January 2017 DISCLAIMER This presentation contains certain forward - - PowerPoint PPT Presentation

Company Presentation January 2017

This presentation contains certain “forward looking statements.” These forward looking statements include words or phrases such as EDC or its management “believes”, “expects”, “anticipates”, “intends”, “plans”, “foresees”, or other words or phrases of similar import. Similarly, statements that describe EDC’s objectives, plans or goals also are forward-looking statements. All such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Such forward looking statements are made based on management’s current expectations or beliefs as well as assumptions made by, and information currently available to,

• management. EDC does not make expressed or implied representations or warranties as to the accuracy and completeness of the

information contained herein and shall not accept any responsibility or liability (including any third party liability) for any loss or damage, whether or not arising from any error or omission in compiling such information or as a result of any party’s reliance or use of such information. The information and opinions in this presentation are subject to change without notice. This presentation does not constitute a prospectus or other offering memorandum in whole or in part. Information contained in this presentation is a summary only and is prepared for discussion purposes and is not a complete record of the discussions. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any security. There shall be no sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification under securities laws of such state or jurisdiction. By receiving this presentation, each investor is deemed to represent that it is a sophisticated investor and possesses sufficient investment expertise to understand the risks involved. Prospective investors should undertake their own assessment with regard to their investment and they should obtain independent advice on any such investment’s suitability, inherent risks and merits and any tax, legal and accounting implications which it may have for them.

DISCLAIMER

Execution of clear action plans are underway. Full retrofitting works for Tongonan unit 1 has begun. By middle of next year, the rehab of all units will be completed. In the context of a challenging competitive environment, we have focused on investing to improve reliability, increase generation output, thereby lowering unit costs. Initiatives to manage financial risks enable EDC to comfortably

• perate within covenanted financial ratios.​

Breaking into the contestable markets is key to lowering sales into the WESM.

8 Business Model, 9 Contract Tenor, 10 Portfolio Expansion, 11 Risk Factors & Initiatives

Com

• mpany Intr

Introductio ion

14 Profile of Geothermal Plants, 15 Update on FY2015 Outages, 16 Tongonan Rehab, 17 Typhoon Proofing Initiatives

Equi Equipment Reli Reliabilit ity & Res Resil iliency

24 US$ Exposure, 25 Managing Financial Risks, 26 Financial Ratios, 27 Cash Dividends

US$ $ Debt ebt Mana anagement & FX FX Ex Expo posure

20 Weak Commodity Prices, 21 GCGI Contract Re-pricing , 22 Bacman Capacity

Pre Preserving the the Rev Revenue Base ase

30 Retail Competition Open Access (RCOA), 31 Contestable

Customers, 32 Timeline for Mandatory Contestability,

33 DOE’s 9 Strategic Directions

Bre reaking into nto New ew Mar arkets

13 23 19 29

Hig ighlights of

• f th

the Pre resentation

7

Key Takeaways

35

COMPANY INTRODUCTION

8 Company Introduction

EDC’S BUSINESS MODEL POSSESSES STABLE AND PREDICTABLE CASH FLOWS

Transco Electric Cooperatives/ Third party customers/ NGCP/ WESM

Subsidiaries

• f EDC

National Power Corporation

Power Supply Agreements (PSAs) Ancillary Services Provider Agreement (ASPA)

Power Purchase Agreements

Steam Sales Agreements (SSA)

Bac-Man Geothermal

Geothermal Resources Sales Contracts (GRSC)

Green Core Geothermal FG Hydro

Electricity Cashflow Electricity Cashflow

Electricity & Ancillary Svcs.

Cashflow Steam

Cashflow or Dividends

Steam

Cashflow or Dividends

Dividends

Burgos Wind

Electricity Cashflow Dividends

Power Supply Agreements

Power Purchase Agreements (PPAs)

Electricity Cashflow

Solar

Electricity Cashflow

Geothermal

% of Consolidated Revenues (1) USD Linkage

Electricity 37% 73%

Sovereign off-take

Electricity 57% 0%

Commercial off-take

Electricity 6% 60%

Feed-in-Tariff

(1) As of Sept. 30, 2016

Customers

Cashflow Energy Flow

9 Company Introduction

EDC’S EXPOSURE TO THE SPOT MARKET PRICES IS ONLY 12%

WESM, 2,930 NGCP, 701 DU, 3,360 NPC, 9,391 DU, 3,904 Transco, 1,535 DU, 3,564 SPOT 12% 1-2 YRS 15% 3-5 YRS 1% 6-10 YRS 48% 11-20 YRS 10% >21 YRS 14%

25,384

(1) Consolidated revenues as of September 30, 2016

TERM STRUCTURE OF CONTRACTS(1) In PHP Millions

SPOT 1-2 YRS 3-5 YRS 6-10 YRS 11-20 YRS >21 YRS WESM

12%

• NGCP
• 3%
• DU
• 12%

1% 11% 3% 14%

NPC

• 37%
• TRANSCO
• 7%
• 88%

revenue from long-term contracts

72%

revenue from contract tenors

• f >6 yrs

41%

expanded revenue base from contracted commercial clients

10 Company Introduction

HOWEVER, REPORTED EARNINGS HAVE BEEN VOLATILE

19,007 20,527 20,678 24,153 24,540 28,369 25,656 30,867 34,360 10,324 11,859 10,712 13,748 13,238 17,330 15,641 17,922 18,680 6,243 5,690 7,276 6,638 4,459 8,522 6,568 9,197 8,798

2007 2008 2009 2010 2011 2012 2013 2014 2015

RE REVENUES EB EBITDA RN RNIA

638 770 1,181 1,331 1,262 1,262 1,262 1,446 1,455

513 132 411 150 (69) 184 9

+ 49.4 MW N.Negros + 463.4 MW Mahanagdong, Malitbog & Optimization + 132.0 MW Pantabangan- Masiway + 106.0MW Mindanao I & II + 305.0 MW Palinpinon & Tongonan + 150 MW BacMan I & II

• 49.4 MW
• N. Negros
• 20.0 MW

Botong

• Acquired geothermal concessions
• verseas

+ 49.4 MW Nasulo

• 20.0 MW Nasuji

+ 150.0 MW Burgos + 5.0 MW Bacman Unit 1 + 5.0 MW Bacman Unit 2 + 4.16 MW Burgos Solar Cumulative MW Current MW

Customer Base

10.8 Bn DUs 9.4 Bn NPC 2.9 Bn WESM 1.5 Bn TransCo 0.7 Bn NGCP

Technology

1,169 MW Geothermal 150 MW Wind 132 MW Hydro 6.82 MW Solar

Geography

• Philippines  Chile
• Indonesia  Peru

EDC TODAY

(AS AS OF OF 3Q Q 2016) 6)

2007-2015 (CAGR)

MWcum 9.6% Revenues 6.8% EBITDA 6.8% RNIA 3.9%

11 Company Introduction

WE HAVE CLEAR ACTION PLANS TO REDUCE/ELIMINATE VOLATILITY

Power plants: “Midlife” stage br brings abou bout t reliability iss ssue ues Ge Geography: Project t si sites are si situ tuated along the “typhoon” belt Ma Market: t: Ma Margin sq sque ueeze due due to

• low
• w

com commodity ty pr prices Ge Geoth thermal Re Reso sour urce: Na Natu tural dec decline of

• f reser

servoir pr pressure Ge Geoth thermal Gr Grow

• wth

th CAPEX: : Si Significant amou mounts ts requ quired upfr upfron

• nt

FCRS: : Moun Mounta taino nous locat

• cation
• n

expos

• ses inf

nfrastructu ture to

• pote

potenti tial landslide risk sk Re Retro trofit agi ging g pl plants ts to

• enha

nhance ove

• verall

reliability ty Typ yphoon n pr proo

• of

f cr critical powe power pl plant t com components Re Re-negoti tiate exp xpiring ng cont contracts to

• pr

preserve revenu nue ba base Ad Advanced techn hnologies drive company’s replacement well dr drilling st strategy Ex Expand to

• FiT-suppor
• rted tech

chnolog

• gies

and nd acc ccess mul multi ti-late teral fina nancing to

• mi

miti tigate te exp xploration

• n risk

sk In Insti stitute te a proa

• active land

ndslide mi miti tigation st strategy

RISK FACTORS INITIATIVES

 Power plant lant reh rehab CAP CAPEX  Ty Typhoon proo roofin ing CA CAPEX/OPEX  Mit itig igate mar argin in sq squeeze  Main intenance CA CAPEX  Do Domestic ic gro growth  Ty Typhoon proo roofin ing CA CAPEX/OPEX

IMPACT

EQUIPMENT RELIABILITY & RESILIENCY

14 Equipment Reliability & Resiliency

OUR POWER PLANTS ARE AT MIDLIFE STAGE AND REQUIRE SUBSTANTIAL CAPEX FOR IMPROVED RELIABILITY

PLANT AGE, in years UNPLANNED OUTAGE FACTOR (UOF)

END OF DESIGN LIFE (HIGH) END OF DESIGN LIFE (LOW) END OF DESIGN LIFE (BASELINE)

Malitbog 1.16% Palinpinon I 2.21% Palinpinon II 1.18% Bacman I 1.16% Mahanagdong 1.74% Mindanao II 2.22% Nasulo 1.49% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 5 10 15 20 25 30 35 Upper Mahiao 17.19% Mindanao I 8.17% Tongonan I 14.66% Bacman II 12.77% Leyte Optimization 27.66% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

< < 5% 5% UOF ≥ 5% UOF

Leyte Southern Negros Bacman Mindanao

UNPLANNED OUTAGE FACTOR (UOF)

*As of December 31, 2015

15 Equipment Reliability & Resiliency

EDC REMAINS COMMITTED TO BRING UNPLANNED OUTAGE FACTOR (UOF) TO BELOW 5% BY ADDRESSING FLEET WIDE LIFE CYCLE RELIABILITY ISSUES

RELIABILITY IMPROVEMENT STRATEGIES:

• 1. New Steam Path/Reset Life Cycle
• 2. Uprated Steam Path/Reset Life Cycle
• 3. Upgrade Metallurgy to High Chrome

27.66% 17.19% 14.66% 12.77% 8.17%

Leyte Optimization Upper Mahiao Tongonan Bacman II Mindanao 1

38.10% 23.50% 5.30% 1.40% 0.10%

Unpla lanned Outa tage Fac Factor (UOF)

FY FY 2015 015 YT YTD 2016 016  Unit 1 – retrofitting works already commenced  Unit 2 – scheduled for mid Jan 2017  Unit 3 – scheduled for mid Mar 2017

112.5MW TONGONAN 125MW UPPER MAHIAO

 Unit 3 – completed the installation of new rotor and diaphragm; unit completed its 72 hr. reliability run Sept 20, 2016.  Unit 1 – 2nd new rotor is available ex-works US Nov 2016; installation scheduled by Mar 2017.  Unit 4 – 3rd new rotor budgeted for 2017. To be ordered Dec 2016

20MW BACMAN UNIT 3

 Unit 3 (Cawayan) is operating normally following the warranty inspection completed last Feb 2016.

52MW MINDANAO I

 New OEM new stator has already arrived in Davao  Installation scheduled on 1Q 2017 together with steam turbine major outage. Exisiting unit continues to operate reliably.

50MW LEYTE OPTIMIZATION

 Mahanagdong A Topping Cycle – new turbine rotor discs budgeted for 2017  Tongonan Topping Cycle – new turbine rotor discs budgeted for 2017  Malitbog Bottoming Cycle – new rotor budgeted for 2017. To be ordered Dec 2016.

16 Equipment Reliability & Resiliency

Timeline Costs TONGONAN REHAB PHASE II: Php4.2Bn

ATTAINING GENERATION TARGETS REQUIRE SUCCESSFUL IMPLEMENTATION OF BOTH EQUIPMENT RELIABILITY UPRATING AND TYPHOON RESILIENCY INITIATIVES RETROFIT UPRATE RELIABILITY

Mitsubishi for Turbine Retrofit Transformer, Busbar, Cooling Tower Mitsubishi for Generator Rehabilitation Control System Integration – Tongonan Balance-of-Plant Reliability Enhancements October ‘16 (60 days) TGPP U1 January ‘17 (55 days) TGPP U2 March ‘17 (55 days) TGPP U3 Retrofit/Control System Integration (CSI) Project

FORECASTED ACTUALS ON TRACK WITH BUDGET

• Turbine retrofit (x1)
• Gen. rehab (x1)
• CSI project (x1)

2016

Php2,893Mn

• Turbine retrofit (x2)
• Gen. rehab (x2)
• CSI project (x2)

2017

Php1,258Mn

• LRVP UPGRADE (x3)

2018

Php102Mn

17 Equipment Reliability & Resiliency

EDC HAS COMPLETED “TYPHOON PROOFING” ON 65 OF 68 COOLING TOWER CELLS IN TYPHOON PRONE SITES IN BACMAN AND LEYTE FACILITIES. BEFORE (200 kph) MODIFIED (233 kph) AFTER (300 kph)

100 100% OF F UNIT ITS W/ HIS ISTORY OFT FTYPHOON DA DAMAGE

REIN INFORCEMENT

OF COOLIN LING TO TOWERS

INTERMEDIATE SHORING ON ROLLUP DOORS ADDITIONAL PURLINS

2 2 CO COMPLETED; ; 7 7 OUT OF F 9 9 ONGOING

REIN INFORCEMENT

OF POWERHOUSES

BUNKER-TYPE DESIGN CONTROL ROOM POWER PLANT CONTROL CENTER

5 CO COMPLETED; ; 2 OUT OF F 8 8 ONGOING

TY TYPHOON PROOFING

OF CONT NTROL RO ROOMS

PRESERVING THE REVENUE BASE

20 Preserving the Revenue Base 2,121 1,975 2,133 2,203 2,318 1,987 2,112

4,347 5,228 5,318 6,133 4,581 4,551 5,070

4,000 4,500 5,000 5,500 6,000 6,500 7,000 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300 2,400 2,500 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016

Volume in gWh Expenses in Mn

WEAK COMMODITY PRICES EXPOSE OUR UNCONTRACTED CAPACITY TO LOWER MARGINS WHICH PROMPTS EDC TO SELECTIVELY POSTPONE GROWTH UNTIL TARGET RETURNS ARE ACHIEVED

74% 77% 86% 88% 85% 26% 23% 14% 12% 15%

200 400 600 800 1000 1200 1400 1600 2020 2019 2018 2017 2016 Contracted WESM

CONTRACTED VS. WESM/EXPIRING CONTRACT[1]

(1) Expressed as percentage of capacity as of October 31, 2016 and exclusive of contracts pending approval

GENERATION VS. OPEX

128.08 71.34 98.97 121.55 96.53 84.38 70.88 59.38 93.56 63.28 78.04 106.19 109.08 105.30 96.24 50.91 49.27 52.15 52.42 50.73 51.27 53.40 61.71 67.38 72.06 90.82 26.81 33.58 38.97 39.03 44.27 46.26 42.46 43.70 43.33 48.98* 10 20 30 40 50 60 70 80 90 100 30 50 70 90 110 130 150

2008 2009 2010 2011 2012 2013 2014 2015 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sept-16 Oct-16

Coal, $/MT Oil, S/bbl

HISTORICAL COAL AND OIL PRICES

* Projected

21 Preserving the Revenue Base

GCGI’S CONTRACT REPRICING IS IMPERATIVE GIVEN ADVERSE MARKET CONDITIONS

1 As of November 30, 2014 2 As of January 31, 2015

CONTRACT REPRICING SUCCESSFULLY PRESERVED GCGI REVENUES OVER THE NEXT 5 TO 10 YEARS, INSPITE OF PHP800M IN FOREGONE REVENUES AT THE ONSET

3.6x increase

weighted ave. contract life

4.27 yrs

vs.

15.36 yrs

104 88 61 42.5 21 67 31 105.5 50 100 150 200 250 300 0-2 yrs 3-5 yrs 6-10 yrs 11-20 yrs 21+ yrs Before After 256 267 50 100 150 200 250 300 TOTAL CONTRACTED

MW MW

GCGI CONTRACT REPRICING

22 Preserving the Revenue Base

70MW OF BGI’S UNCONTRACTED CAPACITY HAVE BEEN SIGNED-UP AND ONLY AWAITING ERC APPROVAL

38.2 38.2 94.8 3.3 3.3 21.5 21.5 70.0 70.0

40 80 120 160

August 2016 November 2016

Bacman Business Unit

Contracted Uncontracted Contestable Customers For ERC Approval

133 MW

Net Capacity MW

US$ DEBT MANAGEMENT & FX EXPOSURE

24 US$ Debt Management & FX Exposure

VARIOUS INITIATIVES HAVE BEEN UNDERTAKEN TO INSULATE EDC FROM SWINGS IN NET INCOME

DS1 12

• 100

200 300 400 500 Cover Debt

LOANS % BY CURRENCY

Eliminated JPY exposure starting 2011

USD EXPOSURE*

Significant portion of USD obligation remain exposed to currency fluctuations Cash flow exposure is evident in year 2021

CASH FLOW EXPOSURE*

105 105 105 105 105 105 75 97 82 60 83 357

• 100

200 300 400 2016 2017 2018 2019 2020 2021 USD Capex, Opex, Debt Service USD Linked Revenues 12 66 56 63 62 60 62 61 11 21 44 37 38 40 38 39 77 13 0% 20% 40% 60% 80% 100% 2009 2010 2011 2012 2013 2014 2015 2016* PESO USD JPY Dollar Bonds 300 CCS3 63 $ Linked Revenues 105 Uncovered Portion 178

1 Remaining Debt Service payments for the year

* 2016 Year-End Projected figures as of September 30, 2016 2 Remaining Opex and Capex unspent for the year 3 Cross Currency Swaps

4 Call Spread

175 Mn Club loan 88 80 Mn Club loan 73 OPEX2 3 USD Cash 85 Capex Dep’n2 1 CS4 46

25 US$ Debt Management & FX Exposure

DELIBERATELY MANAGING FINANCIAL RISKS …

69% 69% 71% 71% 67% 68% 68% 69% 69% 70% 70% 71% 71% 72% 72%

20 40 60 80 100 120 2014 2015 2016 2017E Hedged Unhedged US$ Mn

52% 66% 67% 63% 20% 30% 40% 50% 60% 70% 80%

20 40 60 80 2014 2015 2016 2017E Amortizing Bullet

5.9% 6.3% 6.1% 6.1% 4% 5% 5% 6% 6% 7% 7%

50 55 60 65 70 75 2014 2015 2016 2017E Total Debt

DEBT SERVICE REQUIREMENT INTEREST RATE LOANS BY REPAYMENT SCHEDULE

71% hedged Interest rate (wtd ave.) reduced to 6.1% Amortizing loans smoothen lumpy principal payments PhP Bn PhP Bn E = estimated % assuming no new financing

26 US$ Debt Management & FX Exposure

... BRINGS ABOUT A ROBUST BALANCE SHEET

3Q 2016 3Q 2015 Dec-15 Dec-14 Dec-13 Dec-12 5.3 6.0 7.4 5.4 2.1 3.2 3Q 2016 3Q 2015 Dec-15 Dec-14 Dec-13 Dec-12 2.8 3.0 3.1 3.1 3.3 3.2 3Q 2016 3Q 2015 Dec-15 Dec-14 Dec-13 Dec-12 1.3 1.7 1.7 1.4 3.9 2.5

CURRENT RATIO NET DEBT TO EBITDA(2) DEBT SERVICE COVERAGE RATIO(1)

Notes: Ratios are computed based on Parent Company financial statements (1) Debt Service Coverage Ratio = Net Cash flow from Operating Activities / (Short Term Debt + Long Term Debt + Projected Interest Service for the next 12 months) (2) EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization

3.6 times 1.0 times

High liquidity to meet short-term obligations Well within our targeted 3.6 times Strong ability to produce cash to cover debt payments

1.2 times

COMFORTABLY OPERATING WITHIN COVENANTED FINANCIAL RATIOS

94.30 136. 36.04 04

Dec-12 Dec-15

Tota

• tal As

Asset sets

PhP Bn 58.87 87 88.81 81 35.43 43 47.23 23

Dec-12 Dec-15

Tota

• tal Liabiliti

ties and nd Eq Equi uiti ties

PhP Bn

Total Equities Total Liabilities

27 US$ Debt Management & FX Exposure

DIVIDEND POLICY IS TO DECLARE 30% OF PRIOR YEAR’S RNI

1,485 1,875 1,863 2,250 3,000 1,875 1,500 1,875 1,875 2,624 2,175 750 1,500 1,875 2,062 2,248 6,243 5,690 7,276 6,638 4,459 8,522 6,568 9,197 8,798 30% 65% 33% 31% 45% 58% 36% 58% 42% 55%

20% 30% 40% 50% 60% 70% 80% 90% 100% 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cash Divi vidends on

• n Com
• mmon Sha

Shares

Special Regular RNIA Payout Ratio

PHP/share 0.099 0.270 0.125 0.120 0.160 0.140 0.160 0.200 0.210 0.260 Yield 1.7% 4.4% 3.3% 2.4% 2.7% 2.4% 2.4% 3.6% 3.5% 4.5%

Payout Ratio PhP Mn

At or about 30% of previous year’s Recurring Net Income subject to i) Debt service requirements and loan covenants, and ii) Implementation of business plans, operating expenses, budgets, funding for new investments and acquisitions, appropriate reserves and working capital.

DIVIDEND POLICY STATEMENT

BREAKING INTO NEW MARKETS

30 Breaking into New Markets

EDC IS NOW ACTIVE IN SEVEN (7) MARKETS FOLLOWING THE ENACTMENT OF EPIRA (2001) AND RE- LAW (2009)

ST STRATEGIC FOC OCUS PRE EP EPIRA POST EP EPIRA POST RE RE-LAW

CUSTOMERS Na Nati tional Power Co Corp rporation (NPC NPC)

  

Distri ribution Ut Utilities/Electr tric Co Coop

• peratives (DUs/ECs)

  

Wh Whol

• lesale Elec

ectri ricity Spot pot Ma Market (WESM)

  

NG NGCP

  

Tr Transco

  

Distri ributed Gene Generation

  

Co Contestable Cus Custo tomers

  

BUSINESS MO MODEL Pow

• wer Purc

urchase Agr greements/ Power Supp upply Agre reements (PPAs/PSAs)

  

Spot

• t Ma

Mark rket t (WESM)

  

Anc ncillary Serv ervices Pro rovider Agre reement t (AS ASPA PA)

  

Fee eed-in in-Tarrif (FiT FiT)

  

DOE Dep epartment Orde der No No.: .: DC20 C2016-04 04-0004 0004 Providing timeliness for compliance with the full implementation of retail competition and open access in the Philippine Electric Power Industry

April 21, 2016

ER ERC Re Resolution No No. . 10, 0, Se Series of 2016 016 A Resolution adopting the revised rules for contestability

May 26, 2016

ER ERC Re Resolution No No. . 11, 1, Se Series of 2016 016 A Resolution imposing restrictions on the operations of distributed utilities and retail electricity suppliers in the competitive retail electricity market

May 26, 2016

Regulations governing retail competition and

• pen access (RCOA)

31 Breaking into New Markets

WHERE THE CONTESTABLE CUSTOMERS ARE …

Based on May 2016 List published in www.buyyourelectricity.com.ph

Contracted with RES vs. Still being Served By DU

Definition of Terms…

• "Contestable Customers" defined as an electricity end-

user that has a choice of a supplier of electricity, as may be determined by the ERC. They are presently the following:

• Jun. 26, 2016 – Voluntary compliance for those below

1 MW to greater than 750 KW

• Dec. 26, 2016 -- Mandatory compliance for those w/

1MW and greater

• Jun. 26, 2017 – Mandatory compliance for those

below 1 MW to greater than 750 KW

• “Retail Competition” means that eligible electricity

customers (or retail customers) may themselves contract for the supply of electricity with authorized suppliers, rather than through the franchised distribution utility.

• “Open Access”, on the other hand, means that retail

electricity customers and suppliers of electricity may also contract with the transmission company and the distribution company for the “wheeling” or delivery of energy/electricity through the transmission

• r

distribution wires.

OPEN ACCESS IS THUS THE MEANS BY WHICH RETAIL COMPETITION IS ACHIEVED.

Contracted with RES Remains with DU

~2,734 MW 708 Customers ~1,528 MW 386 Customers Total Qualified Co Contestable Cu Customers 1,4 ,447 1 MW 1,094 With Retail Supply Contract 386 Who have not switched (Luzon) 575 Who have not switched (Visayas) 133 750 kW 353 Luzon 318 Visayas 35

32 Breaking into New Markets

WHILE THE DOE AND ERC HAVE ISSUED CIRCULARS AND RESOLUTIONS FOR MANDATORY OPEN ACCESS BY 26 DEC 2016, THE TIMELINE FOR MANDATORY CONTESTABILITY HAS YET TO BE FINALIZED DUE TO CASES FILED IN THE RTC AND THE SC

ERC IS EXPECTED TO DEFER MANDATORY CONTESTABILITY TO JUNE 2017 May 27, 2016

MERALCO Filed for Declaratory Relief and TRO with Pasig RTC

June 13, 2016

• Pasig RTC Granted The

TRO on the following Rules:

• Prohibiting DU from

Engaging in the Supply Business

• Market Cap
• Mandatory

Contestability

• 2 Year Contract Term

June 30, 2016

RTC Decision for Preliminary Injunction

July 11, 2016

ERC filed a petition for Certiorari & Prohibition against the case filed by MERALCO in the RTC

October 10, 2016

SC issues resolution restraining the RTC from continuing proceedings and cancelling the TRO

33 Breaking into New Markets

THE DOE HAS IDENTIFIED 9 STRATEGIC DIRECTIONS FOR THE 2016 TO 2030 PHILIPPINE ENERGY

• PLAN. HOWEVER, CIRCULARS AND RESOLUTIONS FOR IMPLEMENTING RULES STILL HAVE TO BE

ISSUED FOR MORE CONCRETE DEVELOPMENTS.

Ensure Energy Security Expand Energy Access

1 2

Promote a Low Carbon Future

3

Encourage Investment 4 Local Energy Plans

5

Sectoral Roadmaps & Action Plans

6

Passage of Legislative Agenda

7

Consumer Welfare and Protection

8

Stronger International Relations & Partnerships

9

9

STRATEGIC DIRECTIONS

KEY TAKEAWAYS

36 Key Takeaways

KEY TAKEAWAYS

OVERSEAS DRILLING TURBINE RETROFIT REINFORCED COOLING TOWER



EDC proactively invests in both typhoon resiliency and equipment reliability uprating initiatives to deter operational upsets, in the process lowering unit costs.



EDC will defer some CAPEX-intensive growth projects and focus investments on its existing asset base to boost output and improve reliability and cash generation.



EDC commits to forward contract its WESM exposure and to implement cost management initiatives given that a low margin environment is expected to persists.

 EDC deliberately manages financial risks by entering into project

financing for new investments, hedging of US Dollar debt, and refinancing bullet maturities to amortizing type loan

 EDC remains comfortably within debt covenant ratios despite the

increase in leverage



EDC will compete in the new market segments [FiT based, Retail Competition and Open Access (RCOA) and Ancillary Services] created with EPIRA and RE Law’s passage

Equi Equipment Reli Reliabilit ity & Res Resil iliency US US$ $ Debt ebt Mana anagement & FX FX Expo Exposure Pre Preserving the the Rev Revenue Base ase Bre Breaking into nto New ew Mar arkets

EDC REMAINS COMMITTED TO GROW ITS GEOTHERMAL BUSINESS OVERSEAS AND PAY CASH DIVIDENDS TO ITS SHAREHOLDERS

END OF PRESENTATION

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