REKINDLING AND RENEWING About the Cover REKINDLING AND RENEWING A country’s faith in its future Energy Development Corporation (EDC) is a global leader in geothermal energy and Philippine pioneer in renewable power production. Now 39 years onward, the company sets sights on further growing its platforms, so that we harness clean, renewable energy while making a positive change for our country’s growth. EDC seeks to rekindle and renew our country’s faith in its future by boosting national development through low-carbon and environmentally sustainable means. The illustrations represent the company’s portfolio of purely renewable assets, which is founded on our geothermal asset base but now venturing into wind and solar power. The rising islands symbolize our company’s ideals and ambitions as EDC pursues its bold aspiration to be a global leader in renewable energy. They are rendered in paper-textured 3D to convey our positive outlook as sustainable development rekindles a better future for all. Editorial Team EDITORIAL ADVISERS CIRCULATION Ramon A. Carandang Lourdes V. Zaide Agnes C. de Jesus Ma. Antonia D. Nieva COVER DESIGN BBDO Guerrero EDITOR-IN-CHIEF Frances L. Ariola COPY, LAYOUT AND INFOGRAPHICS DRINK CONTRIBUTORS Atty. Maria Jasmine D. Medina-Almojino PHOTOGRAPHY Atty. Princessita M. Yulde Martin Jhudiel D. San Diego (Portraiture) Garrick Gregory A. Mina Toto Labrador (Portraiture) Jimson S. Solatre Ivy A. Henson (Ground) Paulo M. Gooco Jeffrey Bajo (Ground and Aerial) Louie Adrianne R. Cediño John Carlo P. Despi (Ground) Cherrylane E. Santiago Creation Station (Aerial) 2 EDC 2015 Performance Report EDC 2015 Performance Contents 4 EDC at a Glance 10 About the Report: Six Years Onward 12 EDC 2015 Highlights 14 Vision, Mission and Values 15 Awards and Recognition 16 Message from the Chairman and Chief Executive Officer 20 Report of the President and Chief Operating Officer 26 Report of the Chief Financial Officer 30 Investors’ Nook 32 Operational Excellence that Drives Long-term Business Growth Feature: EDC’s Burgos Projects: The Country’s First Combined Wind and Solar Farm Feature: Future-proofing: Building a Truly Sustainable Business 40 Growing with Our Communities: Our Corporate Social Responsibility Feature: Rebuilding for Resiliency: EDC Typhoon-proofs More Schools Feature: Skilled Nation-builders: EDC’s KEITECH Reaches More Partner Communities Feature: Brighter Futures for the First CAREERS Graduates 50 Sustainable Development for a Low Carbon World Feature: EDC’s BINHI Grows New Legacies Feature: EDC Protects the Rich Biodiversity in its Geothermal Project Sites 68 Talent Management: Powered by Good People Feature: Involving and Evolving: EDC’s PowerUp 2015 Feature: Harmony with Our Unions: EDC Signs Joint Collective Bargaining Agreement Feature: EDC’s No Impact Week 2015: Taking on the Challenges of Sustainable Living 80 Our Safety Culture 86 Corporate Governance 112 Board of Directors 118 Key Executives 124 Memberships 125 Sustainability at Work: Our GRI Team 126 Assurance Statement of the External Review Committee 128 External Review Committee 130 Global Reporting Initiative G4 Content Index 137 Audited Consolidated Financial Statements 138 2015 Audit and Governance Committee Report 140 Management’s Responsibility for Financial Statements 3 REKINDLING AND RENEWING EDC AT A GLANCE Filipino company Energy Development Corporation (PSE: EDC) is a global and diversified renewable power company. We are the largest producer of geothermal energy with 1,169 megawatts (MW) of installed capacity. With 39 years of pioneering Fgeothermal industry experience, our company is the recognized world leader in wet steamfield technology. We have strategic geothermal business units in Bicol, Leyte, Negros Island, and Mt. Apo, with corporate headquarters in Ortigas Business Center, Pasig. We have built on our geothermal expertise to forge a robust portfolio of clean, indigenous, renewable energy sources that include hydro, wind, and solar power, composed of the 132-MW Pantabangan-Masiway Hydro Electric Power Project, 150- MW Burgos Wind Project, and 7-MW Burgos Solar I and II Project. All these allow us to supply vital power to the country’s largest grid and growth market. They provide an environmentally friendly source to power the Philippines’ growth prospects as the country emerges as a renewable energy leader in the dynamic Asian region. Locally, our geographically and technologically diversified base is well-positioned to provide value for stakeholders across the archipelago. Our focus on innovation, sustainability, and empowerment enables us to bring value to our stakeholders while protecting our license to operate in local communities, and in national and international jurisdictions. This platform and track record enable us to expand within and beyond the region. We have strategic investments in Southeast Asia and Latin America, to further empower economies and societies through partnerships that advance the sustainable development of our host and home countries. 4 EDC, the world’s largest vertically integrated geothermal company, has now 150.0 MW Burgos Wind expanded into a global, diversified 4.16 MW Burgos Solar I 2.66 MW Burgos Solar II* renewable power * Commissioned in January 2016 company. 120.0 MW Pantabangan 12.0 MW Masiway 120.0 MW BacMan I 20.0 MW BacMan II 112.5 MW Tongonan 125.0 MW Upper Mahiao 232.5 MW Malitbog LEGEND: 180.0 MW Mahanagdong 50.9 MW Optimization Wind Solar Hydro Geothermal (EDC Subsidiary) Geothermal (Integrated) 112.5 MW Palinpinon I 60.0 MW Palinpinon II** ** 20-MW Nasuji Power Plant placed on preservation 49.4 MW Nasulo Total Installed Capacity 52.0 MW Mindanao I 1,458 MW 54.0 MW Mindanao II EDC 2015 Performance EDC 2015 Performance GroWtH WItH oUr EDC PROSPEct AREAS CUStoMErS Ampiro, Misamis Occidental Mandalagan, Negros Occidental R Mt. Zion, North Cotabato 2 eport Institutional Lakewood, Zamboanga del Sur Geothermal Balingasag, Misamis Oriental Pagudpud, Ilocos Norte Matnog & Magdalena, Sorsogon 22 Batad & San Dionisio, Iloilo Electric Cooperatives* Manapla & Cadiz City, Negros Occidental Wind Pasuquin, Ilocos Norte Murcia, Negros Occidental President Roxas, North Cotabato Matalam, North Cotabato 3 Solar Bogo, Cebu Distribution Utilities Strategic Focus Before 2007 Today 8 • 1,169 MW Geothermal** Industrial 1,149 MW • 132 MW Hydro Technology Geothermal* • 150 MW Wind • 7 MW Solar • NPC • Electric Cooperatives Customers NPC • Distribution Utilities • Large Industrial Clients • NGCP 1 • Power Purchase Agreements Commercial Power Business • Wholesale Electricity Spot Market Purchase * Supplies to commercial, residential, Model • Ancilliary Services Provider Agreements and industrial customers • Feed-in tariff • Philippines • Indonesia Domicile Philippines • Peru • Chile * Steamfield only 36 TOTAL ** Steamfield and power plant NPC – National Power Corporation; NGCP – National Grid Corporation of the Philippines NEW CoNtractS, NEW CUStoMErS For 2015 In 2015, new power supply agreements (PSA) with an aggregate contracted capacity of 30 MW were signed with Antique Electric Cooperative (ANTECO), Mactan Enerzone Corporation (MEZ), Camarines Sur IV Electric Cooperative (CASURECO IV), and Bohol Light Company, Inc. (BLCI). Our company also increased the contracted capacities of two existing customers, Iloilo II Electric Cooperative (ILECO II) and Iloilo III Electric Cooperative (ILECO III), adding 4.5 MW to our contracted volume. With these new and amended agreements, their combined additional 34.5 MW are estimated to contribute additional revenues of PHP555 million in 2015. PHP181 million in additional revenue was also realized from the interim replacement power contract with San Miguel Energy Corporation (SMEC), for the period from September to November 2015, to cover its 23-MW contract obligation to its customer, Isabela II Electric Cooperative (ISELCO II). G4-10, G4-EU3, G4-EU10 6 The EDC value chain is a continuum of investments that rekindles and renews the future of national development. We generate environmentally sustainable power through our diversified and purely renewable energy portfolio, which now spans geothermal, hydro, wind, and solar power, while uplifting the lives of our customers and partner communities. At every stage — from exploration to resource management to power generation — our company is empowered by the longstanding commitment to live harmoniously with the environment and make positive contributions for our country. REKINDLING AND RENEWING ABOUT THE REPORT Six Years Onward oUr StAkEHoLDErS’ MAtErIAL indicatorS* (Based on impact and influence) EDC is now on its sixth year of Impact Influence sustainability reporting under GRI G4 KPIs Description Score Score the Global Reporting Initiative EN13 Habitats protected or restored 3.14 2.54 E(GRI) framework in keeping with its sustainability agenda. With Percentage of total workforce represented in formal joint management-worker health and safety committees that nearly four decades in practicing LA5 help monitor and advise on occupational health and 3.09 2.44 safety programs responsible energy production, Average hours of training per year per employee by our company continues to disclose LA9 gender, and by employee category 2.92 2.34 triple bottom line performance while we pursue our bold aspiration EN6 Reduction of energy consumption 2.90 2.35 and long-term goals. Reductions in energy requirements of products and EN7 services 2.90 2.35 Now six years onward, our 2015 LEGEND: 1 – No Impact / No Influence Impact Score – significance