EDC 2014 SR (UPDATED)

EDC 2014 Performance Report
Operation and Maintenance Agreement (O&M Agreement)
In 2006, FG Hydro entered into an O&M Agreement with NIA, with the conformity of the NPC.
Under the O&M Agreement, NIA will manage, operate, maintain and rehabilitate the
Non-Power Components of the PAHEP/MAHEP in consideration for a service fee based on actual
cubic meter of water used by FG Hydro for power generation.
In addition, FG Hydro will provide for a trust fund amounting to ₱100.0 million within the first
two years of the O&M Agreement. The amortization for the Trust Fund is payable in 24 monthly
payments starting November 2006 and is billed by NIA in addition to the monthly service fee.
The Trust Fund has been fully funded as of October 2008.
The O&M Agreement is effective for a period of 25 years commencing on November 18, 2006
and renewable for another 25 years under the terms and conditions as may be mutually agreed
upon by both parties.
Total service fees incurred amounted to ₱117.7 million, ₱138.9 million and ₱88.2 million in 2013,
2012 and 2011, respectively, and are included under the “Cost of sale of electricity” account in the
statements of comprehensive income.
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 2014, 2013 and 2012. The
user’s fee is included under “General and administrative expenses” account in the consolidated
statements of income, specifically “Rental, insurance and taxes” account (see Note 22).
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.
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 maybe agreed by both parties.
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