Hydroelectric power has become one of the pillars of renewable energy, providing clean, low-carbon, and cost-effective ways of generating electricity for a world in need of sustainable energy solutions.

First Gen’s hydro platform is comprised of three hydroelectric power plants: the 1.6-MW Agusan run-of-river power plant, and the 120-MW Pantabangan and 12-MW Masiway plants, which comprise the 132-MW Pantabangan-Masiway Hydroelectric Power Plant (PMHEP).

The run-of-river (ROR) Agusan plant is operated by the Company’s wholly-owned subsidiary FG Bukidnon Power Corporation (FG Bukidnon), which is located in Damilag, Manolo Fortich, Bukidnon.

Unlike Agusan, PMHEP generates power using the cascading hydroelectric system, and is part of a multipurpose hydro complex that supplies irrigation water for the vast rice fields of Nueva Ecija, approximately 180 kilometers northeast of Metro Manila. To maximize the hydraulic potential of water for power generation, PMHEP cascades the water resource from the Pantabangan reservoir initially through its two 60-MW units of Pantabangan upstream, and then through the smaller 12-MW Masiway plant downstream.

PMHEP is owned and managed by FG Hydro, where First Gen directly and indirectly owns a 65.0 percent economic stake.

In 2017, the hydro platform’s revenues decreased by PHP 627.7 million, or 27.0 percent, from PHP 2,323.0 million in 2016 to PHP 1,695.3 million in 2017. The decrease was primarily due to the expiration of FG Hydro’s Ancillary Services Procurement Agreement (ASPA) in February 2017 and the expiration of one of its PSA last December 2016. The plant also had lower availability as it went through its annual preventive maintenance. Meanwhile, FG Bukidnon’s revenues increased in 2017 due to its higher dispatch, as compared to 2016 when the plant underwent maintenance and experienced lower water levels during the first quarter of that year.

The decline in revenues was slightly tempered by FG Hydro’s lower G&A expenses due to lower insurance premiums for the period arising from an adjustment in prior years’ premiums and lower professional fees, taxes, and licenses. Meanwhile, the lower operating income was partially offset by FG Hydro’s lower interest expenses, as well as the significant drop in its income tax expense following the Renewable Energy Service Contract it secured last February 2017. This resulted in a reduced income tax rate of 10.0 percent from 30.0 percent, along with other fiscal incentives.

100% RELIABILITY of the Pantabangan-Masiway plant in 2017

For 2017, FG Hydro’s Pantabangan reservoir had comparatively low dam elevations compared to the previous year. This led to lower dependable capacity, affecting the volume of power generated by the PMHEP Complex.

In contrast, FG Bukidnon experienced higher dispatch in 2017, as compared to 2016 when the plant underwent maintenance and experienced lower water levels during the first quarter of 2016.

International Standards Met

Both FG Bukidnon and FG Hydro successfully retained their three international certifications for Quality (ISO 9001:2008), Environment (ISO 14001:2004), and Occupational Health and Safety (OHSAS 18001:2007) during their respective surveillance audits conducted in February and July 2017.

FG Bukidnon adopted the new versions of the Quality (ISO 9001:2015) and Environmental (ISO 14001:2015) ISO standards in May 2017. FG Hydro, on the other hand, is expected to complete its transition to the 2015 versions of the certifications by its next surveillance audit, which is scheduled in 2018.

Awards Received

FG Hydro received the 2017 Corporate Safety and Health Excellence Award from the DOE for its attainment of Zero Lost Time Incident for the entire year of 2017. Concurrently, FG Bukidnon was given the Perfect Safety Record Award by the Safety Organization of the Philippines (SOPI) for achieving Zero Lost Time Accident in 2017. In the same year, FG Bukidnon qualified for the Hall of Fame of the Corporate Safety and Health Excellence Award (CSHEA). SHAPES, in partnership with DOE, gives this special award to companies that achieved the CSHEA for three successive years.

Recent Developments

In December 2017, the DOE released Circular No. DC2017-12-0015 regarding the On-Grid Rules of the newly promulgated Renewable Portfolio Standards (RPS). To support further development of renewable energy in the country, the DOE has mandated distribution utilities, suppliers of electricity to the contestable market, and power-generating companies to comply with the RPS.

As a result, First Gen is keeping an eye out for potential off-takers to avail of the RPS incentive. At present, First Gen has four Mindanao-based ROR projects in the pipeline: the 32-MW Bubunawan plant in Baungon, Bukidnon; the 33-MW Tagoloan plant in Impasugong, Bukidnon; the 30-MW Puyo plant in Jabonga, Agusan del Norte; and the 160-MW Cagayan 1N in Talakag, Bukidnon.

With the discontinuance of the feed-in tariff for hydropower in the country, First Gen has prioritized the market development for its pending ROR projects in Mindanao. Currently, these projects are in the late stages of permitting and technical design.

Last March 9, 2018, the ERC granted Provisional Authority (PA) in ERC Case No. 2017-077 RC, for FG Hydro’s ASPA. This allows FGHPC to provide five ancillary services namely: regulating reserve, contingency reserve, dispatchable reserve, reactive power service, and black start capability effective for a period of five years. The two units of the Pantabangan Plant were certified by the NGCP to provide the aforementioned ancillary services to the grid.