2007 ANNUAL REPORT Power Corporation - Aboitiz Equity Ventures

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