2007 ANNUAL REPORT Power Corporation - Aboitiz Equity Ventures

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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
Page 1 and 2: Power Corporation Powering New Fron
Page 3 and 4: P o w e r i n g New Frontiers ABOIT
Page 5 and 6: FINANCIAL SUMMARY For the Year (In
Page 7 and 8: R E P O R T T O O U R S T O C K H O
Page 9 and 10: h Powering New Frontiers With deman
Page 11: Results of Operations POWER D I S T
Page 15 and 16: A SFELAPCO crew does live line work
Page 17 and 18: Results of Operations POWER G E N E
Page 19 and 20: POWER G E N E R A T I O N Hedcor si
Page 21 and 22: STEAG State Power Inc. (SPI) contri
Page 23 and 24: We expect our distribution companie
Page 25 and 26: The strong and stable financial per
Page 27 and 28: DIRECTORS SPECIAL AND REGULAR BOARD
Page 29 and 30: Director and Senior Executive Compe
Page 31 and 32: The Office of the Chief Compliance
Page 33 and 34: Employee Relations In AP, people ar
Page 35 and 36: P o w e r i n g New Frontiers F E A
Page 37 and 38: The rest of its capacity is traded
Page 39 and 40: The annual energy requirement will
Page 41 and 42: Gone are the long queues at VECO’
Page 43 and 44: The three utilities aim to provide
Page 45 and 46: CPPC, meanwhile, is situated on a 1
Page 47 and 48: and reliable supply of electricity.
Page 49 and 50: The fulfillment of sharing the frui
Page 51 and 52: Board of Directors Jon Ramon M. Abo
Page 53: Corporate Officers Benjamin A. Cari

2007 ANNUAL REPORT Power Corporation - Aboitiz Equity Ventures

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