2020 Integrated Report

Financial Capital

Sound Financial Management Amid Business Disruption

EDC is a global diversified renewable power company. As the world’s largest vertically integrated geothermal producer and the country’s premier renewable energy company, we maintain our leadership in the Philippine renewable energy industry with our portfolio of geothermal, hydropower, solar, and wind power assets.
Our growth agenda is anchored on a) the acquisition of key government geothermal privatization projects; b) development of existing geothermal capacity; c) diversification of our renewable energy portfolio; and d) the establishment of viable operations in Asia, Latin America, and Africa.

Prudent financial management is key to EDC’s operations. Our strong financial position is maintained through healthy cash flows from long-term contract agreements. This allows us to finance the expansion of our portfolio, improve the profitability of energy projects in the pipeline, and provide regular returns to shareholders. We continuously evaluate and improve our treasury, financial, accounting and budgeting systems to tighten fiscal control, and promote corporate governance, and better risk management.

EDC implements an extensive capital expenditure program to maintain optimum availability and reliability of all our power generating assets. This includes upgrading activities, as well as investments in climate-proofing and resiliency.

We comply with corporate governance rules and regulations and submit regular reports as required by the Securities and Exchange Commission and to our shareholders.

To uphold our commitment to responsible business, EDC assesses its risks through its Enterprise Risk Management Program. This is also aligned with ISO 31000 on risk management. EDC conducts an annual review of operational risks as part of its planning and budgeting process. Should the risks be assessed as high, EDC will formulate corresponding risk treatment plans in response and escalate it to the appropriate Management or Board Committee. This will be continuously monitored to ensure that it is properly addressed.

EDC has a nationwide presence, with facilities located in Luzon, Visayas, and Mindanao that have a combined current installed capacity of 1,476.6 MW. Our headquarters are located in Manila, but we hire from the areas where we operate. Where possible, we prioritize qualified applicants from our host provinces for employment. EDC complies with current wage orders and minimum wage standards, and benchmarks its offers against the industry average.

Apart from employment, EDC also contributes to the local economies where we operate by engaging with locally-based suppliers. We also work closely with our community organizations and cooperatives and implement programs to build their capacity for economic participation.

We have a diverse customer base that includes commercial and institutional clients, as well as directly connected customers. We provide power to electric cooperatives and distribution utilities, who in turn supply to commercial, residential, and industrial customers. EDC also provides electricity to businesses through its subsidiaries that are licensed retail electricity suppliers.

EDC builds strong and healthy relationships with its customers. We seek to provide them with flexible contract terms, value-added services, and guidance, as they make the transition to renewable energy. We assess and evaluate our performance in delivering energy to our customers and use this to further strengthen and improve our services to them. This helps promote customer satisfaction and retention.

Providing clean and reliable energy to our customers boosts their productivity and enables them to engage in economic activities. Aside from this benefit, EDC also implements programs to engage and empower our community stakeholders to become agents of their own development.

We elevate our communities and the environment through initiatives and direct investments in education, enterprise development, biodiversity conservation, watershed management, and environmental management. We also provide royalty payments for host communities where our power projects are located. As our services are dependent on the health and stability of the environment, we also invest in ecosystem services for the management of the watersheds in our project sites.

EDC conducts bi-annual social acceptability surveys to evaluate our performance. We also monitor key Corporate Social Responsibility (CSR) performance indicators. This allows us to assess the effectiveness of our initiatives and helps us refine our activities to contribute to lasting inclusive growth and self-reliance for our partner communities.

EDC works with a network of suppliers and contractors who enable us to run our operations and conduct our activities. The quality of the vendors we engage has implications on our success.

EDC’s approach to Supply Chain Management involves strategic sourcing and optimized inventory levels to ensure reliable and uninterrupted supply of goods and services necessary for our operations. Vendor accreditation, spend analysis and market studies, and warehousing and logistics are all components of EDC’s supply chain management.

With respect to vendor selection, our decisions are based on price, technical capability, safety practices, and industry expertise. EDC has accreditation requirements with which potential vendors must comply. They must also demonstrate their financial capacity to provide the goods and services needed and their long-term business sustainability. In line with our priority of creating Shared Economic Value, EDC promotes economic inclusion by practicing local purchasing to qualified locally based suppliers and contractors.

We maintain open and regular lines of communication with our vendors’ assemblies at each of our business units,, including at our Head Office. We manage and evaluate our performance in this area through regular monitoring and benchmarking, as well as through the practice of internal and external audits.

New customers underscore the need for renewable energy options for businesses

 

For more than 40 years, the Energy Development Corporation (EDC) has been powering infinite possibilities for businesses through renewable energy. Through our industry leadership, we are proving that not only is clean energy good for business, but that affordable clean energy is also within reach for businesses.

Retail Competition and Open Access (RCOA), which was mandated by the Electric Power Industry Reform Act (EPIRA) of 2001 (EPIRA), empowers businesses and other commercial and industrial customers to make their own choices when it comes to their electricity suppliers. This means that businesses and organizations that have at least 500kW of average monthly electricity consumption now have the freedom to choose which licensed retail electricity  supplier (RES) to transact with, depending on their budget and electricity supply requirements.

Through the years, EDC has proven to be a trusted partner in this shift through its customized value-added services, flexible contract terms, and comprehensive guidance in the transition to renewable energy. As such, more and more organizations are unlocking the possibilities when they use clean energy. To date, 85 customers are already reaping the benefits of a partnership with EDC. In 2020 alone, EDC had 162 new customers who made the shift to renewable energy.

 

Powering sustainability ambitions 

One of our newest customers is Bounty Fresh Foods, Inc., one of the leading poultry integrators in the country. Through BacMan Geothermal, Inc. (BGI), EDC provides 6.5 megawatts (MW) of power to four facilities of Bounty Fresh. In the pursuit of its long-term sustainability goals, Bounty Fresh sought the expertise of EDC to forward its transition to renewable energy.

“We believe that our country is rich in its own natural resources, which should be used for the benefit of our fellow Filipinos,” says Carl Benedick C. Chung, Senior Vice President of the Breeder Group at Bounty Fresh. “Switching to renewable energy not only helps create a greener future, but it also realizes the ambition of a developed and a self-sustainable Philippines.”

Similarly, Hocheng Philippines Corporation (HPC), which manufactures bathroom fixtures under the HCG brand, also sought the expertise of EDC to support its low-carbon ambitions. The HCG brand is one of the leading bathroom solutions providers in the Philippines. Through BGI as well, EDC provides 1.00MW of power to HPC’s 10-hectare manufacturing plant located in First Cavite Industrial Estate (FCIE).

“As a company, our ultimate goal is to pursue excellence in LEED-compliant products, build better designs to reduce the overall impact on the environment, and support government projects geared towards sustainable development,” says Alex Dennis Abenes, Senior Manager at the Supply Chain Division of HPC. “We believe that EDC, through BGI, can help us meet these goals by providing efficient electricity through its low-carbon energy resources.”

On top of forging new partnerships, EDC also continues to strengthen its guidance and service delivery to existing customers such as Arthaland; Coca-Cola Beverages Philippines, Inc.; Knowles Electronics (Philippines) Corporation; and Silliman University, just to name a few.

Finance gets an upgrade with the use of robotic automation

 

In the context of our new business reality, we want our workforce to increase their productivity despite the challenges of longer-term work-from-home arrangements. Specific to our Finance group, we want them to be more proactive in their roles and engage in more challenging projects, instead of heavily focusing on routine and predictable accounting work. Through Robotic Process Automation (RPA), we were able to reduce the manual work that our Finance-Comptrollership team handles. In 2020, 20 bots were developed and rolled-out, saving a total of 66 man-hours per month.  We are still expecting an additional 102 man-hours per month to be saved by May 2021 as we complete the development of six more bots.

RPA is a business process automation technology that makes use of software robots to execute manual and repetitive business tasks. By doing less monotonous tasks with the help of RPA, our Finance team can focus on activities that have greater business value. RPA also allows us to increase capacity in driving business impact as we enhance our core finance functions and produce more accurate and less-error-prone financial reports.

This digital transformation of our Finance functions is only a subset of EDC’s overall digitization journey and their processes are the first to be automated through RPA.  The intent is to also use this tool to simplify other EDC work processes where RPA is applicable. To be deemed RPA-ready, processes must be rule-based, structured, standardized, and have low to no system changes.

Our 2020 Integrated Report

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