The following are the possible adverse impacts to the Company’s businesses, results of operations, cash
flows, and financial condition:
a) decline in customer demand as a result of general decline in business activity;
b) further destabilization of the markets and decline in business activity negatively impacting
customers’ ability to pay for the Company’s services when due or at all, including downstream
impacts, whereby the utilities’ customers are unable to pay monthly bills or receive a moratorium
from payment obligations, resulting in inability on the part of utilities to make payments for power
supplied by our generation companies;
c) decline in business activity causing our industrial customers to experience declining revenues and
liquidity difficulties that impede their ability to pay for power supplied by our generation
companies;
In particular, while it would be premature to predict the overall impact of the pandemic, the Company
expects continuing adverse impacts in the year 2022. After the significant Philippine energy demand drop
in 2020 due to COVID-19, the economy sharply rebounded in 2021 and demand for the first six months of
2021 returned to 2019 levels. This sharp increase in demand, coupled with a significant number of
unplanned outages in April and May 2021, resulted in a supply deficit which caused high and volatile
WESM prices. WESM had high spikes from April to July 2021 reaching up to averages of ₱7.1/KWh, and
grid alerts caused rotating blackouts in June 2021. Average WESM prices continued to remain high for the
second half of the year, despite cooler weather and additional volume from the newly commissioned 600
MW plant of another 44 power provided in the fourth quarter of 2021. The year ended with an average
WESM price of ₱5.1/KWh in November 2021 and ₱6.3/KWh in December 2021, higher than the historical
coldweather prices of below ₱3.0/KWh during these months