2007 ANNUAL REPORT Power Corporation - Aboitiz Equity Ventures

Power Corporation
Powering
New Frontiers
2007 ANNUAL REPORT

Contents
Power Corporation
Aboitiz Power Corporation (AP), a majority-owned subsidiary of Aboitiz Equity
Ventures, is one of the leaders in the country’s renewable energy industry and the largest
conventional hydropower operator in the country. It has a reputation of operating the
most efficient electricity distribution utilities in the Philippines. The company provides its
customers with quality service and reasonably-priced electricity. Since its incorporation
in 1998, AP has accumulated interests in both hydroelectric power generation facilities
and thermal plants, and expanded its distribution business. It is committed to expand its
renewable energy capacity, driving innovation to power the Philippines.
Financial Highlights 2
Report to Stockholders
From your Chairman and President & CEO 4
EVP and SVP - Power Distribution Group 10
SVP - Power Generation Group 16
EVP - Strategy and Regulatory Affairs 20
Chief Financial Officer 22
Chief Compliance Officer 24
Features: Powering New Frontiers
SN ABOITIZ POWER, INC. 34
Powering hydro capacity
Magat Project Finance: Deal of the Year
Equity Ventures
Aboitiz Equity Ventures, Inc. (AEV) is a diversified conglomerate listed at the Philippine
Stock Exchange that has interests in power generation and distribution, banking, transport
and food manufacturing. Its mission is to create long-term value for all its stakeholders.
The company has been recognized in international surveys as among the Philippines’ best
managed companies. In 2007, it placed 9th overall as the Best Managed Company in Finance
Asia’s Annual Best Companies in Asia poll. In the same poll, AEV ranked 8th as the Most
Committed to Corporate Governance, and 7th in Best
Investor Relations.
Group Foundation
Aboitiz Group Foundation, Inc. (AGFI) is a non-stock and non-profit corporate
foundation registered with the Securities and Exchange Commission in 1989. It is the
concrete manifestation of the Aboitiz Group’s strong commitment to corporate social
responsibility. Guided by its mission, “helping people help themselves”, AGFI addresses
the social and economic development needs of less privileged communities in areas where
Aboitiz companies operate. The Foundation has helped improve the quality of life of its
chosen beneficiaries under its major program components, namely education, enterprise
development, primary health and childcare.
HEDCOR, INC. 36
Powering growing markets with Cleanergy
IN PREPARATION FOR OPEN ACCESS 38
Powering customer service
ABOITIZ POWER ENERZONES 40
Powering industrial estates
EAST ASIA UTILITIES CORPORATION 42
CEBU PRIVATE POWER CORPORATION
Powering a tight market
STEAG STATE POWER INC. 44
Powering Mindanao
CORPORATE SOCIAL RESPONSIBILITY 46
Empowering communities
LOCATION OF OPERATIONS 48
CORPORATE STRUCTURE
BOARD OF DIRECTORS 49
CORPORATE OFFICERS 50
FINANCIAL STATEMENTS 52

P o w e r i n g
New Frontiers
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 •

FINANCIAL HIGHLIGHTS (In Million Pesos)
Revenues
Earnings per share (in pesos)
Total Assets
07
11,312
07
0.66
07
36,163
06
8,681
06
0.37
06
12,345
EBITDA
Cash and Cash Equivalents
Stockholders’ Equity
07
06
2,883
5,531
07
06
1,494
13,288
07
06
8,672
27,023
Net Income to Common
07
06
1,850
4,138
Investments in and Advances to Associates
07
14,888
06 4,270
7.00
AP Stock Price vs. PSE Index
From July 16, 2007 to March 17, 2008
AP Stock Price High Low
July 2007 to March 2008 5.80 3.90
Outstanding as of March 31, 2008 7,358,604,307
6.00
5.00
4.00
3.00
2.00
7/16/2007 8/15/2007 9/14/2007 10/16/2007 11/16/2007 12/17/2007 01/18/2008 02/15/2008 03/17/2008
Aboitiz Power
PSE
• ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

FINANCIAL SUMMARY
For the Year (In Million Pesos)
2006 * 2007
% change
‘07 vs ‘06
Revenues 8,681 11,312 30%
Operating profit
Operating proift from ordinary activities 1,252 1,952 56%
Equity in net earnings of associates 1,062 2,790 163%
Interest expense - net (147) 152 -203%
Other income 108 (11) -110%
Income before income tax 2,275 4,882 115%
Provision for income tax 405 634 57%
Income before minority interest 1,870 4,248 127%
Minority interest 21 109 429%
Net income to common 1,850 4,138 124%
Percentage Contribution
Per Business Segment for 2007
DISTRIBUTION
37%
1,512
Others
1%
29
Generation
62%
2,597
(Figures In Million Pesos)
At year end
Total Assets 12,345 36,163 193%
Total Liabilities 3,582 8,521 138%
Minority Interest 91 619 583%
Equity Attributable to Equity Holders
of the Parent
8,672 27,023 212%
Market Capitalization -- 38,095 n.a.
Income Breakdown
Per Business Segment
(In Million Pesos)
2,597
213%
1,512
52%
EBITDA 2,883 5,531 92%
Per Share (in pesos)
Earnings 0.37 0.66 78%
Book Value 1.75 3.76 115%
Cash Dividends (Common) -- 0.18 n.a.
829
995
Financial Ratios
Current Ratio 3.27 2.54
Debt-to-Equity Ratio 0.41 0.31
Net Debt-to-Equity Ratio (0.24) (0.29)
* Pro-forma
06 07 06 07
Generation
Distribution
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 •

F R O M Y O U R C H A I R M A N A N D P R E S I D E N T & C E O
Jon Ramon M. Aboitiz
CHAIRMAN
Consolidated
revenues of
Aboitiz Power
Corporation of
11.3 billion
increased by 30%
from the
previous year,
a growth spurred
by the robust
performance
of both our
generation and
distribution
businesses.
Dear Shareholders,
We are very pleased to report that your company performed
exceptionally well in 2007, exceeding expectations of the
investment community.
Consolidated revenues of Aboitiz Power Corporation (AP) of 11.3
billion increased by 30% from the previous year, a growth spurred
by the robust performance of both our generation and distribution
businesses. Your company ended 2007 with a net income of 4.1
billion, a 124% year-on-year bottomline growth.
Power Generation
Driven by its successful bidding for government assets and the active
acquisition of other projects, AP ended the year with investments
in 1,035 megawatts (MW) of generating assets. Accounting for its
proportionate ownership, the company increased its attributable
President Gloria
Macapagal-Arroyo rings
the bell to officially start
the trading of AP shares
at the Philippine Stock
Exchange.
generating capacity by 200%, ending the year with 490 MW compared
to 164 MW at the end of 2006. Consequently, power sales of 1,018
gigawatt hours (GwH) in 2007 grew by 176% year-on-year.
As a result, the power generation business for the first time accounted
for a larger share of the company’s earnings contributing 63% of AP’s
net income for 2007, equivalent to 2.6 billion, up by 213% from the
previous year.
We are also pleased to report that the debut year for the Magat hydro
plant and our involvement in the Wholesale Electricity Spot Market
(WESM) resulted in very encouraging results. Following our strategy
of concentrating the generation of power during peak hours resulted
in our attaining premium prices for our power resulting to an average
price of 5.28 per kilowatt-hour (kwh) for sales to the WESM for the
eight months of operations in 2007.
• ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

R E P O R T T O O U R S T O C K H O L D E R S
Power Distribution
Riding on strong economic growth and acquisitions
in 2007, our distribution business ended the year
with a peak demand of 780 MW, 15% higher than
the previous year. Our distribution utilities sold
3,915 GwH of electricity to 637,000 customers.
Adjusting for the company’s ownership in various
utilities, AP’s beneficial sales showed strong kwh
sales growth of 11% in its franchise areas, reaching
2,790 GwH.
Stripping off sales from the acquisitions in 2007, organic electricity
sales was still strong improving by 7%. Average margins in our
distribution business also showed improvement, increasing by 6%
to 1.32 per kwh. This was a result of improved efficiencies, reduced
system losses and controlled costs.
Consequently, income from the power distribution group grew by
52% hitting 1.5 billion, accounting for 37% of AP’s net income.
Strategic Initiatives
Electricity sales by customer (GwH)
819
4%
853
1,688
15%
1,937
2,507
It was an eventful year for AP, marked by major strategic initiatives,
acquisitions, and partnerships.
11%
2,790
06 07 06 07 06 07
Residential Commercial & Industrial Total Power Sales
678
06
15%
780
07
Peak Demand (MW)
The most significant of these initiatives was the consolidation of the
distribution businesses of Aboitiz Equity Ventures, Inc. (AEV) and the
other power-related assets of the Aboitiz Group into AP in preparation
of its Initial Public Offering (IPO). We listed AP on July 16, 2007, offering
1,787,664,000 shares to the public at 5.80 per share representing 24%
of the company.
We were overwhelmed by the market’s acceptance of the IPO. It was
oversubscribed, raising over 10 billion with demand coming from Asia
(39%), United States (30%), Europe (24%), and the Middle East (7%).
This strategic initiative put AP in a position to participate in the
privatization of National Power Corporation (NPC) assets being sold
by the Power Sector Assets and Liabilities Management Corporation
(PSALM). We considered this a once-in-a-lifetime opportunity and
something that we were not going to miss out on. It was also a strategic
move that put us in a position to capitalize on the many exciting
opportunities available in the power sector, including the development of
greenfield projects to augment the country’s needed power supply.
As disclosed during its IPO, AP acquired stakes in three utilities via a share
swap on June 8, 2007. The company acquired 100% of Mactan EnerZone
Corporation (MEZ) and 60% of Balamban EnerZone Corporation (BEZ)
from AboitizLand, Inc. for 610 million and 267 million, respectively.
On March 7, 2008, AP acquired the 40% balance of BEZ from Tsuneishi
Holdings (Cebu), Inc. for approximately 178 million. MEZ, the owner
and operator of the power distribution system at the Mactan Export
Processing Zone II in Cebu, delivers power to semiconductor firms,
electronics manufacturers and other exporters operating within the zone.
BEZ owns and operates the power distribution system at the West Cebu
Industrial Park (WCIP), a special economic zone for light and heavy
industries. It is home to shipbuilding and ship repair facilities, steel
fabrication yards and supporting suppliers such as industrial gas plants
and other subcontractors.
Erramon I. Aboitiz
PRESIDENT &
CHIEF EXECUTIVE OFFICER
Aboitiz Power’s
strategic
initiative of
going public put
the company
in a position to
participate in
the privatization
of Napocor
assets being sold
by the Power
Sector Assets
and Liabilities
Management
Corporation.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 •

In December
2006, SN Aboitiz
Power-Magat,
Inc., AP’s joint
venture with
Norway’s SN
Power, won the
bid for the 360-
MW Magat hydro
plant for US$530
million. The plant
was turned over
to the company
on April 26, 2007.
Also through a share swap, AP acquired an additional 25% stake in
Subic EnerZone Corporation (SEZ) from AEV, San Fernando Electric,
Okeelanta and Pasudeco for 115 million. This increased its ownership
in the company to 80%. On December 17, 2007, AP acquired the
remaining 20% stake in the company for 92 million in cash from
Team Philippines Industrial Power II Corporation, thereby bringing its
effective ownership in SEZ to 100%.
In December 2006, SN Aboitiz Power-Magat, Inc. (SNAP-Magat),
the 50:50 joint venture between AP and Norway’s SN Power, won the
bid for the 360-MW Magat hydroelectric plant after submitting the
highest bid of US$530 million. The plant was turned over to SNAP on
April 26, 2007.
On April 20, 2007, AP acquired for 131 million a 50% stake in East
Asia Utilities Corporation (EAUC), the owner and operator of a
50-MW bunker-fired power plant in Mactan, Cebu. EAUC is the sole
provider of electricity at the Mactan Export Processing Zone I (MEPZ I).
Also on April 20, 2007, AP acquired for 178 million from EAUC a 60%
stake in Cebu Private Power Corporation (CPPC), the owner of a
70-MW bunker-fired plant embedded in the franchise area of Visayan
Electric Company, Inc. (VECO).
On August 10, 2007, AP’s offer of US$92 million won the competitive
bid for a 34% stake in STEAG State Power Inc. (SPI), the owner and
operator of a 232-MW coal-fired power plant located in the PHIVIDEC
Industrial Estate in Misamis Oriental, Northern Mindanao. The plant
supplies power to the Mindanao grid through NPC. The transaction
closed on November 15, 2007.
On November 28, 2007, SN Aboitiz Power-Benguet, Inc (SNAP-
Benguet), another joint venture with SN Power, won the bid for the
Ambuklao-Binga hydroelectric power complex. The facility consists
of the 75-MW Ambuklao plant in Bokod, Benguet and the 100-MW
Binga plant in Itogon, Benguet. The price offer amounted to US$325
million. Upon turnover by PSALM, the hydro complex will further
increase the group’s attributable capacity by 18% to 578 MW.
Attributable Generating Capacity Chart (MW)
164
490
578
620
718
868
2006 2007 2008 2009 2010 2011
• ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

h
Powering New Frontiers
With demand for electricity accelerating with the country’s economic
growth, we see reserve margins in the power industry tightening and a
need for additional power supply.
To fill this need, AP has lined up several greenfield projects that are
expected to come on stream within the next few years.
On February 17, 2007, AP entered into a Memorandum of Agreement
with Taiwan Cogeneration International Corporation, a Taipei-based
independent power producer (IPP), to collaborate in developing a
power plant in the Subic Bay Freeport Zone. We are expecting to break
ground for the construction of a 300-MW coal-fired power plant by
the third quarter of 2008 and expect completion 36 months thereafter.
On June 26, 2007, AP’s 100%-owned subsidiary Hedcor, Inc. began
construction work on the 42-MW Sibulan hydropower plant in Davao.
This run-of-river hydro project is estimated to cost over 5 billion.
Hedcor is also currently in the final design stage for another 34-MW
run-of-river hydro plant that is expected to start construction by the
third quarter of 2008 and be operational by 2010.
Through a power sales agreement, the output of both plants has been
committed to supply AP subsidiary Davao Light and Power Company,
Inc. with approximately 400 million kwh of energy annually, right at a
time when the Mindanao grid is expected to be tight of power.
On December 19, 2007, AP’s 60%-owned subsidiary, Abovant
Holdings, Inc., entered into a joint venture agreement with the Global
Business Power Corporation, a member of the Metrobank Group of
Companies, and Formosa Heavy Industries Corporation of Taiwan for
the construction and operation of a 246-MW coal-fired power plant in
Toledo, Cebu.
The consortium’s total investment in this project is expected to reach
US$450 million. The plant is targeted to be completed by early 2010 and
will provide part of its power output to VECO and BEZ. AP’s beneficial
ownership of the project is 26%.
Once these projects are completed, which is estimated to come in
between 2008 and 2011, AP will have investments in power plants with
a total capacity of 1,832 MW, and an attributable capacity of 868 MW, a
further increase of 50% from the end of 2007.
OUTLOOK
The prevailing conditions in the Philippine power industry allow for
enormous opportunities for your company’s growth. The industry is
in the midst of massive changes involving deregulation, increased
competition and further privatization of government-owned assets.
Aside from the remaining power generating assets that PSALM is
committed to sell, it has over 6,000 MW capacity from IPPs that it
intends to bid out and transfer to the private sector. Hydro represents
the majority of our generation mix. We will continue to build on this
base and grow our renewable energy business.
The Energy Regulatory Commission has begun to implement
Performance- Based Regulation (PBR) for distribution utilities. We
believe PBR will benefit efficient distribution utilities like ours. We too
are confident that our distribution rates will be adjusted considering
that our current rates are based on assets and expenses of the year
2000.
We also anticipate that when open access is implemented, a new
market for our power will open up for us, giving us the opportunity to
not only sell electricity to customers outside our franchise area, but also
to build additional generating capacity.
On June 26, 2007,
AP subsidiary
Hedcor, Inc. began
construction
work on the 42-
MW Sibulan runof-river
plant in
Davao estimated
to cost over
5 billion. It is
also in the final
design stage for
another 34-MW
plant targeted to
be operational
by 2010.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 •

AP declared a
cash dividend of
0.18 per share
to shareholders
on record as
of February 21,
2008, paying out
1.3 billion on
March 3, 2008.
Your company is fortunate to be in a position, with both the
human and financial capital required, to take advantage of all these
opportunities.
We will choose our opportunities carefully so as not to dilute our
efforts and resources, focusing on projects wherein we believe
we have the competitive edge and those that possess long-term
strategic value.
CORPORATE SOCIAL RESPONSIBILITY
We in Aboitiz Power believe that our mission does not end
with fulfilling the need of building power plants, operating
utilities and selling electricity. We are committed to work with
all our stakeholders to create a sustainable balance among our
communities, our environment, our team members and the
company.
Our business units contribute a portion of their income to support
infrastructure improvement as well as social development and
environmental projects in our host communities. In partnership
with the Department of Energy and our Local Governments, we also
help bring electricity to barangays and homes that still do not have
access to electric power.
In partnership with the Aboitiz Group Foundation, Inc. (AGFI) AP
and its subsidiaries are also involved in numerous education-related
interventions, primary health and child care projects and enterprise
development.
CONCLUDING REMARKS
While we look back to a fabulous year for AP, we can look forward
with confidence to an even stronger performance in the future. We
have never been as optimistic as we are today about the Philippine
power industry in general and AP in particular.
Although AP’s stock price ended 2007 below its listing price despite
our good results, our hope is that as the investment environment
normalizes, investors will discover the value proposition we see in AP
and its future.
To all our hardworking and dedicated team members across the
Aboitiz Power group, thank you for your efforts and contributions
for the exceptional performance in 2007. We, however, would like
to remind you that our job is far from over. Let us remain focused on
serving our customers and adding value wherever possible.
To our business partners and suppliers, we thank you for your
invaluable support and cooperation. Together, let us continue to
drive innovation to power new frontiers in the Philippine electricity
industry. And of course, to our valued shareholders and customers,
we extend our sincerest gratitude for your continued trust and
confidence.
CASH DIVIDENDS
Following its dividend policy of paying out one-third of its preceding
year’s net income, AP declared a cash dividend of 0.18 per share
to shareholders on record as of February 21, 2008, paying out 1.3
billion on March 3, 2008.
Jon Ramon Aboitiz
CHAIRMAN
Erramon I. Aboitiz
PRESIDENT
& CHIEF EXECUTIVE OFFICER
• ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

Results of Operations
POWER
D I S T R I B U T I O N
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 •

F R O M Y O U R E V P & S V P - P O W E R D I S T R I B U T I O N G R O U P
Dear Shareholders,
Power Distribution
Luis Alfonso Y. Aboitiz
EXECUTIVE VICE PRESIDENT
POWER DISTRIBUTION GROUP
AP’s distribution
business turned
in a strong
performance,
contributing
1.5 billion, up
by 52% from the
previous year’s
contribution.
AP’s distribution business turned in a strong performance,
contributing 1.5 billion, up 52% from the previous year’s
contribution. This represents 37% of AP’s total income in 2007.
This robust performance is attributed to improved efficiencies,
increasing margins, as well as solid kilowatt-hour sales (kwH) growth
of our residential, commercial and industrial customers, and the
acquisitions we made in 2007.
Total electricity sales (GwH)
1997-2007 cagr=7%
The company’s distribution utilities recorded strong sales growth in
its franchise areas. On an organic basis, the group’s kwH electricity
sales grew by 7%, from 2,507 gigawatt hours (GwH) to 2,673 GwH.
This further increased to 2,790 GwH, with the sales contribution
of the acquisitions made during the year. The company acquired
100% of Mactan EnerZone Corporation, 60% of Balamban EnerZone
Corporation and the remaining stake in Subic EnerZone Corporation,
resulting in an 11% year-on-year growth rate in electricity sales.
Power consumption of both residential and non-residential customers
continued their strong showing, growing by 4% and 15%, respectively.
This was on the back of an improved customer base with residential
and non-residential accounts growing by 3% and 8%, respectively.
2%
11%
( 7% organic)
1,357 1,492 1,520 1,767 1,896 1,971 1,127 1,419 1,461 1,507 1,790
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Davao Light & Power Company, Inc. (DLPC) contributed 954
million to AP’s income in 2007, up 44%. DLPC sold 1,331 GwH
of electricity in 2007, up by 5% against 2006. Customers served
increased by 4%, from 238,612 in 2006 to 247,341 in 2007. Peak
demand also increased by 3% to 245 megawatts (MW). Continuous
system upgrades and the stepping up of anti-pilferage efforts
resulted to a decrease in DLPC’s system losses from 8.9% in 2006 to
8.1% in 2007.
DLPC constantly strives to improve its customer service as this will
set them apart from other utilities in a competitive, deregulated
environment.
In 2007, the company installed a 14-mega volt amperes (MVA) power
transformer and completed structural upgrades of its Bajada Power
Plant to optimize the delivery of power produced by the plant. The
plant is now able to serve up to 23% of peak demand on a shortterm
basis and 17% on a sustained basis, assuring DLPC customers of
a steady back-up power source.
In the first quarter of 2007, DLPC completed the 6-million
rehabilitation project of its 15-MVA Puan Substation. This project has
improved service by enhancing functional reliability and structural
integrity.
On May 10, 2007, DLPC energized its 138 kilo-volt (kV) Don Ramon
Substation in Bunawan, Davao City. It is currently equipped with a
50-MVA transformer that serves the increasing power load growth
in the northern part of DLPC’s franchise, particularly in Tibungco,
Bunawan, and Lasang in Davao City and three municipalities in Davao
del Norte.
In August, the Puan feeder 1 was upgraded to a higher rating
conductor to accommodate the growing load in its service area and
to serve as a back-up power source.
10 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

R E S U L T S O F O P E R A T I O N S
Davao Light constantly
strives to improve its
customer service as
this will set them apart
from other utilities in a
competitive, deregulated
environment.
In November, the P. Reyes-Toril fiber optic project was completed. It
provides a high capacity and reliable communication infrastructure
for Supervisory Control and Data Acquisition (SCADA), the
computerized system installed in substations that automatically
reads and monitors loading energy, voltage registration, power factor
and allows full control of the system from a single control point.
Visayan Electric Company, Inc. (VECO) contributed 333 million,
45% higher than its 2006 contribution. The company sold 1,681 GwH
of energy, 6.9% higher than its sales in the same period last year
while customers increased by 2.1% to 288,587. Peak demand also
increased by 16% to 358 MW. System losses were reduced to 9.5% in
2007 from 9.8% in the previous year.
A strategic partner in Metro Cebu’s rapid growth, VECO has kept
itself abreast with the area’s development by providing stable and
reliable power. In 2007, the company implemented several projects
aimed at addressing the growing demand of its franchise area.
In January 2007, it energized the 69-Kilovolt (kV) line connected
to the 200-MVA gas-insulated substation (GIS) of the National
Transmission Corporation (TransCo) in Mandaue City. This has
further enhanced service reliability and curbed system losses.
To further reduce losses and improve system reliability, VECO has
implemented a three-year program to upgrade its substations
targeting to have a uniform distribution system voltage of 23 kV
from the current 13.8 kV. The company replaced some 14 kilometers
of distribution lines with larger conductors in key growth areas
within its franchise. The remaining portions serviced by VECO’s
Cabancalan, Ermita, and Carreta substations are currently being
upgraded to have a 25/33-MVA transformer with 23-kV feeders.
Completion is targeted within 2008. The uniform distribution
voltage level will minimize interruptions as loads can easily be
transferred to neighboring sources.
The company also commissioned and loaded its new 69/23 kV Naga
substation in southern Cebu on June 24, 2007, after construction
was completed in a record 16 days. The 25-MVA substation serves
the needs of neighboring towns in Minglanilla, Naga and San
Fernando, as well as the Cebu Techno Park/New Cebu Township One
Special Ecozone in Cantao-an, Naga.
In the last quarter of 2007, VECO implemented two 69kV
subtransmission line projects in the southern part of its franchise
area, with target completion within 2008. The first project is the
12-km Pardo-Naga 69kV line that will interconnect the Pardo and
Naga substations while the second is the 1.1-km Quiot-Pardo 69kV
line that will link the new TransCo-Quiot and the VECO Pardo
substations. When completed, these line projects will greatly
improve system reliability and voltage regulation in the area.
Jaime Jose Aboitiz
SENIOR VICE PRESIDENT
POWER DISTRIBUTION GROUP
Visayan Electric
Company (VECO)
contributed
333 million,
45% higher
than its 2006
contribution.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 11

POWER
D I S T R I B U T I O N
Linemen of Cotabato Light (above)
and VECO work 24/7 to ensure stable
and reliable power in their respective
franchise areas.
12 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

A SFELAPCO crew does live line works at night.
Also in 2007, VECO placed an order for its first mobile transformer. The
33 MVA 69 kV/23kV mobile substation will provide better customer
service and reliability by reducing outages when a substation is
undergoing maintenance and/or rehabilitation. The mobile substation
is expected to be delivered and operational in late 2008.
Cotabato Light & Power Co. (CLPC) contributed 55 million, up
by 85%. The company sold 118 GwH of electricity, up by 4.1%. Its
customers increased by 4% to 27,966. Peak demand was 23 MW, up
by 2.5% versus 2006. System losses decreased to 10.3% in 2007 from
10.9% in 2006.
In 2007, three of CLPC’s generating step-up power transformers
underwent Preventive Maintenance Servicing (PMS), improving the
performance of these transformers to ensure continuous supply from
back-up generating units in case of a TransCo power interruption.
The company’s SCADA system now uses a wireless communication
link from its Salimbao substation to the CLPC power plant office,
providing faster and more reliable data exchange.
Subic EnerZone Corporation (SEZ) contributed 45 million to AP’s
income in 2007, 50% higher than its contribution in 2006. The
company’s electricity sales grew by 11% to 199 GwH in 2007 from
179 GwH in 2006. Its customers also increased by 4% to 2,576. Peak
demand in 2007 was 44 MW, up by 24%. SEZ continues to raise its
efficiency level with system losses down to 3.6% in 2007 from 5.6%
in the previous year.
In March 2007, SEZ completed the improvement of its Maritan
Substation, which improved system reliability and flexibility in the
freeport’s housing and golf course areas, as well as some parts of the
Subic Bay Industrial Park.
To prevent electrical faults within its lines, SEZ initiated its Re-
Conductoring Project in May replacing bare copper conductors with
insulated ones in selected parts of the freeport zone.
In August 2007, preventive maintenance of the 250-MVA power
transformer of SEZ’s Cubi Substation and three units of its 667 kilovolt
ampere (kVA) Automatic Voltage Regulators were completed.
This enhanced power provision in the airport, Grande Island, and the
Subic Bay Techno Park.
In May 2007, SEZ, Subic Bay Metropolitan Authority (SBMA) and
Hanjin Heavy Industries Corporation (HHIC) Philippines, Inc. signed
back-to-back Memorandum of Agreements (MOAs) for SEZ to
provide electricity to HHIC’s shipyard located at the Redondo
Peninsula in Subic. In turn, HHIC will pay SEZ a corresponding
wheeling fee for such provision and other related services that shall
be collected by SEZ.
San Fernando Electric Light & Power Company, Inc. (SFELAPCO)
contributed 61 million in 2007, up by 47% versus 2006. The
company sold 392 GwH of electricity in 2007, 7% higher than its
2006 sales. Its customers served in 2007 reached 70,071, 5% higher
than 2006. Peak demand stood at 74 MW in 2007, down 1%. Its
system losses decreased from 6.2% in 2006 to 6.03% in 2007.
In May 2007,
SEZ, Subic Bay
Metropolitan
Authority (SBMA),
and Hanjin
Heavy Industries
Corporation (HHIC)
signed back-toback
Memorandum
of Agreements
for SEZ to provide
electricity to HHIC’s
shipyard at the
Redondo Peninsula
in Subic.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 13

POWER
D I S T R I B U T I O N
To improve system reliability, SFELAPCO constructed a new
10-MVA substation in Floridablanca to replace its existing 8 MVA
substation at the Basa Airbase.
We expect
healthy organic
growth from our
existing business
with potential
incremental
opportunities
coming from the
improvement
of operational
efficiency of
our existing
assets as well as
acquisitions of
other utilities.
Mactan EnerZone Corporation and Balamban EnerZone
Corporation (MEZ/BEZ) contributed 64 million to AP’s 2007
income. The two utilities served a total of 85 locators and
reached a combined electricity sales of 116 GwH for seven
months ended December 31, 2007. Peak demand for MEZ was
22 MW while that of BEZ was 14 MW. At year-end 2007, system
losses stood at 3% and 0.6% for MEZ and BEZ, respectively.
The future looks bright for your company. We expect healthy
organic growth from our existing business with potential
incremental opportunities coming from the improvement
of operational efficiency of our existing assets as well as
acquisitions of other utilities.
Luis Alfonso Y. Aboitiz
EXECUTIVE VICE PRESIDENT
POWER DISTRIBUTION GROUP
Jaime Jose Aboitiz
SENIOR VICE PRESIDENT
POWER DISTRIBUTION GROUP
Balamban EnerZone provides power to the shipbuilding facilities of Tsuneishi Heavy
Industries and FBMA Marine.
14 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

Results of Operations
POWER
G E N E R A T I O N
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 15

F R O M Y O U R S V P - P O W E R G E N E R A T I O N G R O U P
Inside the SN Aboitiz Power trading room
Luis Miguel O. Aboitiz
SENIOR VICE PRESIDENT
POWER GENERATION GROUP
The generation
business
contributed
2.6 billion, 213%
higher versus the
previous year
as attributable
capacity grew
by 200% as a
result of major
acquisitions made
during the year.
Dear Shareholders,
The generation business contributed 2.6 billion, 213% higher
versus the previous year as attributable capacity grew by 200% from
major acquisitions made during the year. Our attributable capacity
(proportionate megawatt capacity based on the company’s interest
in each generating entity) grew from 164 MW in 2006 to 490 MW in
2007 as a result of successful bids in the government’s privatization
program and private acquisitions. These additions were the 360-MW
Magat hydro power plant (in which our effective interest is 50%);
the 70-MW Cebu Private Power Corporation (CPPC) thermal plant
(60%); the 50-MW East Asia Utilities Corporation (EAUC) thermal
plant (50%), and the 232-MW coal-fired power plant of STEAG State
Power Inc (34%). AP’s total equity investments for these new assets
amounted to US$271 million.
Generation plant /
Utility
SN Aboitiz
Power- Magat
Installed
Capacity
(MW)
AP
ownership
(%)
AP’s Total
Attributable
Capacity (MW)
Fuel Type
360 50 180 Hydro
Luzon Hydro Corp. 70 50 35 Hydro
Hedcor, Inc. 38 100 38 Hydro
Western Mindanao Power 100 20 20 Oil
Southern Philippines
Power
55 20 11 Oil
Cebu Private Power Corp. 70 60 42 Oil
East Asia Utilities Corp. 50 50 25 Oil
Davao Light 53 100 53 Oil
Cotabato Light 7 100 7 Oil
Steag State Power 232 34 79 Coal
Total 1,035 490
By the end of 2007, AP’s generating plants had a total installed capacity of
1,035 MW, of which 490 MW was attributable to the company. Out of said
attributable capacity, 253 MW or 52% were hydro assets. This makes the
company the largest conventional hydro power developer and operator in
the Philippines. Income from the generation business increased by 213%,
from 829 million in 2006 to 2.6 billion in 2007, while power sales grew
176% from 369 GwH to 1,018 GwH.
Hedcor, Inc. (Hedcor) earned 160 million in 2007, up 305% from 2006.
Despite a 3.9 MW reduction in the company’s generating capacity after the
Asin plants were returned to the City of Baguio in December 2006, Hedcor
plants managed to generate 162 GwH of electricity, up by 2.4%. The total
installed capacity of Hedcor plants at the end of 2007 was 38 MW.
To address the impending power crisis in Southern Mindanao, Hedcor
signed a 12-year, 400 million kwH power supply agreement (PSA) with
DLPC in 2007. The PSA assures DLPC customers of clean and reliable
energy starting in 2009, which will be supplied by two vital greenfield
projects – the 42-MW Sibulan Hydropower Project (Sibulan) and the
34-MW Tamugan Hydropower Project (Tamugan). The construction of
these plants is estimated to cost the company 11 billion over the next
three years. After several years of development, the Sibulan Project began
construction in June 2007 and its two cascading plants are on target to
generate 212 million kwH annually starting August 2009. Tamugan is
expected to break ground by June 2008 and be completed by August 2010.
It is expected to generate 234 million Kwh of clean energy annually.
Both Sibulan and Tamugan support the Philippine Government’s goal of
increasing the country’s renewable energy-based capacity and attaining
energy self-sufficiency through the development of indigenous sources
such as hydro. The two projects will generate a total of 446 million kwH
annually. This amount of energy will prevent the release of more than
170,000 tons of carbon dioxide equivalents (tCO2e) in the atmosphere
every year.
16 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

POWER
G E N E R A T I O N
Hedcor signed
a 12-year, 400-
million kwH
power supply
agreement with
Davao Light in
2007. It assures
Davao customers
of clean and
reliable energy
starting in 2009,
to be supplied by
two greenfield
projects - the
42-MW Sibulan
and 34-MW
Tamugan hydro
plants.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 17

(Left most photo)
Inside the 360-MW
Magat hydro plant
Luzon Hydro
Corporation generated
279 GwH in 2007, the
highest-ever recorded
generation level
since the start of its
commercial operations
in 2001.
The Magat
acquisition was
a strategic move
in achieving both
goals of building
a stronger
renewable
energy business
and gaining
a foothold
in a newly
established open
power market.
Each year, Hedcor allocates a percentage of its revenues to communities
where its plants are located. Since 1991, Hedcor has given back 1.1 billion
in donations and taxes to its host communities.
Luzon Hydro Corporation (LHC) contributed 481 million in income in
2007, down by 27% mainly due to lower capacity fees brought about by
the declining tariff structure stipulated in the contract with the National
Power Corporation (NPC). LHC generated 279 GwH of power, 10% higher
than its generation in 2006 and the highest-ever recorded generation
level since the start of commercial operations in 2001. Furthermore,
LHC applied for and was granted a one-year Income Tax Holiday (ITH)
extension by the Board of Investment (BOI). LHC is 50% owned by
Philippine Hydropower Corporation (PHC), a wholly-owned holding
company of AP.
SN Aboitiz Power-Magat, Inc. (SNAP-Magat), the joint venture between
AP and Norway’s SN Power Invest AS (SN Power) for the 360-MW Magat
hydro plant, contributed 1.6 billion to AP’s income in 2007. This amount
represents the company’s contribution for eight months of operation in
2007, during which it generated 717 GwH of electricity. The Power Sector
Assets and Liabilities Corporation (PSALM) officially turned over the $530
million plant to SNAP on April 26, 2007.
The Magat acquisition was a strategic move in achieving both goals of
building a stronger renewable energy business and gaining a foothold
in a newly-established open power market. The plant is strategically
valuable because its ability to store water allows the company to sell
most of its energy at peak hours, when prices are higher. This flexibility
allowed the plant to sell power to the spot market at an average price of
5.28 per kwH compared to the average spot price of 4.71 per kwH for
18 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007
2007. Twenty one percent of the energy sold by the plant served bilateral
contracts with various utilities. Although the average selling price of
these contracts ( 4.41 per kwH) was less than the price from sales to the
spot market, bilateral contract revenues are more predictable.
The country’s energy spot market is expanding to include the purchase
of ancillary services such as regulating reserve, contingency reserve,
back-up reserve and reactive power support. Magat has been certified to
provide these services and will participate in the market for them. When
this new market is established, the plant will have the flexibility of selling
the optimum set of services that provide it with the highest contribution.
The combined contribution of Western Mindanao Power Corporation
(WMPC) and Southern Philippines Power Corporation (SPPC) totaled
142 million in 2007, up by 6%. These plants generated 332 GWH of
energy, down by 20% from 2006. Despite this, income contribution
from both companies increased due to lower costs and fixed capacity
payments.
East Asia Utilities Corporation (EAUC) and Cebu Private Power
Corporation (CPPC) contributed a combined total of 224 million to AP’s
income in 2007, from electricity sales that only started in the second
quarter of the year. The two plants generated 504 GwH of electricity
from April 2007 to December 2007. AP acquired a 60% stake in the 70-
MW CPPC plant and 50% of the 50-MW EAUC plant in April 2007. Both
plants are ideally located to serve the high-growth load centers of Cebu
City and Mactan Island. CPPC, which is one of the largest power plants
in Cebu, supplies 62 MW of power to VECO. The EAUC plant is the sole
electricity provider of the Mactan Export Processing Zone 1.

STEAG State Power Inc. (SPI) contributed 95 million to AP’s income in
2007. In its two months of operations, it generated and sold 228 GwH of
electricity to the NPC. This represents a utilization factor of 74%. The
plant has approximately 10 MW of additional capacity that it will sell to
NPC under a three-year contract beginning March 2008.
AP’s acquisitions in 2007 will certainly contribute to growth in 2008,
when the Magat, CPPC, EAUC, and SPI facilities will provide a full year of
earnings under your company’s ownership.
Moving forward, your company will be able to take advantage of its
unique position as a vertically integrated company and derive synergies
between its generation and distribution businesses.
For the coming year, the company will focus on the financing, turnover,
rehabilitation, and operations of the Ambuklao and Binga plants, which
it had won in a recent privatization auction. Ambuklao will require
approximately two years of repair work but Binga will be operating
during this period. This plant stands to benefit from the expected rise
in spot market prices between now and 2010 when demand is expected
to increase without any corresponding increase in generation capacity.
Binga’s rehabilitation will commence when Ambuklao is completed to
ensure a steady revenue stream for the company.
The next two years are ripe with opportunity. In 2007, under two
privatization programs, there was approximately 1,800 MW of capacity
offered to private industry. In 2008 and 2009, PSALM plans to sell
approximately 1,500 MW of generation assets. In this same period,
PSALM is also expected to bid out approximately 6,000 MW of IPP
Administrator contracts. In essence, these contracts contain the right
to control and sell power generated from specific power plants still
under contract through the government’s Build Operate and Transfer
(BOT) program of the past. Your company will carefully monitor these
privatization efforts and selectively participate in the bids where it has
the most competitive advantage.
In addition to the privatization program, your company is developing
four greenfield power plants. One is a 300-MW coal-fired plant to be
built at the Redondo Peninsula industrial area at the Subic Bay Economic
Zone. The other two are the 42-MW Sibulan and 34-MW Tamugan
hydro plants discussed above. The fourth is the 246-MW coal-fired
power plant in Cebu, which will be completed in 2010. The project is
a joint venture between 60%-owned Abovant Holdings and Global
Formosa of the Metrobank Group in which AP will have an effective
ownership of 26%.
Under the Electric Power Industry Reform Act, which governs the
privatization of government’s generating assets, Open Access (the
ability of generators to directly contract with and sell power to large
industrial customers within distribution utility franchises) is to occur
one year after the government sells at least 70% of its generating
assets.
However, in February 2008, the government and several key private
distributors forged an agreement to allow Open Access within their
franchises. This is a new opportunity your company is ready for and
will actively pursue. Companies who want to sell energy under Open
Access are required to obtain a Retail Electricity Supplier license from
the Energy Regulatory Commission (ERC). Your company was one of
the first two companies to be awarded such a license.
Never in its history has your company been presented with so many
possibilities. We will continue to work hard to prepare ourselves for
opportunities of expansion in the very near future.
Luis Miguel O. Aboitiz
SENIOR VICE PRESIDENT
POWER GENERATION GROUP
Aboitiz Power acquired a 60%
stake in the 70-MW CPPC plant
that supplies power to VECO.
Moving forward,
your company will
be able to take
advantage of its
unique position
as a vertically
integrated
company and
derive synergies
between its
generation and
distribution
businesses.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 19

F R O M Y O U R E V P F O R S T R A T E G Y & R E G U L A T O R Y A F F A I R S
Dear Shareholders,
Juan Antonio E. Bernad
EXECUTIVE VICE PRESIDENT
STRATEGY & REGULATORY AFFAIRS
The distribution
utilities will remain
regulated as
natural monopolies
for the network
business, but
preparations
are being made
for the shift of
supply services
into a competitive
environment.
As structural changes are gradually implemented in the power
industry, the regulatory framework is also changing. The distribution
utilities will remain regulated as natural monopolies for the network
business, but preparations are being made for the shift of supply
services into a competitive environment. Our distribution utilities
have pending applications with the Energy Regulatory Commission
(ERC) for their Business Separation & Unbundling Plans.
In preparation for open access and retail competition, we have
acquired licenses for Retail Electricity Supply and Wholesale
Aggregation under several corporate entities, including our main
electricity service company, Aboitiz Energy Solutions, Inc. (AESI)
AESI already serves a wide range of customers today, from commercial
and industrial establishments to distribution utilities, helping them
improve the efficiency of their electrical systems.
On the network side, our utilities are also in the process of acquiring all
applicable sub-transmission assets (STA) of the National Transmission
Corporation (TransCo) in their respective franchise areas. Acquiring
the STAs will prevent anyone from bypassing our distribution networks
in serving customers within our franchise areas.
With valuation issues already resolved between the ERC and TransCo,
many of the STA sale agreements have already been approved by
the ERC, and upon transfer will be included in the rate bases of
the distribution assets either as network or connection assets, the
difference being that the latter are charged to specific customers.
A key challenge, as well as opportunity for our generation business,
is ensuring future energy supply in the coming years after the
privatization of the National Power Corporation. While generation is
also intended to be a competitive, and therefore, largely unregulated
business, rates passed on to distribution utility customers are still
regulated in the transition period before full retail competition.
The power supply agreement between Davao Light & Power Company
and Hedcor’s Sibulan & Tamugan hydroelectric plants that resulted from a
competitive bidding process, is in the final stages of approval with the ERC.
We are also in the process of evaluating new supply contracts for the other
utilities, and updating our Transition Supply Contracts with NPC to meet
our medium-term requirements.
Other expanded prospects for the generation business include new
guidelines for procurement of ancillary services, which previously had been
sourced only from NPC. The expansion of the Wholesale Electricity Spot
Market (WESM) to the Visayas grid should also provide market-determined
electricity prices in the grid to attract new capacity.
The last of our distribution utilities to get a new unbundled rate decision
from the ERC was Subic EnerZone, with an average rate adjustment of
36.7 centavos per kilowatt-hour scheduled to take effect after the October
2008 fifth anniversary of its Distribution Management Service Agreement
with the Subic Bay Metropolitan Authority.
The ERC is moving towards a Performance-based ratemaking approach
(PBR) with Cotabato Light currently going through the rate reset procedure
to prepare for its entry into a four-year regulatory period under PBR by
April 2009. The reset procedure for Davao Light and VECO will start at the
end of 2008, for new rates to take effect by July 2010. Initially this will
include both distribution wheeling and supply & metering charges, though
subsequent resets will only be for distribution wheeling charges. San
Fernando Electric and Subic EnerZone are scheduled for the fourth batch of
private utilities to enter PBR, with new rates to be effective by 2011.
The advantages of PBR include defined timeframes for rate reviews and
tariff setting, forward looking cost bases including projected capex,
adjustments for inflation, and performance incentive schemes. Since these
efficiency improvements benefit the utilities initially, but are kept by the
consumers in subsequent periods, it is positive for both parties. Under
this arrangement, service levels are enforced not just through statutory
requirements imposed by the regulator, but also through a system of
financial rewards and penalties.
20 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

We expect our distribution companies’ efficiency to be rewarded
under this regulatory approach. It also provides an opportunity for
immediate gains upon entry as rates will be re-based from the 2000
test years in our current unbundled rates to the present cost levels.
The data requirements to effect PBR present a huge challenge, and
a strain on resources. So we have applied what we learned from the
other utilities’ experience, including our current experience with
Cotabato Light, to plan ahead so that much of the work we need
to do upon entry by our larger utilities are being prepared ahead of
time. We believe this preparation will facilitate the process both for
us and the regulator, and help us maximize the benefits of PBR.
The future environment will be more demanding, and competition
will force the industry to become increasingly efficient. When we
enter the era of customer choice, we expect to be able to offer
our customers a range of value propositions designed to meet
their individual preferences, while retaining one constant: service
excellence.
Juan Antonio E. Bernad
EXECUTIVE VICE PRESIDENT
STRATEGY & REGULATORY AFFAIRS
When we enter the
era of customer
choice, we expect
to be able to offer
our customers
a range of value
propositions
designed to meet
their individual
preferences, while
retaining one
constant: service
excellence.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 21

F R O M Y O U R C H I E F F I N A N C I A L O F F I C E R
Iker M. Aboitiz
FIRST VICE PRESIDENT
CHIEF FINANCIAL OFFICER
CHIEF INFORMATION OFFICER
Total 2007
Consolidated Net
Income earned
stood at 4.1
billion, an increase
of 124% versus
2006. Net Foreign
Exchange Gains of
785 million were
incurred primarily
on the revaluation
of subsidiary
and associate
foreign exchangedenominated
debt.
Dear Shareholders,
2007 was both a challenging and rewarding year for Aboitiz Power
Corporation (AP). Your company turned in record profits of 4.1
billion, successfully completed its Initial Public Offering (IPO) in July
raising over 10 billion, and financed and completed over 20.3 billion
in acquisitions and investments.
2007 Investment Acquisitions Breakdown
STEAG
22%
Enerzones
5%
CPPC / EAUC
6%
Sibulan Project
5%
Magat
62%
Total 2007 Consolidated Net Income earned stood at 4.1 billion, an
increase of 124% versus 2006. Net Foreign Exchange Gains of 785
million were incurred primarily on the revaluation of subsidiary and
associate foreign exchange-denominated debt. Recurring income
contribution attributable to operations thus stood at 3.4 billion or a
very healthy increase of 81% on the back of record contributions from
both the distribution and generation businesses.
Exceptional growth in 2007 Net Income resulted to an increase in both
recurring and non-recurring earnings per share despite an increase of
year-end shares outstanding by 47%. Recurring and non-recurring
earnings per share for 2007 were at 0.53 and 0.66 respectively, both
increasing by 44% and 78% from 2006 levels of 0.37 per share.
Operating cash flow generated by AP’s business segments was equally
strong. Your company’s consolidated EBITDA in 2007 was 5.5 billion,
up by 92% from 2006 levels of 2.9 billion. Taking AP’s proportionate
share of each of its subsidiaries and associate companies, pro-forma
EBITDA increased to 6 billion, recording a 64% growth over the 3.7
billion registered in 2006.
2007 Pro-Forma EBITDA Breakdown
Merchant generation assets
26%
Hydro generation-based assets
with contracts
21%
Distribution and capacity
fee- based generation assets
53%
The strength of your company’s cash flows lies in its diversified risk mix.
Like a well-balanced portfolio, AP’s mix of cash flows is designed to
provide upside potential while prudently managing business risk:
• Of the above-mentioned EBITDA of 6 billion, 53% was attributed to a
combination of the very stable distribution business and the predictable
capacity fee-based generation assets. To a certain extent, both are
granted guaranteed returns.
• The run-of-river hydro generation assets contributed 21%. Due to
their Power Purchase Agreements, these assets take no market risk yet
maintain moderate upside arising from increases in generation volume.
These assets, however, do take hydrology risk, which your company
feels is manageable given fairly steady Philippine rainfall patterns.
• Magat, AP’s merchant hydro plant, generated most of the remaining
26% of the above-mentioned EBITDA of 6 billion. This asset’s
significant upside is driven by its ability to store water equivalent to
one month of generating capacity, allowing for the generation and sale
of electricity to occur at the peak hours of the day, which command
premium spot prices. Magat’s source of upside, water as a source of fuel
and the ability to store it, is also its source of limited downside. This
hydro asset has minimal marginal cash costs granting it competitive
advantage in terms of economic dispatch order versus other fuel-fired
power plants that have significant marginal cash costs. Lastly, given
this asset’s unique ability to store water, generation in times of low spot
prices can be deferred to times of more favorable spot prices.
22 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

The strong and stable financial performance in 2007 resulted not only
in healthy bottom line figures but in healthy returns as well. Return
on Equity (ROE) for 2007 stood at 23%; if adjusted for non-recurring
income, ROE would have been 18%. This respectable return was in spite
of AP’s high year-end parent level cash balance of 10.6 billion mainly
coming from the IPO proceeds.
As your company’s acquisition and expansion strategy is further
implemented, capital raised over last July’s IPO will be deployed into
higher yielding investments, which are expected to further increase your
equity returns.
Your company’s balance sheet is sound and will be able to fund the
acquisition and expansion plans disclosed in its IPO.
• Total Consolidated Year-End Assets of 36.2 billion registered a
193% increase buoyed by cash raised in the IPO and the successful
acquisitions and investments concluded throughout 2007.
• Despite this expansion of Consolidated Assets, Total 2007
Consolidated Liabilities stood at only 8.5 billion.
• Cash and Cash Equivalents at the Consolidated Level stood at 13.3
billion at year-end, while cash at the Parent Level stood at 10.6 billion.
• Total Year-End Equity Attributable to Equity Holders of the Parent
stood at 27 billion. This 212% rise was mainly brought about by
additional capital raised over the IPO and additional infusions from
our parent company, Aboitiz Equity Ventures. These capital-raising
activities resulted in total year-end shares outstanding to increase by
47% to 7.4 billion shares.
• Net Debt to Equity Ratio stood at -0.29 and -0.27 at the Consolidated
and Parent Level, respectively.
AP’s high net cash position coupled with the strong and stable cash flows
from the distribution and generation businesses arm your company with
the financial strength and ability to prudently carry out its acquisition and
expansion strategy.
The market acknowledged this prudent acquisition and expansion
strategy through the successful close of the SN Aboitiz Power project
finance deal in October 2007. It has been hailed as the region’s first-ever
project finance debt granted to a merchant power plant and the winner
of Project International’s Power Deal of the Year, Asset’s Best Project
Finance and Best Privatization Awards. This uniquely successful debtraising
activity is a testament to AP’s financial discipline and rewarding
expansion strategy.
The refinancing will have immediate bottom line effects with a
reduction of interest rates from 12% to approximately 8.5% at the SN
Aboitiz Power associate level, or approximately 450 million in annual
interest savings.
The debt markets of 2007 proved to be extremely favorable for
capital-raising activities. High liquidity levels of both foreign and local
banks resulted in ample capital being made available for infrastructurerelated
projects. Coupled with low-interest rates and the lengthening
of the lending yield curve, the environment for quality project finance
borrowing extended throughout 2007 and is expected to continue in
2008.
Your company looks forward to 2008 with great confidence and
excitement. AP will carry on with its prudent acquisition and expansion
strategy by:
• Capitalizing on its portfolio of strong cash flows and under-levered
balance sheet;
• Further exploiting the favorable borrowing environment;
• Applying financial discipline, and
• Focusing on the opportunities in the dynamic and growing Philippine
power industry.
Iker M. Aboitiz
First Vice President /
Chief Financial Officer /
Chief Information Officer
The SN Aboitiz
Power project
finance deal in
October 2007 has
been hailed as the
region’s first-ever
project finance
debt granted to a
merchant power
plant and is the
winner of Project
International’s
Power Deal of the
Year, Asset’s Best
Project Finance and
Best Privatization
Awards.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 23

F R O M Y O U R C H I E F C O M P L I A N C E O F F I C E R
M. Jasmine S. Oporto
CHIEF COMPLIANCE OFFICER
Through sound
corporate
governance,
including the
adherence to a lean
and transparent
corporate
structure, AP fulfills
its commitment to
create value for its
stakeholders and
the communities it
serves.
Dear Shareholders,
Integrity defines the true north in the workings of Aboitiz Power
Corporation (AP), its board of directors, management and employees.
Through sound corporate governance, including the adherence to a
lean and transparent corporate structure, AP fulfills its commitment to
create value for its stakeholders and the communities it serves.
This report capsulizes the Aboitiz code of behavior - trust,
transparency, disclosure, fairness and accountability - which has guided
AP’s long-term plans, business strategies, fiduciary responsibilities and
day-to-day operations.
BOARD OF DIRECTORS
AP is led by a Board that is responsible for adopting directional
strategies and for monitoring management’s implementation of
such strategies. The Board sets AP’s goals and performance targets,
identifies and manages key risk areas in AP’s businesses, ensures that
a system of checks and balances is in place and working properly,
oversees employee development and succession plans, monitors AP’s
compliance with existing laws and regulations in its business operations
and ensures that AP remains true to its commitment to its stakeholders.
The Board regularly reviews AP’s governance policies to ensure that
such policies remain relevant and appropriate to AP’s governance
conditions. In 2007, the Board approved the amendment of AP’s Manual
on Corporate Governance to include information security management
as an important component of corporate governance.
In the Board are nine directors carefully chosen for their ability to bring
about practical but strategic and progressive changes to AP through a
dynamic mix of their business, legal and finance competencies. While
they create a dynamic mix of business, legal and finance competencies
and expertise, they add value as well from their ability to render
independent judgment, particularly in the formulation of corporate
policies.
At various times between 2002 and 2008, all the directors have
attended the Corporate Governance seminar.
Composition
The Board of Directors is chaired by Jon Ramon M. Aboitiz. The other
directors are Erramon I. Aboitiz, President and Chief Executive Officer;
Ernesto R. Aboitiz, Vice-Chairman; and directors Luis Alfonso Y. Aboitiz,
Mikel A. Aboitiz, Juan Antonio E. Bernad, and Antonio R. Moraza. Except
for Mr. Moraza who came on board in 1999, all the aforementioned
directors have been with AP since its incorporation in 1998. All have
extensive experience in and intimate knowledge of the Philippine
electric power industry. Their collective experience and expertise in the
electric power business make them very qualified to steer AP through
the many growth opportunities and risks brought about by the ongoing
deregulation and privatization of the Philippine electric power industry.
Also on the Board are two Independent Directors, Manuel S. Go and
Pablo V. Malixi, who were elected to the Board during the annual
stockholders meeting in May 2007 in preparation for the initial public
offering (IPO) of AP’s common shares in July 2007. They represent 20%
of the total number of Directors in compliance with the requirements of
the Securities Regulation Code for public companies. As Independent
Directors, they are independent of management and free of any
business or other relationship with AP that could materially interfere
with their exercise of unfettered judgment as members of the Board.
24 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

DIRECTORS
SPECIAL AND REGULAR BOARD MEETINGS 2007
JAN. 11 JAN.16 MARCH 8 APRIL 12 APRIL26 MAY 15 JUNE 12 JULY 13 AUG. 29 SEPT. 18 NOV. 13
JON RAMON ABOITIZ P P P P P P P P P P P
ERNESTO R. ABOITIZ P P P P P A A A P P P
ERRAMON I. ABOITIZ P P P P P P P P P P P
LUIS ALFONSO Y. ABOITIZ P P P P P P P P A A A
JUAN ANTONIO E. BERNAD P P P P P P P P P P P
MIKEL A. ABOITIZ P P P P P P P A P P P
ANTONIO R. MORAZA P P P P P P P A A A P
PABLO MALIXI
(elected 4-26-07 as Independent
Director)
MANUEL S. GO
(elected 4-26-07 as Independent
Director)
JAIME JOSE ABOITIZ
(Director up to 4-26-07)
LUIS MIGUEL ABOITIZ
(Director up to 4-26-07)
- - - - - A A P P P P
- - - - - P P P P P P
P P P P - - - - - - -
P P P P - - - - - - -
Total No. of Directors Present 9 9 9 9 7 7 7 6 7 7 7
Legend:
P- Present
A- Absent
To emphasize the oversight function of the Board over management, the
respective roles and responsibilities of the Board and of management
are clearly delineated. In particular, the role of the Chairman is separated
from that of the President and Chief Executive Officer. This separation of
responsibilities serves to underscore the accountability of management
to the Board and ultimately to AP’s shareholders that the Board
represents.
Each member of the Board holds office for one year until his successor is
elected at the next annual stockholders’ meeting.
Board Performance
The year 2007 was a particularly busy one for the AP Board as it held
a total of eleven (11) regular and special meetings to preside over and
orchestrate the IPO of AP’s common shares as well as the significant
power asset acquisitions and implementation of greenfield projects.
Board Committees
To ensure that the Board is independently and fully informed of the
strategic issues and major risks facing AP, four committees - Nomination,
Compensation and Remuneration, Audit and Investor Relations - support
the Board to ensure good governance. These Board Committees were
constituted in 2007 prior to the IPO of AP’s common shares.
Nominations Committee
The Nomination Committee pre-screens and shortlists all nominees
for Board membership in accordance with the provisions of AP’s
Manual on Corporate Governance and Bylaws as well as the statutory
requirements under the Corporation Code of the Philippines and the
Securities Regulations Code. In consultation with AP’s executive
committee, the Nomination Committee is also tasked to re-define
the role, duties and responsibilities of the Chief Executive Officer,
primarily by integrating the dynamic requirements of the business as
a going concern, and the future expansionary prospects within the
tenets of good corporate governance.
The Committee is composed of at least three voting members, one
of whom is an independent director, and one non-voting member in
the person of the HR Manager. To date, the voting members of the
Nomination Committee are Erramon I. Aboitiz as Chairman, Antonio
R. Moraza and Independent Director Pablo V. Malixi.
Compensation and Remuneration Committee
The Compensation and Remuneration Committee reinforces AP’s
pay-for-performance philosophy. It is tasked to establish a formal
and transparent policy on directors and executive remuneration to
ensure that compensation is consistent with AP’s culture, strategy
and control environment and in a level sufficient to attract and retain
To emphasize the
oversight function
of the Board over
management,
the respective
roles and
responsibilities of
the Board and of
management are
clearly delineated.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 25

corporate governance
One of the key
roles of the Audit
Committee is
to advise and
assist the Board
in safeguarding
the integrity of
financial reporting
in AP.
directors and officers who are needed to run AP successfully. It is also
responsible for reviewing existing personnel policies on conflict of interest,
salaries and benefits, promotion and career advancement directives.
The Committee has at least three members, one of whom is an
Independent Director. Its current members are Erramon I. Aboitiz as
Chairman, Antonio R. Moraza and Independent Director Manuel S. Go.
In 2007, the Committee held its initial meeting during which it reviewed
and approved the enhancements to the benefits packages of AP’s
employees. It also approved the implementation of an employee
rewards and recognition and a 360° survey to ensure the continuous
improvement of the competencies of AP’s team leaders. It likewise
authorized the review of AP’s organizational structure and manpower
complement that will serve as basis for its hiring policy, employee
movements and succession planning.
Audit Committee
One of the key roles of the Audit Committee is to advise and assist the
Board in safeguarding the integrity of financial reporting in AP. This
responsibility embraces adopting, maintaining and applying appropriate
accounting and reporting processes and procedures. It also involves
ensuring that financial reports are compliant with internal processes and
procedures as well as with pertinent accounting standards and regulatory
requirements.
The Committee has oversight over the Corporate Audit Team, which
performs the internal audit function within AP. It likewise performs direct
interface functions with the internal and external auditors, facilitates the
independence of the external audit process and addresses issues arising
from this process. The Audit Committee also performs oversight financial
management functions and crisis management.
The Audit Committee is chaired by Independent Director Manuel S.
Go, with Mikel A. Aboitiz and Juan Antonio E. Bernad as members. In
2007, the Audit Committee held its first meeting since AP went public.
Among the items discussed were the 2007 audit plan and scope,
including outstanding accounting and auditing issues. The Committee
also reviewed the internal audit report of the Corporate Audit Team
and the third quarter consolidated financial statements and results of
operations.
Investor Relations Committee
The Investor Relations Committee ensures that shareholders
and investors receive timely, high quality, relevant, balanced and
understandable information about AP. It is also responsible for ensuring
that shareholders and investors have easy and direct access to officially
designated spokespersons for clarifying information, issues and for
conveying concerns.
The Committee also performs oversight functions over the Investor
Relations and Corporate Communications teams of AP, regularly
monitoring and evaluating the programs and activities of the teams
against expectations of disseminating accurate and timely information
to shareholders, investors and other stakeholders.
Composed of Erramon I. Aboitiz as Chairman, with Juan Antonio E.
Bernad, CFO and Chief Information Officer Iker M. Aboitiz and AVP for
Corporate Communications Caroline S. Ballesteros as members, the
Committee held its first meeting in 2007 during which were discussed
results of meetings and briefings with institutional investors and
financial analysts, updates’ on the current features in the corporate
website and stockholders’ concerns.
26 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

Director and Senior Executive Compensation
AP rewards its individual directors and officers based on ability
to execute his duties and responsibilities. It is AP’s philosophy to
reward based on individual performance. Performance is evaluated
and compensation is reviewed on an annual basis. AP ensures that it
pays its directors and officers competitively by comparing rates with
other Philippine-based companies through a market salary survey.
Changes in Board compensation, if any, comes at the suggestion of the
Compensation and Remuneration Committee but with full discussion
and concurrence by the Board.
In 2007, all of AP’s directors received a monthly allowance of 50,000
per month. In addition, each director received a per diem for every Board
meeting attended as follows:
Per Diem per Board Meeting Attended
Independent Directors 25,000
Other Directors 15,000
To date, AP has not granted any stock option to its directors or officers.
RISK MANAGEMENT
Risk Management Framework
AP’s risk management framework provides the manner and
approach by which risks (including compliance risks) are defined,
managed, assessed and monitored. Risk management is a continuous
improvement process whereby everyone in the AP organization, from
the Board of Directors to the employees, is actively integrating and
embedding risk management in all business activities.
The framework provides the infrastructure for risk management
and is comprised of AP’s Board of Directors, the Audit Committee
and other board committees, executive and divisional committees,
management and other relevant parties in the AP organization.
Together, the different components of the risk management
framework set the risk culture in AP and develop appropriate policies,
procedures and methodologies.
Policies and Procedures and Reporting Responsibilities
There are existing policies and procedures articulating AP’s
position and expectations on identified risks and the manner of
communicating these to the Board and staff. There are established
issue identification, escalation and reporting mechanisms across
AP. Risks issues are reported independently to the Board, Executive
Committee, Audit Committee and other relevant Board committees at
designated periods.
AUDIT AND ACCOUNTABILITY
External Audit
An external auditor enables an environment of good corporate
governance as reflected in the financial records and reports of AP. An
external auditor is selected and appointed by the shareholders upon
recommendation of the Audit Committee.
As a policy, the Audit Committee pre–approves audit plans, scope
and frequency before an audit is conducted. Audit services of external
auditors for 2007 were pre–approved by the Audit Committee. The
Committee also reviewed the extent and nature of these services to
ensure that the independence of the external auditors is preserved.
Risk management
is a continuous
improvement
process whereby
everyone in the
AP organization,
from the Board
of Directors to
the employees,
is actively
integrating and
embedding risk
management in all
business activities.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 27

corporate governance
To safeguard
adherence
to corporate
principles and
best practices, a
Chief Compliance
Officer who
reports directly
to the Board
Chairman is
designated.
The auditing firm of Sycip, Gorres, Velayo & Company (SGV) is AP’s
external auditor. The current audit partner is Mr. Ladislao Z. Avila,
Jr. SGV is being nominated for re-election at the scheduled annual
meeting of shareholders.
The fees paid to the external auditors for the years 2007 and 2006
were as follows:
Audit Fees
Year ended
December 31, 2007
15,498,880
Year ended
December 31, 2006
110,000
Audit-Related Fees - -
Tax Fees - -
Consultancy Fees -
Total 15,498,880 110,000
Of the total audit fees incurred in 2007, approximately 14.4 million
was incurred by AP in connection with the IPO of its common shares
in July 2007.
Internal Audit
It is the policy of AP to maintain an internal audit function as
a primary resource of the Board of Directors, Audit Committee
and management in the effective discharge of their respective
duties and responsibilities of reviewing, evaluating, managing and
controlling AP’s operations, including that of its subsidiaries and
affiliates.
Internal audit is an independent and objective assurance and
consulting function designed to add value and improve AP’s
operations through a systematic, disciplined approach in evaluating
and improving the effectiveness of AP’s risk management, control
and governance processes. It is undertaken by the Corporate Audit
Team, a staff organization that functions in an advisory capacity.
To maintain its objectivity, it exercises no direct responsibility or
authority on operating activities or functions it reviews.
The Corporate Audit Team reports to the Audit Committee and has
direct access to the Chairman of the Board. The Board of Directors and
senior management support the Corporate Audit Team to ensure that
audits are performed without interference.
The Corporate Audit Team has full, free and unrestricted access to all
operating and financial records, information, systems and applications,
physical properties, activities and personnel under review.
Its scope of work encompasses evaluating and improving the adequacy
and effectiveness of AP’s risk management, control and governance
processes through risk profiling and evaluation of risk exposures,
evaluation of existing internal control structure, participation in the
planning, design and implementation of major information systems
as a consultant to ensure that systems are properly tested, secured,
documented and implemented, and undertaking of special reviews as
determined by the Audit Committee.
The Corporate Audit Team adheres to established professional
standards and abides by the Institute of Internal Auditors’ Code of
Ethics.
Compliance Officer
To safeguard adherence to corporate principles and best practices, a
Chief Compliance Officer who reports directly to the Board Chairman
is designated. Principal responsibilities include monitoring compliance
with Manual on Corporate Governance, identifying, monitoring and
controlling compliance risks and recommending improvements to
existing policies. Presently, the Corporate Secretary holds the position
in concurrent capacity.
28 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

The Office of the Chief Compliance Officer monitors compliance
with the reportorial requirements of the Securities and Exchange
Commission and the Philippine Stock Exchange and reports to
management the status of such compliance as well as other material
legal issues confronting AP every two months.
The Chief Compliance Officer works closely with the Executive Vice
President for Strategy and Regulatory Affairs to ensure compliance
with the rules and regulations of power industry regulators and
relevant government agencies.
In 2007 the Office of the Corporate Secretary started a documents
management system for AP’s and its subsidiaries’ constitutive
documents, contracts, government filings and other relevant
business documentation as a benchmark for compliance and ensuring
document integrity.
DISCLOSURE AND TRANSPARENCY
Ownership Structure
AP discloses its ownership structure in the reports it files with
the Securities and Exchange Commission (SEC) and the Philippine
Stock Exchange (PSE). It submits to the PSE a list of its top 100
shareholders every quarter. It likewise submits periodically to the PSE
a public ownership report that details the ownership of controlling
shareholders, including the shareholdings of their subsidiaries and
affiliates, and of directors and management. It also discloses its top 20
shareholders, including the record and beneficial owners owning more
than 5% of AP’s outstanding capital stock, as well as the shareholdings
of directors and officers in the Definitive Information Statement sent
out to shareholders annually.
As of December 31, 2007, Aboitiz Equity Ventures, Inc. (AEV)
owns 5.40 billion common shares of AP, representing 75% of the
outstanding capital stock of AP. Aboitiz & Company, Inc., in turn
owns 2.48 billion common shares of AEV, representing 43% of
the outstanding capital stock of AEV. PCD Nominee Corporation
(Foreign) holds a total of 1.49 billion common shares of AP,
representing 21% of the outstanding capital stock of AP.
Disclosures
AP discloses to the public its financial and operating results every
quarter through its filings with the SEC and the PSE. It also discloses
its full year financial and operating results in SEC Form 17-A filed
with the SEC and the PSE. Its shareholders are furnished a report of
its full year financial and operating results through the Definitive
Information Statement sent out to the shareholders every year.
In addition to the periodic reports submitted to the SEC and the
PSE, AP immediately updates the investing public with any material
fact or event related to AP and its business operations which may
affect investors’ decision in relation to the trading of AP’s securities.
In 2007, unstructured disclosures filed with the SEC and the PSE
contained information about significant asset acquisitions such
as the STEAG and the Ambuklao-Binga power plants, the Magat
refinancing, joint venture projects, status of ongoing projects,
and appointments of certain officers of AP. These unstructured
disclosures are also uploaded to AP’s website.
In addition to the
periodic reports
submitted to the
SEC and the PSE,
AP immediately
updates the
investing public
with any material
fact or event
related to AP
and its business
operations which
may affect
investors’ decision
in relation to the
trading of AP’s
securities.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 29

The Investor
Relations Unit is
responsible for
addressing the
various information
requirements
of the investing
public, particularly
the minority
shareholders.
Dealings in Securities
In compliance with disclosure rules of the SEC and the PSE, the members
of the Board of Directors and management disclose within five trading
days any acquisition, disposal or change in their beneficial shareholdings
in AP.
STAKEHOLDER RELATIONS
Shareholder Meeting and Voting Procedures
Annual and special meetings of shareholders are held in Cebu City
where the principal office of AP is located. Annual meetings of the
shareholders are held every third Monday of May of each year. In
addition, a separate shareholders’ briefing is conducted in Makati City
for shareholders who are unable to attend the annual shareholders’
meeting in Cebu City.
Notices and agenda of any shareholders’ meeting are sent to
shareholders of record at least 15 business days from the date of the
meeting.
Each common share of stock entitles the holder under whose name it
is registered to one vote in all matters that may be submitted for the
consideration of the shareholders during the meeting. Shareholders may
vote either in person or by proxy duly given in writing and presented to
the Corporate Secretary for inspection, validation and record at least
seven (7) days prior to the opening of the meeting.
Shareholder and Investor Relations
AP aims to promote a good relationship with its shareholders and
investors. An Investor Relations Unit was created to ensure the effective
and transparent communication of relevant information about AP to
its investing public. This is to ensure that the investing public has a
good understanding of AP and its plans and strategies, which open
communications redound to shareholder value creation.
The Investor Relations Unit is responsible for addressing the various
information requirements of the investing public, particularly the
minority shareholders. Timely disclosures to the PSE and the SEC,
regular quarterly briefings, one-on-one meetings, conference calls,
roadshows and investor conferences, website updates, emails and
telephone calls were the means by which AP, through its Investor
Relations Unit, conveyed its messages to the investing public last year.
In 2007, AP held two briefings on its financial and operating results.
The first was on the results for the first half of 2007 and the second
was on the results for the first nine months of 2007. Mostly in
attendance were institutional investors and sell side analysts. Apart
from venues like these, access to senior management was provided via
one-on-one meetings upon request.
AP participated in several investor conferences that were held
both locally and internationally. Senior management met with
buy side analysts and fund managers, and updated them of recent
developments, both industry and company specific.
AP launched its website, www.aboitizpower.com in August 2007. This
was in compliance with the 40-day blackout policy that was imposed
on AP in relation to its IPO. AP regularly updates the Investor Relations
section of its website. Filings with and disclosures to regulatory
agencies, press releases and presentations made during briefings were
immediately made available on this section. The regular release of the
Online Newsletter was also another way of updating the investing
public of the current developments in AP.
30 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

Employee Relations
In AP, people are treated not just as employees but as business
partners as well.
AP offers fair and competitive compensation commensurate to
employee qualification and performance on the job. It aims to
provide healthy balance between financial and non-financial
rewards, and continually measures its employees’ satisfaction and
morale level through annual surveys. A healthy work-life balance is
promoted throughout the organization. It is likewise committed to
providing a safe and healthy work environment for its employees.
AP places a high regard for its employees’ professional and personal
growth, and finds opportunities to develop each team member. It
cultivates life-long learning through high impact, quality training
programs designed to support employee career development path
and personal growth. Exemplary performers are developed through
a talent management program, which is designed for the next
generation of corporate leaders.
AP encourages an open-door policy, which allows employees to
talk and interact with top executives in the organization who serve
as leaders and mentors. This allows a free exchange of ideas and
experiences, promoting teamwork, collaboration, cooperation and
diversity within the organization.
CODE OF ETHICS AND BUSINESS CONDUCT
AP’s Code of Ethics and Business Conduct sets forth the basic
principles that guide the day-to-day activities of any of its
employee, officer or director. It is to be read together with other
existing policies and procedures of AP.
Under the Code, everyone within the AP organization is expected to
comply with the spirit and letter of applicable laws and regulations
to promote the avoidance not only of actual misconduct but even
the appearance of impropriety.
AP seeks to outperform its competition fairly and honestly through
superior performance, and every employee, officer and director is
expected to keep the best interests of customers paramount and
to deal fairly with suppliers, competitors and the public. Moreover,
every employee, officer and director is exhorted to act in the best
interest of AP and avoid any situation in which a conflict of interest
may arise.
Employees and officers are required to promptly report to the
Human Resources Department any potential relationship, action
or transaction that may give rise to a conflict of interest. Directors
are under obligation to disclose any actual or potential conflicts of
interest to the Chairman of the Board and the Compliance Officer.
All directors are also required to recuse themselves from any
Board discussion or decision affecting their personal, business or
professional interests.
The Code further prohibits the use of one’s position in AP or of
corporate property or information for personal gain. Protection of
proprietary and confidential information generated and gathered
in the conduct of business is considered the obligation of every
member of the AP organization. Conversely, everyone is also
expected to respect the property rights of other companies.
Insider trading is strictly prohibited under the Code and every
member of the AP organization is obligated to prevent the misuse of
inside information.
AP seeks to
outperform its
competition fairly
and honestly
through superior
performance
and every
employee, officer
and director is
expected to keep
the best interests
of customers
paramount and
to deal fairly
with suppliers,
competitors and
the public.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 31

The Code
promotes
a safe and
healthy working
environment that
provides equal
employment
opportunities
and prohibits
discriminatory
practices
and where all
individuals are
treated with
dignity and
respect.
The Code affirms AP’s commitment to provide fair and truthful
disclosures to the public. In particular, AP’s senior financial
officers, executive officers and directors are tasked to promote
full, fair, accurate, timely and understandable disclosure in AP’s
public communications and in all disclosures filed with the SEC
and other regulators. Furthermore, it is considered the obligation
of every member of the AP organization to report to the proper
officer or committee any materially inaccurate or misleading
statement in a public communication.
The Code further affirms AP’s obligation to maintain accurate and
complete books and records. In particular, senior financial officers
are tasked to ensure that financial information included in AP’s
books and records is correct and complete in all material respects.
The Code also promotes a safe and healthy working environment,
an environment that provides equal employment opportunities
and prohibits discriminatory practices and where all individuals are
treated with dignity and respect.
WEBSITE
Additional information on corporate governance principles and
practices of the Aboitiz Power Corporation is available at
www.aboitizpower.com.
M. Jasmine S. Oporto
CHIEF COMPLIANCE OFFICER
Some of Davao Light’s Safety Training Programs
32 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

P o w e r i n g
New Frontiers
F E A T U R E S
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 33

SN Aboitiz Power, INC
Powering hydro capacity
In November
2007, SN Aboitiz
Power Hydro,
Inc., another joint
venture company
with SN Power of
Norway, placed
a winning bid
for the 75-MW
Ambuklao and
100-MW Binga
plants in Benguet.
Aboitiz Power Corporation (AP) continued to power
new frontiers in 2007 through the acquisition of hydro
assets privatized by the government as mandated by the
Electric Power Industry Reform Act (EPIRA).
The acquisitions were done through SN Aboitiz Power,
Inc., a joint venture company with SN Power of Norway,
a partnership that has proven to be an effective
collaboration, allowing synergy between AP’s extensive
local expertise and SN Power’s global experience.
This partnership led to a successful acquisition of the
360-MW Magat plant, which is located along the border of
Ramon, Isabela and Alfonso Lista, Ifugao. The plant is a key
power generation facility in the Luzon grid as it is capable
of providing various ancillary services, including black start
capacity.
The Magat plant currently provides power to various electric
cooperatives in Region II and to five pumping stations of the
National Irrigation Administration (NIA) in the region.
The 360 -MW Magat complex, located at the border between Ramon, Isabela and Alfonso Lista , Ifugao in Northern Luzon has a historical average annual
generation of 916 million kwh. It supplies irrigation to 85.000 hectares of mostly riceland.
34 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

The rest of its capacity is traded in the wholesale
electricity spot market (WESM). Superior production
planning vis-avis the water regime constraints imposed
by the irrigation daily requirements and the rule curve
serves as the key to Magat’s success.
In November 2007, SN Aboitiz Power-Benguet, Inc.,
another joint venture company with SN Power of Norway,
placed a winning bid for the 75-MW Ambuklao and 100-
MW Binga plants in Bokod and Itogon, Benguet.
These plants are located in the Upper Agno River and are
upstream of the San Roque Multipurpose Power Project
in Pangasinan that was built in the late 1990s under a
build-operate-transfer scheme. This acquisition will allow
SN Aboitiz to have a more robust participation in the
electricity spot market, and will likewise further boost its
ability to provide ancillary services in the Luzon grid.
SN Aboitiz Power is also poised to participate in
the bidding for Independent Power Producers (IPP)
Administration contracts to allow it to trade in the
WESM the electricity generated by IPPs operating under
take-or-pay agreements with the government.
The trading room has redundant connectivity to
the Magat power plant to ensure round-the-clock
communications capability between the trading room
and the Magat operations office. This redundant
setup will be replicated in the Ambuklao and Binga
power plants.
The company has put together a mixed Filipino-
Norwegian team for plant operations and a formidable
power trading team that has been performing well in
its participation in the WESM. Norwegian experts from
Statkraft, one of the parent companies of SN Power,
provide advice and analytical tools to further beef
up the trading team’s capability. Trading activities
are governed by preset limits and monitored by an
oversight team to ensure control.
SN Aboitiz Power’s trading team is considered one
of the finest, if not the best, in the local spot market
business.
Magat Project Finance:
Deal of the Year
The US$380-million financing for the privatization of the Magat
hydropower plant was the recipient of four prestigious awards in 2007,
making it the Power Deal of the Year.
These were Best Privatization and Best Project Finance in The Asset’s
Triple A House and Deal Awards for 2007; Asia Pacific Power Deal of the
Year given by the Project Finance International (PFI); and Best Vanilla
Deal in Southeast Asia awarded by Alpha Southeast Asia Magazine.
The award-giving bodies are international finance publications that
conduct research, provide global news, features, key trends and analysis
on the latest project finance deals and developments around the world.
In the PFI Yearbook 2008, the Magat financing is referred to as a
“landmark”, representing a milestone for power project finance not
only in the Philippines but also in Asia. The Magat transaction is the first
limited recourse project finance granted to a merchant power plant in
the Philippines.
Power Trading Facility
The company has a state-of-the-art power trading
facility that has four fixed terminals/workstations
and one mobile workstation that are all capable
of interacting via Internet access with the Market
Management System of WESM operated by the
Philippine Electricity Market Corporation.
Trading activities are governed by preset limits and
monitored by an oversight team to ensure control.
SN Aboitiz Power secured the US$380-million loan from a consortium of
international and domestic financial institutions to fully pay its US$530-
million winning bid for the Magat facility.
The US dollar lenders are the International Finance Corp. and the Nordic
Investment Bank. The peso lenders are Banco de Oro Unibank, Inc., Bank
of the Philippine Islands, China Banking Corp., Development Bank of the
Philippines, Hongkong and Shanghai Banking Corp., Philippine National
Bank and Security.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 35

Hedcor, Inc.
Powering growing markets with Cleanergy
In 2007, Hedcor
focused its
resources
and efforts
in expanding
its generating
capacity and
improving the
efficiency of
its existing
hydropower
plants.
In 2007, Hedcor, Inc. focused its resources and efforts
in expanding its generating capacity and improving
the efficiency of its existing hydropower plants. The
company is driven by a clear strategy to deliver viable and
sustainable renewable energy projects in the country.
With its experience in greenfield development and the
expertise of its technical team, Hedcor is powering
growing markets with Cleanergy, Aboitiz Power’s brand of
renewable energy.
Based on the Department of Energy’s 2006 Power
Development Plan, the energy situation in Mindanao will be at
a critical level by 2009. The region will need an additional 115
megawatts (MW) of new capacity to support its 6.5 percent
average annual growth rate.
In 2007, Hedcor signed a 12-year power supply agreement
(PSA) with Davao Light & Power Company, Inc. (DLPC) to
provide the utility with 400 million kilowatt-hours (kwh) of
clean energy annually. The PSA assures DLPC customers of
clean and reliable energy to power their growing economy.
36 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

The annual energy requirement will be met with the
development of two vital greenfield projects in Davao
Province – the 42-MW Sibulan Hydropower Project (SHP)
and the 34-MW Tamugan Hydropower Project (THP).
Both these run-of-river hydropower projects support the
Philippine Government’s goal of increasing the country’s
renewable energy-based capacity and attaining energy
self-sufficiency through the development of indigenous
sources such as hydro.
For its SHP project, Hedcor has secured the necessary
permits and licenses for the project including an
Environmental Compliance Certificate from the
Department of Environment and Natural Resources.
The total energy from the SHP and THP will prevent the
release of more than 200,800 tons of carbon dioxide
equivalents (tCO2e) in the atmosphere every year. With
this, SHP applied for the Clean Development Mechanism
(CDM) registration last March 2007.
The CDM is a market-based flexibility mechanism
included in the Kyoto Protocol that allows developed
countries to earn “certified emission reduction” units
(CERs) to be used for fractional compliance with their
greenhouse gases’ reduction commitments.
Once registered as a CDM project, the Sibulan plants will
have the opportunity to be issued CERs that can then be
traded in the worldwide CER Market. Revenues from the
SHP’s CER sales are projected to be between 80
million and 100 million annually.
In 2007, the company’s 15 mini hydro plants generated
162 million kwh in 2007, exceeding their annual target
by five percent due to a prolonged rainy season. This
amount of clean energy also prevented the release of
about 85,000 tCO2e into the atmosphere and saved the
country from importing 400,600 barrels of oil.
Being at the forefront of the renewable energy
industry, Hedcor continues to look at the possibilities of
developing other hydro potentials in the Benguet and
Davao regions.
Supplying energy
for the future
Aboitiz Power Corporation (AP) has
certainly come a long way in building its
renewable energy business. From its humble
beginnings in 1972 as a lessee and operator
of a 3.5-MW hydro plant in Talomo, Davao
owned by the National Power Corporation, AP
is today the country’s largest conventional
hydro owner and operator.
Upon turnover of the Ambuklao-Binga plants
this year, AP will have total investments
in 643 MW of hydro capacity. Taking its
corresponding ownership in these assets, AP
has an attributable capacity of 340 MW of
hydro, equivalent to 59% of its generating
capacity.
The company believes that today, more than
ever, clean and renewable energy will play an
increasingly important role in the supply of
energy for the future.
With this in mind, AP has set its sights on
developing more greenfield capacity after
its Sibulan and Tamugan hydro projects in
Davao. It also intends to bid for other NPC
assets, both hydro and geothermal, being
sold by PSALM.
AP has developed its own brand of clean and
renewable energy called Cleanergy. It is the
company’s vision to make Cleanergy available
to every Filipino.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 37

IN PREPARATION FOR OPEN ACCESS
Powering customer service
Davao Light
has been
implementing
customer service
enhancements
long before open
access became
a buzzword.
Its emergency
response
statistics show
that it has
surpassed other
Asian distribution
companies in this
aspect.
As the power industry heads towards a more competitive
environment, utilities are faced with a tougher challenge:
more demanding customers who now have the power of
choice. Competition forces industry players to become more
efficient, to listen to customers’ needs and strive towards
service excellence above all.
In anticipation of open access and retail competition,
significant changes in the supply side of the business had to
be made.
Since electricity is a generic product, a distribution utility
(DU) can only differentiate itself from its competitors by the
quality of its product and the delivery of its service.
DUs of Aboitiz Power Corporation (AP) have long been
preparing for this inevitable but welcome change. They
have lined up a range of value propositions designed to
meet the customers’ individual preferences. Even as
these DUs currently operate as a natural monopoly within
their respective franchise areas, efficiency and customer
satisfaction remain their top priorities.
Leading the way in efficiency and customer service are
Davao Light & Power Company, Inc. (DLPC) and Visayan
Electric Company, Inc. (VECO).
Davao Light has been implementing customer service
enhancements long before open access became a buzzword.
Its emergency response statistics show that it has surpassed
other Asian distribution companies in this aspect.
The company has implemented a one-day installation of
residential meters as it believes that fast service creates a
good and lasting impression to an incoming customer. Its goal
is that upon the customer’s return home after submitting his
application documents, he sees his house already connected
upon nightfall that same day.
Davao Light’s call center has also long been in place with
representatives trained to handle almost all kinds of complaints,
inquiries and requests without having to pass these on to another
employee. For easy recall, the utility acquired the telephone
number 229-DLPC. The center also uses a Customer Relationship
Management System (CRMS) developed in-house to appropriately
fit the utility’s unique requirements.
The company takes its call center service a step further
by informing customers in advance of scheduled power
interruptions. Representatives also call back customers upon
resolution of their complaints to ensure and confirm that they are
satisfied with the service DLPC had provided.
38 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

Gone are the long queues at VECO’s full-service center at the SM City (at left) and in Talisay.
To ensure uninterrupted service to hospitals, water service providers,
airport, city hall and other government offices, military and police
institutions, DLPC has a 54.7-MW standby power plant. On a sustained
basis, it can generate 40 MW and serve 17% of DLPC’s peak demand of
235 MW.
To minimize or totally eliminate service interruptions during
maintenance or load transfers, DLPC has a 33 MVA mobile substation to
either replace substations that need to undergo prolonged maintenance
or act as backup should one of its substations need repair.
For its part, VECO is unceasing in its search for new ways to serve its
customers better.
In the first quarter of 2007, the company, together with UnionBank and
Bancnet Philippines launched its online payment system. Customers
can either pay their electric bill online through Internet banking or via
Automated Teller Machines.
In October 2007, VECO opened its Talisay full-service center for
customers in the southern part of Cebu. Modeled after the first fullservice
center in SM City Cebu, the new one-stop shop facility provides
a complete range of services from collection, payment arrangements,
complaints handling, application processing and metering services.
Gone are the long queues with eight tellers now handling customers’
concerns simultaneously.
In May 2008, the company made a major move as it transferred the
frontliners of its Line Services Department (LSD) based in the company’s
corporate headquarters in Banilad to the SM mall. The LSD receives and
processes power applications for above eight kilowatts per month
consumption. The transfer makes the department more accessible
to customers and adds another service to the SM center.
The company also has a dedicated team assigned to handle
the needs of “strategic” customers, those with a kilowatt-hour
demand of 500 kilowatts and above. The Key Accounts and Retail
Supply Department under the Utility Economics Group, is tasked to
keep strategic customers satisfied in order to attract, retain and/or
recover them, once open access and retail competition are in place.
Formerly known as the Power Marketing and Sales Department,
the group was created in 1999 in anticipation of open access as
mandated by the EPIRA. To address this challenge, Key Accounts
representatives take extra care of the needs of these strategic
customers and make monthly visits offering value-added
services such as thermal scanning, IV scanning, load logging and
transformer testings.
In terms of customer service, VECO’s service level statistics have
improved by leaps and bounds. Its emergency response times
are now at par with those of Davao Light. The same goes for
meter installations. Its same-day and one-day meter installation
statistics are at the same high level as Davao Light.
The goal of Aboitiz Power companies is to achieve consistency
in efficiency and customer service delivery for all its customers
and ultimately be the utility of choice once open access and full
competition are in place.
In October 2007,
VECO opened
its Talisay fullservice
center for
customers in the
southern part of
Cebu, modeled
after the first one
in SM Cebu.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 39

ABOITIZ POWER ENERZONES
Powering industrial estates
AP’s acquisition
of MEZ, BEZ and
the remaining
stake in SEZ was
a strategic move
to consolidate the
group’s business
of distributing
power in industrial
estates.
In 2007, Aboitiz Power Corporation (AP) fully acquired the
distribution utilities of two special economic zones in Cebu
and bought out the remaining stake in an ecozone utility
already majority-owned by the company.
AP’s acquisition of Mactan EnerZone (MEZ), Balamban
EnerZone (BEZ), and the additional stake in Subic EnerZone
(SEZ) was a strategic move to consolidate the group’s
business of distributing power in industrial estates and
building a niche business focused on this area. The company
looks at these units as markets for its power in the future.
The Hanjin shipyard at the Redondo Peninsula in Subic
40 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

The three utilities aim to provide customers with reliable and
reasonably-priced electricity to help power up industrial growth
in the country.
MEZ distributes power at the Mactan Export Processing
Zone II (MEPZ II) in Mactan Island, Cebu. MEPZ II currently
has 75 locators, many of which are semiconductor firms and
electronics manufacturers.
BEZ is the electricity provider in the Western Cebu Industrial
Park (WCIP) in Balamban, Cebu. Balamban is home to the
shipbuilding facilities of Tsuneishi Heavy Industries (Cebu)
and FBMA Marine, as well as the modular fabrication facility of
Metaphil International. Demand for power in the WCIP, which
currently has 10 locators, is expected to grow substantially in
2008 due to the expansion of Tsuneishi’s shipbuilding facilities
and the completion of the new plants of Air Liquide and SIG.
The West Cebu Industrial Park in Balamban, Cebu where the Tsuneishi shipyard is located.
SEZ has been managing the power distribution system of
the Subic Bay Freeport Zone since 2003 under a Distribution
Management Services Agreement (DMSA) with the Subic Bay
Metropolitan Authority (SBMA). The DMSA covers a period of
25 years, with SEZ paying SBMA 40 million annually for the
lease of its power facilities and other properties.
In just four years, SEZ has dropped the systems loss from 14%
to 4.0% allowing it to lower its power rates. The distribution
charge was reduced from 1.00 per kilowatt-hour (kwhr) to
0.59/kwhr upon turnover; the reduction of the system losses
resulted to further savings to the customer amounting to
approximately 0.48 per kwhr.
Power demand in the freeport zone is expected to grow rapidly
in the coming years with the operations of its new container
terminal and the Hanjin Heavy Industries’ multi-billion shipyard,
as well as the opening of the Subic-Clark-Tarlac Expressway. As
of February 2008, SEZ had 2576 customers.
In 2007, SEZ signed a Memorandum of Agreement to provide
power to Hanjin’s shipyard located at the Redondo Peninsula.
With the energization of the peninsula, more investors are
expected to locate in the area.
To help serve this surge in power demand and in anticipation
of the influx of more investments into Subic in the next few
years, AP together with Taiwan Cogeneration Corporation, is
developing a 300-MW coal plant near the Hanjin shipyard. The
plant is scheduled for completion in 2011.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 41

The CPPC and
EAUC plants
are designed
for maximum
flexibility of
operations,
ensuring reliable,
responsive
and efficient
power supply
and services to
customers.
East Asia Utilities Corporation
Cebu Private Power Corporation
Powering a tight market
With the increasing power consumption demand in Cebu,
additional power capacity is needed to meet the needs of
the island. Reserve requirements have tightened leaving the
grid vulnerable.
But private utilities like the East Asia Utilities Corporation
(EAUC) and the Cebu Private Power Corporation (CPPC)
have been providing reliable power to the Mactan Economic
Zone 1 and Visayan Electric Company, Inc. (VECO) in this
time of tightness in the power market. The fact that these
plants are embedded in the markets they serve are an added
advantage resulting to improved voltage and quality of
power. Without these two plants, brownouts will surely be a
common occurrence.
Both the EAUC and CPPC plants are designed for maximum
flexibility of operations, ensuring reliable, responsive and
efficient power supply and services to their dedicated
customers when they need the power.
EAUC began commercial operations in December 1997,
with its 50 megawatts (MW) primarily for the use of
locators of the Mactan Export Processing Zone 1 (MEPZ
1). Located in a two-hectare coastal site within MEPZ 1,
the plant is powered by four MAN B&W bunker-fuel fired
engines coupled with Ideal electric generators. Each unit
has a rated capacity of 12.4 MW, giving the plant a total
installed capacity of 49.6MW.
42 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007
The EAUC plant located in Mactan Island, Cebu.

CPPC, meanwhile, is situated on a 1.8-hectare lot in
the old VECO compound in Bgy. Ermita, Cebu City. The
company started as a joint venture of EAUC with VECO
to boost the latter’s capacity by 72 MW to help meet
the increasing power demand of Cebu’s residential and
business population.
VECO supplies power to the cities of Cebu, Mandaue and
Talisay and six municipalities of the greater part of Metro
Cebu, servicing an area of roughly 627 square kilometers,
with over 288,000 customers. The plant, which began full
commercial operations in November 1998, is powered by
10 Caterpillar-MaK diesel engines.
In the future, when cheaper base load capacity is built in
Cebu, EAUC and CPPC would still provide a crucial role of
providing ancillary and back-up services to the grid, as
well as other power producers.
CPPC, which is one of
the largest power plants
in Cebu, supplies 62 MW
of power to VECO.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 43

STEAG State Power Inc.
Powering Mindanao
The SPI
investment is
very strategic
for Aboitiz
Power because
aside from
its expansion
potential,
the plant is
mitigating a
shortage of
power supply
and improving
the reliability
of power in
Mindanao.
In 2007, Aboitiz Power Corporation (AP) bought a 34%
share from Evonik Steag GmbH in its Philippine special
purpose company STEAG State Power Inc. (SPI). The
share purchase agreement was signed in August after
AP’s winning bid of US$91.91 million and the transaction
was closed on November 15, 2007.
SPI owns and operates the 232-MW (gross) coal-fired
Mindanao Power Plant located within a 55-hectare lot
at the PHIVIDEC Industrial Estate in Misamis Oriental,
Northern Mindanao.
With the purchase agreement, AP becomes an equity partner
with majority stockholder Evonik Steag GmbH, Germany’s
fifth largest power generator, which holds 55% of SPI and
State Investment Trust, Inc. with its 11% stake.
Aside from its attractive contracts with NPC and its coal
supply, this investment is very strategic to AP for several
reasons. It is the first coal plant to be built in Mindanao,
providing the island with much-needed base load capacity,
mitigating a shortage of power supply. It has also expanded
the grid’s electricity generation mix resulting in a more stable
44 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007
The Mindanao Power Plant of STEAG
State Power Inc. (SPI) is the newest
and most modern power plant in the
country’s second biggest island.

and reliable supply of electricity. Expanding the plant will also
be easier and less costly than putting up a greenfield facility,
giving SPI an edge over other power plant developers.
The required systems reserve margin for Mindanao is at least
21%. The plant has an installed capacity of 232 MW and
generates about 1 billion kilowatt-hours of power each year.
This covers about 15 percent of the electricity needs of the
island, which has some 20 million inhabitants. The electricity
generated is supplied to the state-run National Power
Corporation over a period of 25 years.
The plant’s net-generating output of 210 MW has increased the
island’s systems reserve margin from a critical level of 13% prior
to the plant’s operation to a more comfortable level of 24%
after the start of full commercial operations in November 2006.
In 2007, the plant accounted for about 20% of the total
electricity supply to the Mindanao grid. It has contributed
stability and supply reliability necessary to sustain the island’s
promising economic growth and development.
SPI built the plant under a build-operate-transfer (BOT)
arrangement. It enjoys a six-year income tax holiday from the
Board of Investments.
Evonik Steag GmbH specializes in the production of electricity
from coal and renewable sources. As a full-service provider,
it focuses on engineering and consulting skills in the design,
building and operation of ultra-modern power plants
worldwide.
In 2007, the
plant accounted
for about 20%
of Mindanao’s
total electricity
supply and has
contributed
stability and
supply reliability
necessary to
sustain the
island’s promising
economic
growth and
development.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 45

CORPORATE SOCIAL RESPONSIBILITY
Empowering communities
The strong
commitment to
corporate social
responsibility and
the deep sense
of sharing and
belongingness
in a community
propel Aboitiz
Power companies
to support and
assist their host
communities.
The strong commitment to corporate social responsibility and the
deep sense of sharing and belongingness in a community propel
companies of Aboitiz Power Corporation (AP) to support and
assist their host communities. AP companies actively implement
CSR programs and projects in areas where they operate.
The fulfillment of sharing the fruits of their company’s operations
and improve the quality of life of residents in their host
communities goes far beyond the company’s bottomline figures.
As a group, AP companies allocated a total of 86 million for
various social development initiatives in 2007.
The bulk of the different interventions conducted by the
companies are in the area of community development wherein
a percentage of company revenues is shared with the host
communities for use in various social development projects.
Continuing projects that are specific to power companies like rural
electrification were also implemented.
Further, the allocation of a special fund as mandated by the
Department of Energy ER 1-94 has helped communities in
alleviating poverty in their respective areas. ER 1-94 is a program
in partnership with the generation facilities/private sector
wherein the generation facility allocates one centavo for every
kilowatt hour of total electricity sales as financial benefits to the
communities hosting the power plants.
The funds are used to finance community projects proposed by
the host communities. The projects should show potential for
enhancing progress, provide a decent source of livelihood, and uplift
the community’s general economic conditions.
AP companies also supported education-related activities such as
infrastructure building, computerization programs, values formation
training, scholarships and financial assistance programs. They also
undertook initiatives in environment and enterprise development.
46 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

The fulfillment of
sharing the fruits
of their company’s
operations and
improve the
quality of life of
residents in their
host communities
goes far beyond
the company’s
bottomline
figures.
Aboitiz Power, through the Aboitiz Group Foundation,
also supports education-related activities in
partnership with the Department of Education.
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 47

ABOITIZ POWER COROPORATION
LOCATION OF OPERATIONS
CORPORATE STRUCTURE
MANILA
LUZON
SN Aboitiz Power- Magat, Inc.
Luzon Hydro Corporation
Hedcor, Inc.
SN Aboitiz Power - Benguet, Inc.
San Fernando Electric Light & Power Co.,Inc.
Redondo Peninsula Energy, Inc.
Subic EnerZone Corporation
Generation companies: %
SN Aboitiz Power - Magat, Inc. 50
SN Aboitiz Power - Benguet, Inc. 50
Hedcor, Inc. 100
Hedcor Sibulan, Inc. 100
Hedcor Tamugan, Inc. 100
Luzon Hydro Corporation 50
Cebu Private Power Corporation 60
East Asia Utilities Corporation 50
Abovant Holdings, Inc. 60
STEAG State Power Inc. 34
Southern Philippines Power Corporation 20
Western Mindanao Power Corporation 20
Redondo Peninsula Energy, Inc. 50
VISAYAS
CEBU
DAVAO
MINDANAO
Balamban EnerZone Corporation
Abovant Holdings, Inc.
Aboitiz Power Corporation
Visayan Electric Company, Inc.
Cebu Private Power Corporation
Aboitiz Energy Solutions, Inc.
Mactan EnerZone Corporation
East Asia Utilities Corporation
STEAG State Power Inc.
Western Mindanao Power Corporation
Davao Light & Power Company, Inc.
Hedcor Tamugan, Inc.
Hedcor Sibulan, Inc.
Cotabato Light & Power Company
Distribution companies:
Davao Light & Power Company, Inc. 100
Visayan Electric Company, Inc. 55
Subic EnerZone Corporation 100
Cotabato Light & Power Company 100
Mactan EnerZone Corporation 100
Balamban EnerZone Corporation 100
San Fernando Electric Light & Power Company, Inc. 44
Services
Aboitiz Energy Solutions, Inc. 100
Southern Philippines Power Corporation
48 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

Board of Directors
Jon Ramon M. Aboitiz
CHAIRMAN
Ernesto R. Aboitiz
VICE CHAIRMAN
Erramon I. Aboitiz
DIRECTOR
Luis Alfonso Y. Aboitiz
DIRECTOR
Mikel A. Aboitiz
DIRECTOR
Juan Antonio E. Bernad
DIRECTOR
Antonio Moraza
DIRECTOR
Pablo V. Malixi
INDEPENDENT DIRECTOR
NOMINATION COMMITTEE MEMBER
Manuel S. Go
INDEPENDENT DIRECTOR
AUDIT COMMITTEE CHAIRMAN
COMPENSATION COMMITTEE MEMBER
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 49

Corporate Officers
Erramon I. Aboitiz
PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Luis Alfonso Y. Aboitiz
EXECUTIVE VICE PRESIDENT
POWER DISTRIBUTION GROUP
Juan Antonio E. Bernad
EXECUTIVE VICE PRESIDENT
STRATEGY & REGULATORY AFFAIRS
Luis Miguel O. Aboitiz
SENIOR VICE PRESIDENT
POWER GENERATION GROUP
Jaime Jose Y. Aboitiz
SENIOR VICE PRESIDENT
POWER DISTRIBUTION GROUP
Iker M. Aboitiz
FIRST VICE PRESIDENT
CHIEF FINANCIAL OFFICER
CORPORATE INFORMATION OFFICER
Gabriel T. Mañalac
FIRST VICE PRESIDENT
TREASURER
Alvin S. Arco
VICE PRESIDENT
REGULATORY AFFAIRS
50 • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007

Corporate Officers
Benjamin A. Cariaso, Jr.
VICE PRESIDENT
BUSINESS DEVELOPMENT
Anastacio Cubos, Jr.
VICE PRESIDENT
SPECIAL PROJECTS
Carmela I. Naranjilla
ASSISTANT VICE PRESIDENT
INVESTOR RELATIONS
Cheditas O. Saavedra
ASSISTANT VICE PRESIDENT
COMPTROLLER
M. Jasmine S. Oporto
CHIEF COMPLIANCE OFFICER
CORPORATE SECRETARY
Joseph Trillana T. Gonzales
ASSISTANT CORPORATE SECRETARY
ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 • 51