’s largest plant conservation network, selected EDC to be part of the Global Tree Assessment program to help update the status of 800 Philippine endemic tree species. To date, EDC has assessed 200 species and IUCN has updated and published 89 species in their Red List.
  10. We have now shifted to integrated reporting following the framework developed by the International Integrated Reporting Council (IIRC). This is our way of leveling up by holding ourselves accountable in terms of our performance vs targets and is on top of the GRI Standards for sustainability reporting, which we have been doing for ten years. The shift to IIRC demands that we measure outcomes in order to assess the value that we contribute to the ecosystem and to society as we strive towards a regenerative future.


It was indeed a remarkable year for the company, one that afforded us a robust posture for the coming impact of COVID-19. It’s easy to forget 2019 despite the record performance, as it stands under the long shadow cast by 2020’s COVID-19.


Crisis that has made safety and survival the key thrusts of the company, the country, and the world.

We now live in quite dystopian times, characterized by the most unprecedented disruption in generations. We now live in what is frequently alluded to as “VUCA” times.

After the collapse of the Soviet Union in 1991, war colleges in the United States coined the term “VUCA” to describe a world where the “enemy of the future” would be dispersed and hard to identify. In the war games held in the top military schools in the United States, future leaders were taught to prepare for a Volatile, Uncertain, Complex, and Ambiguous (VUCA) world, one where the enemy can strike quickly, lethally, and at scale.

I am guessing that when VUCA was being described at that time, the main focus of attention were terrorist cells or anyone capable of inflicting damage militarily. I suspect no one really coined the term VUCA for a virus—propagated by a careless touch from an unwashed hands, a cough, or a sneeze—which is now the cause of a global crisis, an economic depression, and very significant unemployment.

If today’s world has indeed proved to be VUCA, there is also its antithesis, called VUCA Prime. It talks about the duty of management to craft a VISION, make sure there is UNDERSTANDING, with no less than absolute CLARITY in the organization in order for a company to execute in an AGILE manner.

I am glad that your company, despite living in a VUCA world, has continued to thrive using the VUCA Prime principles lived out by our employees and management team.

Allow me to discuss what I mean—

At the early days of the crisis, prior to any government-initiated lockdowns, we activated our Crisis Management Committee (CMC). We agreed, then laid down our priorities clearly and in this order:


  • Keep our people safe.
  • Keep our assets running and protect our fuel source.
  • Engage and help our communities.


Very crucially, having learned from many crises in the past, we agreed to “split our brains” with one part of EDC focused on the near-term crisis and another focused solely on long-term thinking. Those involved in the long-term thinking would be spared from the daily calls of the CMC that ran into the late nights and devoured weekends. For the long-term thinking part of EDC, we set aside our Strategy and Commercial team as well as our Transformation and Program Management Office (PMO).

The CMC, in the span of a week, morphed into a hub-and-spoke structure where a clear delineation of responsibilities was made: the CMC would lead at the organization level, and at each site our leaders were to form their own Incident Management Teams (IMTs) to deal exclusively with local issues. At the sites, the IMTs would have to manage 937 employees as we rapidly shifted to shelter in place protocols and interface with our communities composed of 52 primary barangays (and some parts of our secondary barangays) with around 25,000 households.

Against all uncertainties, and as the transition to remote work started, we laid down crystal clear prioritization for the company and communicated the following to everyone:“If your projects and tasks do not align with the new priorities of the day, throttle down now and do this fast.” “If you identify any gaps in what we are doing, speak up and make sure we all know and address it.” “Are we all clear?” and “Any help needed?” were questions asked each day, consistent with Agile principles and practice.

In less than three weeks, a total of 30 new Agile squads formed. The main difference between just getting tasks done and doing so with squads is that the squads form organically and dissolve when tasks are done. The squad members do not need to ask permission from their bosses to participate. The squads are also almost always multidisciplinary, which results in neural networks being built across many individuals in the organization. So, in the midst of an intense and life-threatening crisis, our squad-centered setup built relationships and trust.

Quite crucially, we in the ManCom discussed and agreed to consistently convey to our teams: “You know what our priorities are; so go and decide on your own and don’t worry—we have your backs.”

To cite one example, two weeks into the crisis, we asked our site Community Partners Teams to check on the assistance that had been provided to our communities. The amount mentioned was too modest to make a dent in the needs of our communities given the rapidly accelerating unemployment then. So, a simple agreement was reached: go and help in a much more meaningful way and realign our budgets to do so. A month later, the total assistance given was 40 times of the first 2 weeks. The team decided the amounts and mode of giving on their own, having worked with the local government units and community leaders.

In the midst of the strictest government lockdown protocol in early May, we pivoted yet again from a policy of no project work at sites, to maximizing the work while there was no local transmission occurring. We flicked the ‘on button’ for critical work to ramp up given the lockdown exemptions granted to the energy industry. Our teams were given just 3 days to identify the top projects that would reduce risk and boost revenues. Another squad formed to develop a COVID-19 Risk Assessment Framework to develop return-to-work protocols for all the projects.



As of this July 2020, 10 critical projects have been completed by a team of close to 600 workers on site, with no more than 20 persons per “bubble” (people in one area at any given time), to further reduce risk. Their work has so far mitigated risk to 177MW and boosted steam availability by 23GWh.From the many experts that have spoken in webinars, one of the common themes that has come up has been this:


It is the duty of leaders to make sure that there is a buffer for a rainy day. And it is also the duty of leaders to express gratitude to his or her team for a job well done. So many of our teams continue to outperform to keep EDC ahead of the curve by not only providing an uninterrupted supply of clean, renewable power to our customers but also by keeping our employees and their families safe.


And for this, I am grateful.

Thank you to our solid, talented, and united senior management team, to our PMO, CMC, IMTs, and Risk Management Team for leading the rest of our company to a healthy position.

To all our other teams, thank you so much for your relentless and selfless service:


  • For ensuring that we went into this crisis with a significant buffer, and for even growing it in the last months
  • For rapidly moving our teams to a safer on-site housing facility and for executing our many projects quickly and safely
  • For spreading the Agile Culture and for going out of your comfort zone by working with multidisciplinary teams to come up with the best minimum viable products
  • For partnering with our communities and with the local government. The assistance given—such as the office container vans that now serve as hospital extensions for our local communities, food for the indigenous people and the persons with disabilities, the RT-PCR testing centers in our sites, and all other forms of help in kind—these have gone a long way in helping us fulfill our duties to our communities and our country
  • For having so much heart and agility. Our employees know that ManCom and the Lopez group care. From the repurposing of our benefits, to the many talks on health, to the webinars on homeschooling, to vaccinations against flu and pneumonia, all these have gone a long way to ensure the wellness and well-being of all our employees, which is much needed now
  • For keeping all our employees informed and engaged. The social media posts, quick E-news, health bulletins, and Agile updates, which amount to over 218 messages sent through various channels, have ensured that we stand united in purpose and direction
  • For keeping our logistics humming and for partnering with so many to help our employees cope with the way of work today
  • For leading with such grace under pressure to ensure our employees’ health and safety
  • And finally, for being our very own frontliners—our employees, from those who are working on-site in shifts to ensure the continuous operations and maintenance of our plants, to those on work from home, who keep our company thriving.


These actions reflect the unwavering commitment of our employees to keep our power plants running in order to ensure the continuous supply of electricity to all our customers.

For being able to thrive in these VUCA times, we are truly blessed and grateful.

Our journey continues, looking at ways to further pivot to create higher value for all stakeholders and improve the way we work for the greater benefit of the environment and the communities we serve.

This is our chosen path, as we continue to respond to the needs of the country through the use of clean, renewable energy.

To our shareholders, our board members, our employees, our suppliers, contractors and other partners, and to our communities: thank you for another year of your trust and partnership. I enjoin everyone to continue supporting us as we push for a decarbonized and regenerative future.


Maraming salamat po.


Richard B. Tantoco



Our 2019 Integrated Report


Our Integrated Report tells the story of our efforts to achieve our business objectives, hand-in-hand with our sustainability aspirations.


3 weeks ago

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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

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.

Richard B. Tantoco
President and COO

Message from the EDC
President and COO

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