(1st Endorsement by the Securities and Exchange Commission)

View List of Generation Companies Issued with 2nd Endorsement as of April 2017

The year 2016 is characterized by a significant increase in electricity consumption at 10% and peak demand at 8.7% attributed to several factors such as the increase in temperature and utilization of cooling equipment aggravated by the strong El Niño, the conduct of National and Local elections during the first half of the year, increase in economic growth, and entry of large power generating plants. The residential and industrial sectors remained the major drivers of electricity consumption in the country while Luzon remained the largest on a per grid basis.

Notably, the growth of the country’s supply base supplemented the increase in demand with the growth of total installed capacity at 14% from 18,765 MWh (2015) to 21,423 MWh (2016) majority coming from coal-fired power plants. Among the three grids, Mindanao has the highest recorded growth in terms of capacity at 31% from 2015-2016. From 2017-2025 a total of 5,068 MW committed projects are expected to come online. The DOE is continuously encouraging investments in power generation in view of the increasing peak demand which is expected to grow by more than triple* in 2040.

Along with supply security, the DOE also embarks on increasing the reliability and resiliency of the system. In 2016, several yellow and red alerts were declared by the system operator in Luzon and Visayas in addition to the major grid disturbances and load dropping incidents. Among the three major grids, Mindanao was adversely affected by El Niño which caused the decline in hydro power generation and curtailment of supply during the first half of 2016. The entry of large coal-fired power plants in Mindanao on the latter part of 2016 has addressed these supply shortfalls.

Electricity Sales and Consumption Highlights

• Electricity consumption grew significantly from 82,413,213 MWh (2015) to 90,797,891 MWh (2016). This year’s growth level increased to 10.2% compared to the 6.7% growth from 2014-2015. The substantial increase is due to the strong El Niño which affected the entire country during the 1^st half of 2016.

• This increase is primarily driven by the growth of residential consumption at 12.7% from 22,747,049 MWh (2015) to 25,631,254 MWh (2016) due to high requirements for cooling system.

• On a per grid basis, Mindanao’s electricity consumption grew the highest at 12% boosted by the own-use consumption of newly operational and large coal-fired power plants. Own-use consumption in Mindanao massively increased from 395,268 MWh to 651,156 MWh which is equivalent to a 64.7% growth rate in 2016.

• In terms of share, Luzon, Visayas and Mindanao contributed 74%, 13.5% and 12.5% shares, respectively. The residential sector, together with the industrial sector, comprised more than half of the total Philippine electricity consumption. Own-use and systems loss have at par shares at 9%.

Comparative Peak Demand, Actual 2015-2016 vs. Forecast