In a disclosure to the Philippine Stock Exchange, First Gen said its attributable net income to parent dropped by 55 percent to $16.1 million from $36.1 million in the same period last year.

In a disclosure with the Philippine Stock Exchange, First Gen said the decline in earnings were due to lower contributions from Energy Development Corp. (EDC) and First Gen Hydro Power Corp. (FG Hydro) which operates the 132- megawatt (MW) Pantabangan-Masiway hydroelectric power plants.

First Gen said EDC’s reduced earning were driven by the suspension of steam sales to the National Power Corp. for Bacon-Manito and the ongoing rehabilitation of its steam fields following the acquisition of the power plants in September last year.

EDC reported $9.6 million in earnings in the first quarter from $21.4 million in the same period last year.

FG Hydro also suffered from markedly lower income in the first quarter due to reduced water inflow and cooler weather, which resulted in lower demand and electricity rates in the Wholesale Electricity Spot Market (Wesm).

First Gen said the drop in FG Hydro’s income contribution dropped by $14.6 million to $2.9 million in the first quarter from $17.5 million in the same period last year.

First Gen’s consolidated revenues also fell by 10 percent to $314.1 million in the first quarter from $351.3 million. It added that revenues from equity in net earnings of associates—EDC and FG Hydro—dropped by $25.4 million.

“The lower earnings from our affiliates, EDC and FG Hydro were expected. EDC is undertaking needed improvements to its steam files and power plants, particularly in BacMan, that will boost its electricity output going forward,” Francis Giles Puno, First Gen president, said.

He added that they also realized that FG Hydro’s earnings from Wesm were extraordinarily high last year. “We are fortunate that FG Hydro is about 40-percent contracted. The First Gas plants continue to deliver stable earnings while the lower financing costs at the parent company helped offset the lower contribution of our affiliates,” Puno said.

First Gen said the sales from electricity were driven by the combined dispatch of First Gas’ 1,000-MW Santa Rita and 500-MW San Lorenzo natural gas-fired power plants  that was 87 percent in the first quarter from 76 percent in the same period last year.

Amid the substantially higher dispatch, First Gen said revenues from the sale of electricity were lower by 4 percent to $300.5 million in the first quarter from $311.9 million a year ago.

First Gen also pointed out that First Gas plants operated on natural gas in the first quarter of last year. The reduction in revenues, however, was offset by corresponding declines in the pass-through fuel charges to First Gas’ electricity offtaker—the Manila Electric Co.

For the first quarter, First Gen said First Gas’ plants delivered stable earnings of $33.2 million.

The decrease in earnings contribution from EDC and FG Hydro, according to First Gen, was partly offset by lower interest expenses due to reduced debt at Red Vulcan Holdings Corp., the company which directly owns 40 percent of EDC and at the parent company.

In a separate disclosure, EDC confirmed that its net income dropped by 61.4 percent to P1.45 billion for the first quarter of the year from P3.77 billion a year ago, while its core net income also declined by 61 percent to P1.23 billion from P3.16 billion.

“The income result for the quarter is generally in line with our expectation for revenues to decline in the interim mainly due to forgone steam sales for our BacMan project following the acquisition of the power plants in September 2010 and increased costs related to our acquisitions. As explained before, we are a company in transition, in investment mode for the future,” Richard Tantoco, EDC president and chief operating officer, said.

EDC added that it incurred higher operating expenses for the period primarily due to increased operations and maintenance expenditures for the rehabilitation of the BacMan steam field facilities as well as taxes paid for our newly acquired assets.  

“It is necessary to accelerate this to re-commission the BacMan power plants within the year,” Tantoco added.    

EDC, through its subsidiaries Green Core Geothermal Inc. (GCGI) and Bacman Geothermal Inc. (BGI), acquired the Napocor-owned geothermal power plants that source steam from the EDC’s steam field assets.  With the acquisition, EDC’s steam field and power plant operations became fully integrated making its operations more efficient and cost-competitive.

EDC has invested in the rehabilitation of the Tongonan, Palinpinon and Bacman power plants to bring them back to their rated capacities.  As it is, the Tongonan and Palinpinon power plants have already realized significant improvements in terms of availability and reliability.

At the close of 2010, GCGI successfully sealed long-term power supply contracts with electric cooperatives in Leyte and Negros islands.

EDC remains the largest producer of geothermal energy in the Philippines accounting for 62 percent of the total country’s installed geothermal capacity and is the largest integrated geothermal power company in the world.  Aside from geothermal, EDC also owns and operates the 132-MW Pantabangan-Masiway hydroelectric plant and has investments in wind energy projects in Ilocos Norte and other provinces.