EDC PR 2016 (FS section)

Ancillary Services Procurement Agreement (ASPA)
FG Hydro entered into an agreement with the NGCP on February 23, 2011 after being certified
and accredited by NGCP as capable of providing Contingency Reserve Service, Dispatchable
Reserve Service, Reactive Power Support Service and Black Start Service. Under the agreement,
FG Hydro through the PAHEP facility shall provide any of the above-stated ancillary services to
NGCP.
The ASPA is effective for a period of three (3) years, commencing on February 23, 2011 and shall
be automatically renewed for another three (3) years after the end of the original term subject to
certain conditions as provided in the ASPA.
The ASPA was provisionally approved by the ERC on June 6, 2011. However, ERC altered the
rates that FG Hydro can charge NGCP, and likewise imposed caps and floors to the various ancillary
services that FG Hydro can provide to NGCP.
As provided for in the ASPA, the agreement was automatically renewed subject to the same terms
of the agreement. The extended agreement ended on February 23, 2017 FG Hydro is now in
negotiations with NGCP for a new ancillary services agreement.
Memorandum of Agreement (MOA)
PSALM entered into a MOA with the Protected Area Management Board (PAMB). Under the
MOA, PAMB granted FG Hydro the right to use the Masiway land, where the MAHEP power
plant is situated in consideration for an annual user’s fee. The MOA will be effective for 25 years
and renewable for a similar period subject to terms and conditions as may be mutually agreed
upon by both parties.
FG Hydro incurred annual user’s fee amounting to ₱0.1 million in 2016, 2015 and 2014. The
user’s fee is included under “General and administrative expenses” account in the profit or loss,
specifically “Rental, insurance and taxes” account (see Note 22).
Memorandum of Agreement with NGCP (MOA with NGCP)
In 2011, FG Hydro entered into a MOA with NGCP for the performance of services on the
operation of the PAHEP 230 kV switchyard and its related appurtenances (Switchyard).
NGCP shall pay FG Hydro a monthly fixed operating cost of ₱0.1 million and monthly variable
charges representing energy consumed at the Switchyard.
The MOA is effective for a period of five years and renewable for another three years under such
terms as may be agreed by both parties.
39. Vestas Operation and Maintenance Agreement
In March 2013, the Company entered into an agreement with Vestas Wind Systems (Vestas) for
the construction of its 87-MW Burgos Wind Project (Phase 1), located in the Municipality of
Burgos, Ilocos Norte. The project comprises three components: (i) the establishment of a wind
farm facility; (ii) a 115kV transmission line; and (iii) a substation adjacent to the wind farm.
On April 30, 2014, the Company and Vestas have entered into another contract for the
construction and installation of an additional 21 wind turbines (Phase 2) increasing the total
generating capacity from 87 MW to 150 MW.
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I Energy Development Corporation Performance Report 2016