Enhancing Corporate Value 2011 SR

Sustainability Report 2011San Roque Power Corporation

P H I L I P P I N E S

ENHANCING CORPORATE VALUE

2 San Roque Power Corporation

Sustainability Report 2011

contents

Our CoverEnhancing Corporate Value. Transform the communities, inspire our workforce, nurture the environment and increase fi nancial returns.


3San Roque Power Corporation

We are fortunate to be recognized as a silver awardee in the CSR Leadership category during the 4th Global CSR

Summit on April 19 in Boracay. Although the award was presented to an individual who has contributed to the promotion of CSR, this would not have been possible without the support of my SRPC family. The award is also shared with all our stakeholders to whom the company is committed to bring out the best in our operation.

My driving force in doing CSR is my fi rm belief that CSR enhances corporate value. When we launched our new vision statement, “The Power To Energize Lives,” management underscored the importance of social responsibility as one of our core values. The company then led an aggressive pursuit in initiating an expansive CSR undertaking not only in the communities where we operate but taking into consideration all our stakeholders. I believe that the fulfi lment and adherence of the company to achieve sustainable growth is a long term strategy that entails the participation and support of our stakeholders.

MESSAGE FROM THE PRESIDENT & CEO



Our Core Business. As a peaking plant, the San Roque Hydro Power Plant is operated for eight hours at its contracted capacity of 95 MW. But because the irrigation component of the San Roque Multipurpose Project (SRMP) has not been completed, the power plant is required to operate 24 hours daily to provide the water requirements for irrigation in eastern and central Pangasinan.

In 2011, we generated a total of 1,082.27 gigawatt-hours without any forced outage, a 59% increase from the 681.89 gigawatt-hours generated in 2010. Our generation increased from August to October when the power plant operated in a “must-run” mode due to the excessive rainfall brought about by typhoons during the period. With the annual 15 days allowable downtime, we only utilized ten days for the regular maintenance and power tunnel inspection. With this, we have maintained our 100% reliability and 96% availability in power generation.

We recognize the external potential risk to the image of the company whenever there is a need to open the spillway gates. The company is denounced by downstream communities when fl ooding occurs. As the operator of the power component of the SRMP, we only follow orders from the National Power Corporation (NPC) when it comes to dam water discharge. When NPC ordered the opening of one spillway gate at the onslaught of typhoon Pedring in September, the company worked closely with NPC in the dissemination of information.

We invited the concerned stakeholders such as the local and provincial government units of Pangasinan and the media and participated in monitoring the infl ow and outfl ow of water from the San Roque reservoir. We have discovered that by encouraging the participation of our stakeholders in whatever issue that affects them, we can build awareness and mutual trust for each other’s concerns. The regular engagement and issuance of information to concerned agencies avoids misconception about dam discharges. We intend to maintain this collaboration to intensify the awareness not only of our downstream communities but all our stakeholders.

Our CSR Programs. Faced with the challenges of poverty and the continued degradation of the environment in the locality, the company will continue to implement community development programs to promote self-reliance through economic growth, education, skills building, basic infrastructure and environmental protection. These programs have been on-going since the start of the project’s operation in 2003. The company intends to continue implementing these programs by way of engaging all the stakeholders in order to sustain the efforts.

There was a 27% increase in our CSR budget in 2011. A big portion of the fund was utilized in the construction and repair of ten classrooms in the public elementary schools in our host communities. Through these projects, we were able to strengthen our partnership with the communities as the benefi ciaries developed sense of responsibility and project ownership by providing sweat equity as their counterpart.

Our Comprehensive Livelihood and Rehabilitation Program (CLRP) drew more partner-benefi ciaries. Our Microfi nance Project had 66.15% increase in membership from 192 in 2010 to 319. From the regular loans of Php 5,000, more members have been eligible to avail of agricultural loans which range from Php 5,000 to Php 15,000. The total net capital build-up likewise posted a 74.16% increase. The Microfi nance Project is a major component of the CLRP that provides fi nancial access to the underserved communities that the company has been helping.

In our environmental awareness program, the company organized “Grow a Tree for the San Roque Watershed” in support to the National Greening Program of the government. In its launching year, we mobilized more than 1,200 volunteers from different sectors and planted 44,000 seedlings of various tree species in a 100-hectare area. The company adopted a 500-hectare degraded portion of the San Roque watershed to be reforested for a period of fi ve years.



We have partnered with the Philippine Eagle Foundation for the Philippine Eagle Species Restoration Program within the Agno River watershed and the Cordillera and Caraballo mountain ranges. The program involves eagle research within these mountains and the potential translocation of the Philippine Eagle in the San Roque watershed.

Our Human Resources. As we endeavour to be a world class producer of electric energy by continuously providing safe, stable and reliable supply of electricity, we will continue to invest in people to help them improve their lives and achieve their goals and aspirations. We have a workforce composed of diverse, competent, and motivated employees who are ready to meet our business goals and the members of our host communities who are our partners in promoting the culture of sustainable development. Investing in people is how we defi ne development and the company will continue to serve as a catalyst for positive change in the areas where we operate.

We noticed that the number of employee volunteers participating in various outreach programs organized by the company has been increasing. This shows a magnifi ed culture of social responsibility among the employees and their families. The employee initiated “Nasapa A Paskua” was grander this year not only in terms of contributions and employee participation but of project-benefi ciaries.

Our Working Environment. The company has developed a culture of maintaining a clean and safe working environment to better achieve our goals and objectives. We are fortunate this year that we did not experience any lost time accident. We have been aggressive with our extensive safety trainings focused on hazards and risks associated with their jobs which has intensifi ed our safety culture.

Our Sustainability Report. Our 2009 and 2010 sustainability reports that followed the GRI (Global Reporting Initiative) G3 guidelines were self-declared as Level C. This time, our sustainability report pursues a B+ application level as we adhere to the GRI Electric Utilities Sector Supplement (EUSS), a more stringent guideline applicable to our company. For our report to be externally assured in compliance with the GRI EUSS guideline, we engaged a third party to evaluate our report. As we aim to maintain our world class reputation as energy producer, we would like to keep our commitment to our stakeholders to be transparent and accountable in informing them of the progress of our company’s social, environmental and economic performance. This report will now serve as our baseline roadmap to continue improving our performance.

We welcome comments from all our stakeholders to continuously enhance our sustainability performance.

Ryukichi KawaguchiPresident & CEO



ABOUT OUR REPORTEnhancing Corporate Value

The company is intrinsically linked to the communities and the environment where it operates.

This connection is illustrated here in a diagram that shows the complementary processes and the interplay of the different factors that are involved in its core business of generating power.

The innermost ring represents our deep understanding that enhancing our corporate value starts with our commitment to excellence as we deliver reliable power to our customers.

The next ring depicts the continual process of maintaining balance among the different interests of the company. It demonstrates the dynamic interdependence of our responsibilities to our

shareholders, employees, host communities, and the environment vis-à-vis the similarly interdependent aspects of our business, including electric power generation, environment protection, poverty alleviation, and human resource development.

The outermost ring illustrates the effects of this interaction, showing a continuity of business operations that enhances the value of the company in the communities and the environment where it operates. The three interdependent rings that contain similarly interdependent elements provide a picture of how best the company achieves excellence as it works to increase its corporate value in the economic, social, environmental and ethical aspects of its operations.

COMM

UNITY

EMPOW

ERMEN

T

STEW

ARDSHIP

ENV

IRONM

ENTWORKFORCE

FAMILY SOLIDARITY

ECONOMICS

DISTRIBUTIVE IMPACT



This sustainability report features the company’s performance for fi scal year 2011. No signifi cant changes occurred in the company’s size, structure and ownership since its March 2010 report; however, there were changes in the reporting process.

From a self-declared Level C report following the GRI G3 guidelines, we: • applied the GRI Electric Utilities Sector Supplement

(EUSS); • sought external assurance by employing an External

Review Committee (ERC) composed of experts on economics, environment, social, labor, and human rights; and

• assigned the University of Asia and the Pacifi c to provide an assurance service to this report.

The company recognizes the importance of an external assurance to boost the credibility of our report. The assurance statement of the ERC is on page 70 of this report.

Two other signifi cant changes in relation to writing this report include the company’s organization of the Technical Working Group that is composed of all department heads and the Sustainability Council that is composed of all the executive offi cers of the company.

Used in this report was the principle of materiality in testing economic, environmental, and social performance based on the applicable key performance indicators. It contains the company’s 2011 sustainability performance as gathered from all the departments of the company. This report also refl ects the results of the focus group discussions conducted with the stakeholders on important issues that they considered worth including here.

While this report contains the company’s performance from April 2011 to March 2012, it also includes details of some activities subsequent to April 2012 in order to communicate the latest information. In some cases, 2009 and 2010 data were included to present time series data for comparative purposes.

In particular, this report refl ects the power generation component of the San Roque Multipurpose Project (SRMP) only. The other features of SRMP—irrigation, fl ood control, and water quality improvement— are the concerns of different government agencies. On the other hand, the San Roque Power Foundation, Inc. (SRPFI) implemented the social responsibility programs of the company. Moreover, this report is not limited to the immediate San Roque watershed but also covers the Lower Agno Watershed in the aspects of biodiversity and habitat protection.

The company carried out an effi cient data gathering, using a consolidating and analyzing system to prepare the regular reports to shareholders, lenders, and other agencies. These data were used as reference for this report. There were no restatements of information provided in previous reports.

All the information contained in this report are presented in a qualitative and quantitative manner. The qualitative data are presented in narrative form with visuals to support the information being discussed. The quantitative data, on the other hand, are presented in tables and graphics that refl ect the results of calculations and measurements generally accepted in the power industry that the company uses. In particular, data on energy generation, water usage, and environmental monitoring are presented in tables and graphics, among others.

For comments or inquiries regarding this report, please

contact the Offi ce of the Corporate Social Responsibility

at (+63)-75-6533800 or fax no. (+63)-75-6533807. You may also email us at

[email protected].



COMPANY OVERVIEW

The San Roque Power Corporation (SRPC) is a corporation organized and existing under Philippine laws and registered

with the Philippine Securities and Exchange Commission (SEC) on October 14, 1997. The company is jointly owned by Marubeni Corporation and Kansai Electric Power Company Ltd. with an equal sharing of 50%. In accordance with the Power Purchase Agreement (PPA) that the SRPC entered into with the National Power Corporation, the SRPC shall operate and maintain the power generating facility of the San Roque Multipurpose Project for the supply of electricity to NPC for a period of 25 years starting May 2003 on a build-operate-transfer (BOT) scheme. The other features of the SRMP such as irrigation, fl ood control, and improvement of water quality are managed by other government agencies.

The SRPC operates in the Philippines. Its principal offi ce is in Barangay San Roque, San Manuel, Pangasinan. It also maintains a business and administration offi ce at the 36th Floor Tower 1, The Enterprise Center, 6766, Ayala Avenue, Makati City.

Awards Received

The company received the following recognitions:

1. CSR Silver Leadership Award given at the 4th Annual Global CSR Summit on April 19, 2012 in Boracay, Aklan

2. Certifi cate of Merit on Best Community Program (Education Program) given at the 3rd Annual Global CSR Summit on August 11, 2011 in Cebu City

3. Recognition as partner in the implementation of programs and projects geared towards the protection of the environment and the sustainable development of the natural resources from the Department of Environment and Natural Resources-Region I



Vision, Mission and Core Values

Vision The Power to Energize Lives

Mission To excel in generating electric energy in the safest and most reliable manner, exceed our customers’ service expectations, and ensure our long term productivity and profi tability while performing our responsibilities as a good corporate citizen.

We will affi rm our reputation for a strong commitment: To the best and most effective management and operating systems

For exemplary health, safety and environmentally sound practices To the advancement of human resources For an enduring adherence to the highest ethical standards of good corporate citizenship.

Core Values As employees of San Roque Power Corporation, we undertake to be conscious of, and commit ourselves individually and as an organization to our basic values of

ExcellenceDedicationLeadershipIntegrityTeamworkSafetySocial Responsibility

in our work and in everything that we do.



DISCLOSURE ON MANAGEMENT APPROACH

Management Approach to Economic Sustainability

In keeping up with the company’s mission, we work to ensure long term productivity and profi tability through a strong economic performance.

The company regularly monitors costs and expenses by:

• strictly adhering to approved budgets and forecasts such as the budget for the operation and maintenance of the power plant based on best practices in the industry to ensure short and long term availability and reliability of electricity;

• complying with requirements of stockholders, lenders, and government agencies to meet contract obligations and commitments; and

• abiding by relevant laws and regulations related to accounting, labor, and employment and the Environmental Compliance Certifi cate (ECC).

To strengthen internal control and improve risk management, the company continually reviews its accounting and procurement policies and the latest of these were the:• Accounting Process Revision #6 dated

September 23, 2011;• Procurement Policy Adm 05-03 Revision

#6 dated April 28, 2011; and • Accounting Policy on Expense Reports

Revision #4 dated July 28, 2011.

These revisions were performed to comply with the Foreign Corrupt and Practices Act.

We believe that to sustain our strong economic performance we do not rely only on a strict compliance with internal and external policies. It also includes timely and correct remittance of taxes to the government; social development contributions to our host communities, including benefi ts due them from the operation of the power plant; investments for the development of our workforce; and fair engagement with our suppliers.

The Standards & Practices (S&Ps) that we have established in order to ensure compliance with the different aspects of the company’s operation undergoes regular periodic reviews and updates.

Management Approach to Social Sustainability

Workforce

It is in the best interest of the company to foster solidarity among the members of its workforce. It promotes a culture of a healthy and safe environment combined with personal and professional development. The company provides competitive incentives and benefi ts to promote commitment among its employees to effectively manage and operate its systems and to ensure their professional advancement.

As regards hiring policies, the company does not discriminate as to gender, religion, region, and ethnic affi liation. Moreover, it does not employ minors who are under the legal working age.



The respect the company gives for the rights of its employees and the community where it operates manifests to the employees such that there is no need for a labor union. Apart from complying with government laws and regulations, the company has policies that safeguard the basic human rights of its employees as well as members of the host communities including the indigenous peoples (IPs). Benguet, one of the communities where the company operates, is home to IPs. The company complies with the Indigenous Peoples Right Act (IPRA) and is in partnership with the National Commission on Indigenous Peoples (NCIP), National Power Corporation, Department of Environment and Natural Resources (DENR), Department of Social Welfare and Development (DSWD), and the Local Government of Benguet and Itogon in implementing the Indigenous Peoples Development Plan (IPDP) developed for the IPs affected by the project.

Society

It is the company’s policy to assist its host communities in attaining inclusive growth and development. A mechanism for this policy was the inclusion of social responsibility in its seven corporate values in 2006. Corollary, the company established the San Roque Power Foundation, Inc. in 2010 to execute its CSR programs.

The company is committed to act as a catalyst in empowering these communities, especially the socio-economically challenged ones that are directly affected by the construction of the SRMP. It works to help improve the quality of life in these communities by promoting community entrepreneurship, quality education and health, sustainable community resources and environmental development, and community institution building.

The San Roque Power Foundation, Inc. was established in

October 2010 as the CSR implementing

arm of the company. With a vision to build

sustainable communities through people-driven

development and inclusive growth, the Foundation adopted

the Community Driven Development and

Sustainable Livelihoods approaches in helping

people. For the reporting period, the

Foundation implemented the company’s CSR

programs in the areas of livelihood and

employment, education, health, infrastructure and

environment.



The company likewise coordinates with partner agencies and downstream communities regarding irrigation requirements of the farmlands and in carrying out information campaigns to increase awareness on fl ooding or dam-related emergencies. It also provides technical guidance on the proper use of water to fulfi ll the objectives of the SRMP on irrigation.

Management Approach to Environmental Sustainability

The company implements the Environmental Management and Monitoring Plan (EMMP) to comply with the ECC conditions and other relevant environmental laws, regulations, and guidelines. It adheres to site-specifi c Environmental Standards, Procedures and Practices (ES&Ps) to minimize and mitigate adverse environmental impacts, prevent pollution, and evaluate environmental performance to identify areas for improvement.

The President and Chief Executive Offi cer has the fi nal decision governing all environmental policies and procedures of the company. The Vice President for Corporate Social Responsibility has the overall responsibility in establishing and maintaining SRPC’s environmental management and monitoring system, including water quality monitoring.

The company regularly conducts compliance monitoring with the DENR and the Multipartite Monitoring Team (MMT) according to established procedures and protocols, including:

• status of delivery of commitment made in the Environmental Management Plan (EMP);

• effectiveness of the committed EMP in mitigating the project’s environmental impacts; and

• meeting the terms and conditions of the ECC.

Reports covering all compliance updates are submitted periodically to the DENR, lenders, the MMT, the NPC and other stakeholders. The compliance monitoring scheme is anchored on four major strategies: • desk review of documents (e.g., Self

Monitoring Report) by the MMT;• fi eld assessment and validation;• monitoring by the MMT; and • monitoring and validation by a third party, if

applicable.

The company maintains an account called the Environmental Monitoring Fund (EMF), a fund that a proponent shall commit to establish to support the activities of the MMT for compliance monitoring. The EMF was established as agreed upon and specifi ed in the MMT MOA among the DENR, the SRPC, the NPC, local government units (LGUs) and other MMT representatives. Based on the programming made in the FY 2011 operations and the fi nancial plan for the environment, the company has an approved internal budget that will sustain the programs on environmental management and advocacy.



The SRPC is committed to achieve the highest standards of good corporate governance. The company has put in place basic

principles of good governance: • the existence of an effective and effi cient

Board of Directors and Executive Management Team;

• a clear management decision-making process that involves the employees;

• the internal control systems as provided in the company standards and procedures;

• regular reporting to the shareholders and other stakeholders of the company;

• a mechanism for identifying and managing risk through effective oversight and internal control and safety management; and

• a clear remuneration policy.

The SRPC Board of Directors (Board) is responsible in providing strategic guidance and effective oversight over the company’s management, including the control and accountability systems. The Board is in charge of appointing the President and CEO and other offi cers, and ensures that strategic plans and programs of the company are executed. The Board is also responsible in approving corporate strategy and providing appropriate resources in carrying out the same. The Board is also responsible in approving major capital expenditures and in monitoring fi nancial and other reportorial requirements.

The Board is composed of seven directors and a board secretary, three offi cers from Marubeni Corporation, three from Kansai Electric Power Company, and one independent member who serves as the

CORPORATE GOVERNANCE



chairman with non-executive functions. This arrangement ensures the check and balance in all policy decisions and business transactions in the company. The independent member of the Board is not a member of the Executive Management Team and is not an employee of any of the shareholders. The members of the Board are carefully selected based on their integrity and competence in business and in the power industry.

The directors of the Board elect the President and CEO and appoint the board secretary and the vice presidents. The directors are elected during the regular meeting of the shareholders and have a one-year term of offi ce until their successors are elected.

The President and CEO is also one of the members of the Board and heads the Executive Management Team that is responsible in ensuring that the company is managed according to the company’s vision and mission. The other members of the Executive Management Team are two Senior Vice Presidents, one for Operations and Site Administration and another one for Technical Matters; and three Vice Presidents each for Finance, Compliance, and Corporate Social Responsibility. This team formulates the strategies, policies, plans, and programs of the company based on the key result areas that maintain the balance between being a world class energy producer and a socially responsible corporate neighbor. All employees carry out their functions according to the company’s vision and mission in order that the company’s economic, social and environmental responsibilities are fulfi lled.

The compensation and benefi ts package for offi cers are determined by the Board. This package is commensurate to their qualifi cations

and is comparable with the standards in the power generation industry. The President and CEO leads in determining the compensation and benefi ts of employees in consultation with the other members of the Executive Management Team. Like the compensation of offi cers, the compensation rates and benefi ts of employees are within standards. Moreover, the company has established a professional development program to promote more effective employees.

While the shareholders review the performance of the members of the Board, the latter in turn review the performance of the offi cers. The offi cers then evaluate the performance of all the regular employees in every level, from managers to the ranks using the performance management process.

The company’s performance undergoes a third party evaluation and monitoring every year to assess if it conforms to accepted standards and principles, including: • The Environmental Mission conducted by

Japan Bank for International Cooperation (JBIC) on the company’s compliance and accomplishments on the biophysical and human environment requirements set forth in the End of Construction Report, based on World Bank Standards and best management practices.

• The Safety Audit that covers the company’s compliance with the health and safety practices in its operations, the environment, the health programs for its employees as well as the housekeeping in the company premises (including cafeteria, clinic, among others).

• The Safety Inspections conducted by the Department of Labor and Employment (DOLE) as to the company’s compliance with labor standards in the working place and



permit requirements in operating electrical and mechanical equipment at the power plant.

• The inspection and testing conducted by the National Grid Corporation of the Philippines (NGCP) and Energy Regulatory Commission (ERC) to check the power plant’s reliability to deliver the agreed services.

• The risk assessment conducted by Allianz (Marnix Insurance) in relation to the insurance coverage of the property, plant, and equipment.

• The monitoring and compliance to Environmental Compliance Certifi cate.

Results of these assessments are discussed with the Executive Management Team through close-out meetings or wrap-up sessions. Management then discusses fi ndings and recommendations for appropriate actions.

The result of the recent audit showed that based on OHSAS 18001 and ISO14001, the

company complied with most of the standards. Slight deviations were considered minor and had negligible effect. No violations were noted during the Safety Inspections conducted by DOLE as required in securing related permits to operate electrical and mechanical equipment at the plant.

The company has remained compliant with the DENR’s standards as provided in the Environmental Compliance Certifi cate issued for the project.

The overall performance of the company manifests in the company’s dynamic relationship with its stakeholders. The company maintains this harmonious relationship with the host communities.

The company also undertakes economic, environmental, and social initiatives that are anchored on internationally accepted principles, such as the principles of the UN Millenium Development Goal and UN Global Compact; and the approaches on Sustainable Livelihoods and Community Driven Development.

Feedback Mechanism

The Executive Management Team maintains a two-way communication with its employees through monthly meetings to provide regular updates and discuss performance assessment. The Human Resources Department organizes a monthly general assembly of employees where information is shared. Regular departmental meetings as well as weekly meetings among the Operations and Maintenance staff called Tool Box are also held where employees’ concerns are raised and management’s comments are heard. On a regular basis, the President and CEO conducts regular sessions called Voice-Out where employees are given the opportunity to express their issues with the management.



The open communication between the management and the employees maintains for them a healthy relationship. As a result, the need for a labor union has been non-existent. The Human Resources Department has conducted the 100 Ways Survey that reviewed the employees’ perception of their working conditions and how the management treats them. The survey has revealed that the employees are generally satisfi ed with their employment conditions, compensation, professional development, and the way management treats them. The survey is a tool used by the management to review and further improve its management systems as well as the programs for the employees.

Quarterly and annual operations and fi nancial reports are presented and submitted to the shareholders. Operations reports are prepared by the different departments of the company. The annual fi nancial report is prepared by an independent accounting fi rm in order to ensure integrity. All the concerns of the shareholders, if any, are addressed immediately. All communications, including the notices of shareholders meetings are provided promptly via electronic means. The shareholders can also access relevant information and provide

comments and recommendations via the company’s website: www.sanroquepower.ph.

The company’s website provides other stakeholders a feedback corner where they can send comments and recommendations. It also provides them content on the company’s corporate social responsibility programs and accomplishments, especially to the host communities and the local executives to help promote partnership and encourage comments and inputs on how to improve the programs.

Confl ict of Interest

The company’s Code of Conduct states that it “expects undivided loyalty and dedication from its employees.” The company demands from all employees to act in the company’s best interest and to avoid any activity of interest contrary to that of the company. It is stipulated in the employees’ contracts not to use their position or any confi dential information received during the course of employment for personal gain or advantage. The company policy also prohibits dual positions of offi cers or employees in government or other private organization.



The Code of Conduct also provides for the protection and proper use of company assets as well as encourages the reporting of unlawful and unethical behaviour of the employees and offi cers of the company.

The Employee Handbook, called “A Walk Through SRPC’s Way of Life,” dated August 2009, on the other hand, specifi es that corruption is not permissible in the company. Offering or receiving bribes, commissions, or anything of value to or from subordinates, company clients, contractors and suppliers, and such other persons or fi rms with whom the company does business is a ground for separation. The company has an internal auditor that periodically reviews the compliance of the employees to assure no corruption takes place in the company. All the employees are reminded of the company’s Code of Conduct in the regular General Assembly. Since it started operations in 2003, the company has not recorded any violation related to corruption.

Membership in Associations

The SRPC participates in various events of different organizations for benchmarking, sharing of best practices, and contributing to the formulation of public policy and regulations. A number of these involvements include SRPC’s membership in the following organizations:

• Philippines National Committee on Large Dams,

• People Management Association of the Philippines,

• Philippine Institute of Certifi ed Public Accountants

• Safety and Health Association of the Philippines,

• Philippine Institute for Supply Management, • Philippine Corrosion Society, • Pollution Control Association of the

Philippines, and • League of Corporate Foundations.

A number of employees are also members of different professional associations.

The company attends public hearings and meetings on climate change, disaster management, pollution control, and watershed management. Recently, the company participated in the review of the fl ood forecasting and warning systems for the downstream communities of the San Roque dam. The review is being carried out by the National Power Corporation, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), and the National Water Resources Board (NWRB).



In previous reports, the stakeholders were identifi ed based on the frequency of their engagement with the company. However, another approach was used in this sustainability report to record

stakeholder engagement —through a Technical Working Group that conducted a workshop to defi ne the company’s stakeholders, to understand how different individuals or groups are affected by the company, and how these individuals or groups respond to the company.

The Technical Working Group formulated guide questions to help identify and prioritize the company’s stakeholders:

1. Who has the ability to infl uence whether or not our company can reach its intended goals?

2. Which organizations have an interest to our operation to constructively work with us on a defi ned sustainability topic?

3. Who does the company depend on daily operations? Who lives close to our operating sites?

4. Who are most dependent on our company? Which buyers and suppliers rely on our products or services?

5. Which are the key institutions with whom our company interacts?

Shareholders

Board of Directors and

Offi cers

LGUs

Employees

StrategicPower

DevelopmentCorporation

Lenders

NationalGovernment

Agencies

HostCommunities& Barangays

Farmers

Pro & ConNGOs/POs

Media

Academe

Church

SRPC

STAKEHOLDER ENGAGEMENT



Based on the list that resulted from these questions, the Technical Working Group established a particular threshold in prioritizing the stakeholders. The following were identifi ed to have strong infl uence on the company’s sustainability performance:

1. The Company’s Shareholders 2. Board of Directors and Offi cers 3. LGUs of Pangasinan, Benguet, San Manuel,

San Nicolas and Itogon4. Employees5. Strategic Power Development Corporation6. Lenders7. National Government Agencies

- National Power Corporation- National Irrigation Administration- Power Sector Assets and Liabilities

Management Corporation- Department of Education- Department of Environment and

Natural Resources- Department of Social Welfare and

Development- National Water Resources Board- Department of Agriculture- Offi ce of Civil Defense- Philippine National Police- Philippine Army

8. Farmers 9. Host communities and barangays

10. Pro & Con NGOs/POs12. Media13. Academe13. Church

The company endeavors to meet the needs of the stakeholders in varying degrees of engagement. The different venues where stakeholders are engaged provide opportunities for the company to determine and become aware of how its operations affect them. On the part of the stakeholders, it is where they raise their issues on how the company performs in relation to them.

To fi nd out the areas on which the stakeholders want the company to report, focus group discussions (FGD) were conducted with them on a per sector basis. The following concerns were identifi ed in the FGD:

On Environment□ Sourcing, usage, preservation, and protection

of water supply□ Greening program and maintenance of the

watershed□ Irrigation support for farmers□ Assurance on dam safety □ Protocol on opening of spillway gates and

fl ooding



On Social□ Sustainability of education programs and support for schools□ Sustainability of community livelihood projects □ Solution to marketing problem for community projects□ Dependency on company programs by the host communities□ Lack of scholarship program for the families of Microfi nance members□ Availability of a support system for IPs□ Strengthening of risk reduction and disaster management programs□ Intensifi cation of information campaign on fl ooding□ Disclosure on company management style and security policy□ Increase in employee volunteerism

On Economics□ Amount of company’s contribution to local government tax□ Disclosure on local hiring□ Possibility of ecotourism as a means to improve income in the area

Stakeholders Modes of Engagement Frequency of EngagementShareholders meetings annuallyBoard of Directors & Offi cers meetings quarterly, annuallyGovernment meetings, workshops

inspections, validationspublic hearings

quarterly, open lines ofcommunication

Employees meetings, voice out sessions weekly, monthly, quarterlyLenders human environmental mission annuallyFarmers meetings open lines of communicationHost communities meetings, focus group

discussions, surveysweekly, open lines of communication

NGOs/POs meetings open lines of communicationMedia press conferences, briefi ngs open lines of communicationAcademe meetings, summits, trainings open lines of communicationChurch meetings open lines of communication

Stakeholder Engagement



The SRPC is committed to sustainably provide 100% reliable and available

electricity until the end of term of the Power Purchase Agreement with the NPC, as the company ensures that its business remains stable and profi table to meet the expectations of its lone customer.

The profi tability of the company and its credibility in the industry are tied with the reliability and availability of its products. Henceforth, it can only sustain these by applying best management and operational practices, which include equipment upgrade, trainings and systematic process of inspection, and maintenance of the power plant.

Maintenance of Power Plant

The company uses time- and condition-based preventive power plant maintenance.

Time-based maintenance is undertaken upon the recommendation of and the inspection conducted by the Original Equipment Manufacturer; while condition-based maintenance is carried out using the latest technology appropriate for a particular equipment, e.g., lubrication oil analysis, wear metal analysis, transformer insulation oil analysis, among others. For electrical and rotating machinery, thermography is applied to pinpoint problem areas.

Both maintenance systems ensure that the equipment lasts throughout its lifespan as premature degradation is controlled at an acceptable level. Moreover, the rehabilitation of the equipment is done every 15 years in order to extend its useful life as well as increase the effi ciency of the power plant in cases of retrofi t/upgrade projects.

OPERATIONS OVERVIEW



San Roque Reservoir Rule Curve

The NPC’s management of the reservoir is accomplished through the San Roque Reservoir Rule Curve which was developed jointly by the NPC, National Irrigation Administration (NIA), and SRPC, and approved by the NWRB. The Rule Curve is based on historical reservoir levels and guides NPC in the dispatch of the plant for power generation or spillway operations and NIA on their irrigation requirements.

During the rainy season, when the reservoir elevation is above the Rule Curve and water infl ow is high, the plant is required to operate at full load of 411 MW or on a “Must-Run” mode. During the summer months, the plant is normally dispatched at its contracted capacity of 95 MW only during peak hours and at minimum capacity of 45 MW during off-peak hours to provide for the irrigation requirements.

For as long as the reservoir is managed within the Rule Curve, the energy produced above the contracted capacity and during off-peak period is considered secondary energy. The PPA guarantees the payment of secondary energy.

The power plant maintenance efforts resulted in the utilization of only 10 days of the allowable 15 days downtime per year. As a result, the plant’s availability factor is averaging approximately 96%.

International Training Programs

The SRPC supports the continued training of its

technical personnel in different Kansai power plants in Japan in its effort to keep up with industry trends as well as learn best practices.

Contracted Capacity

The San Roque Hydropower Plant has an installed capacity of 411 MW, producing approximately 1,000 GWh per year of renewable peaking energy that is supplied to the Luzon power grid. The PPA stipulates that the power plant is a peaking plant that operates daily for eight hours at its contracted capacity of 95MW. The designated peaking hours are between 9:00 A.M. and 3:00 P.M. and 6:00 P.M. and 8:00 P.M. In the absence of the re-regulating pond for the irrigation component of the SRMP, the power plant runs 24 hours a day to sustain the irrigation requirements of downstream communities.

As provided for in the PPA, the contracted capacity of the power plant is adjusted accordingly, as shown below:

Table 1. Contracted CapacityContracted Capacity Period

85 MW May 1, 2003 to May 24, 200895 MW May 25, 2008 to May 24, 2013110 MW May 25, 2013 to May 24, 2017115 MW May 25, 2017 to April 30, 2028

MWh – megawatt-hour



Declared Capability

The National Control Center-National Grid Corporation of the Philippines located in Diliman, Quezon City is responsible for issuing dispatch instructions for power generation. The SRPC only generates power based on the requirements of the PPA and submits an Annual Generation Report to the Energy Regulatory Commission. The Strategic Power Development Corporation (SPDC), which became the Independent Power Producer Administrator (IPPA) for the BOT contract of the SRPC on January 26, 2010, trades the SRPC’s capacity to the Wholesale Electricity Spot Market (WESM). The net energy output for 2011 is shown in Table 2.

Table 2. Net Energy OutputMonth Net Energy Output (MWh)

(2011) April 51,272.97May 24,534.54June 18,584.91July 56,396.69

August 115,231.45September 236,636.37October 207,513.03

November 97,078.25December 66,688.92

(2012) January 68,235.58February 79,026.39March 61,077.91Total 1,082,277.01

The electricity generated at the San Roque Hydro Power Plant is transmitted by the NGCP to the distribution utilities (DUs) and subsequently distributed and sold by the DUs to the consumers. The SRMP provides renewable peaking energy to the Luzon Grid; thus all sales and costs are generated locally. The SRMP is important to the Luzon Power Grid as it also provides ancillary services essential to the effi cient delivery of electricity. Its ancillary services help alleviate brownouts in the Luzon service area by providing immediate power whenever other power plants trip out of the grid.

As an operator bound by the PPA, the company has not done any research and development activity for new and more sustainable ways of providing energy. It has not undertaken planned capacity against projected electricity demand over the long term period, neither has it undertaken demand side management, which includes residential, commercial, institutional, and industrial programs.

The SRPC is not a distributor; hence, it cannot infl uence power prices. This is the reason the company is not affected by the electricity’s price volatility in the market. Moreover, being a non-distributor, the company does not directly engage electric customers in any way, such as in matters of customer accounts, disconnection for non-payment, and regulations on transmission and distribution lines. However, the company maintains a good relationship with its stakeholders, the NPC, and the other agencies involved in the project and the power industry. Since the start of the power plant operations in 2003, the company has complied consistently with the PPA.

Figure 1. San Roque Reservoir Rule Curve290.00

280.00

270.00

260.00

250.00

240.00

230.00

220.00

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug Sep

Oct

Nov

Dec

Upper Rule Curve

Lower Rule Curve

2011

2012

MWh – megawatt-hour

Masl – Meters above sea level

mas

l



Black Start Capability

With black start capability, the power plant can start any

of its three generators without backfeed power

coming from the grid. In the event of total system power

loss, this capability auto-starts the power plant’s emergency start-up diesel generator and restores power in the powerhouse in fi ve seconds.

The diesel generator supplies the plant auxiliaries and needed power for the black start of any one of the main generators. Once a unit is started and as soon as voltage is built up, charging of one 230 kV outgoing line to the San Manuel substation takes effect. When the normal line voltage is attained, the

San Manuel substation can start energizing the other power plants that do not have the black start capability and can subsequently energize or load feeder lines to the distribution utilities and restore power in different areas in Pangasinan and Tarlac.

System Frequency Stabilizing Capability

The power plant comes with a control system that is designed to respond to system frequency variations, including plant load variations. As a result, grid power quality, security and stability are assured and maintained.

Operation Related Risks

The company uses a Risk Assessment Matrix that illustrates the possible risks that could emanate from its operations and the possible impacts on the company and its existing control measures.

Possible Risk Possible Impact on SRPC Existing Control MeasuresForced outage due to SRPC’s inability to meet contracted capacity

- Penalty/fi ne by the NPC depending on duration of outage

- Opportunity/generation loss- Negative public image if outage causes eventual grid black out

- Documentation of specifi c procedures - Prompt reporting of defects observed (as practiced and required from operators)

- Prompt corrective action by maintenance crew (as practiced by maintenance crew)

- Utilization of the Facilities Maintenance and Management System (FMMS)

Failure to black start upon instruction by the NGCP

- Revenue loss for undelivered energy

- Periodic simulation exercise by SRPC and NGCP regarding system restoration

- Documented comprehensive black start procedure

Dam-related emergency - Loss of business- Legal dispute- Political dispute - Unrest from summons/sanctions- Financial demands from the affected community

- Annual Emergency Action Plan simulation - Periodic dam monitoring- Administrative standards and procedures in place

Error in generating unit operation

- Generation loss- Business loss- Penalty cost by NPC

- Documented specifi c procedures - Trained staff in place

The company has an Emergency/Crisis Management Committee that oversees the preparatory and preventive measures to be taken when risk/emergency occurs. The Senior Vice President for Operations heads the committee composed of members from the different departments, including the service contractors and the security force.

Table 3. Risk Assessment Matrix



Table 4. Scale of the SRPC 2009 2010 2011

Number of Employees 81 85 85

Net Energy Output 1,326.81 GWh 681.89 GWh 1,082.27 GWhTotal Direct Value Generated (in JPY) 13,055,958,874 10,092,766,258 9,575,682,934

Total Value Distributed (in JPY) 19,528,172,787 9,177,828,118 8,767,692,029

Economic Value Retained (in JPY) (6,472,213,913) 914,938,140 807,990,905

GWh – gigawatt-hour JPY - Japanese yen

Our Suppliers

The company taps the local community for services or goods as a matter of policy and in compliance with Condition No. 13 of the ECC. Thus, local suppliers and service providers are engaged, most of them coming from the provinces of Pangasinan and Benguet. However, when special machine parts are not available locally, the company procures them in Manila or imports them from other countries.

This standard practice does not only sustain the harmonious relationship between the company and the community where it operates but also contributes to the local economy.

The company purchased 21.63% of its total supplies for the year from local vendors, valued at Php 28.14 M. The administration-related income of service providers ranged from 17% to 25% while the income earned by construction and civil works providers ranged from 20% to 30%.

As business partners, vendors are required to comply with labor laws as well as the company’s accreditation policy and security and safety practices. Their compliance with the company’s procurement policies are monitored by the Accounting and Purchasing departments. The company’s safety team checks if they observe the safety policies. Moreover, their compliance to security policies are strictly being enforced jointly by the Philippine National Police and a private security agency commissioned by the company.

ECONOMIC PERFORMANCE



Economic Value

The SRPC applied the provisions of Philippine Interpretation IFRIC 12, Service Concession Arrangements, to the PPA. Instead of recognizing the power station and valuing the capitalized cost of constructing the Fixed Asset in its books, the SRPC recognized a concession receivable from NPC because of its contractual right under the PPA to receive fi xed and determinable amount of payments during the cooperation period irrespective of usage of the power station. The concession receivable, representing capital cost recovery fees, was measured based on initial recognition at its fair value.

Subsequent to initial recognition, the concession receivable is measured at amortized cost using the effective interest method. When the SRPC receives payment during the cooperation period, it apportions such payment among:• repayment of the concession receivable, which

reduces the carrying amount of the concession receivable on the balance sheet; and

• revenues recognized in the statement of income in the form of:- fi nancing income on concession receivable;- operating fees for operating the power station;

and- energy effi ciency fees for electricity delivered in

excess of the contracted capacity and generated during allowable downtime.

Revenue Recognition

Revenue is recognized based on the extent of the probability of economic benefi ts fl owing into the company and on the reliability of its measurement. The following specifi c recognition criteria must also be met before revenue is recognized:

Financing Income on Concession Receivable. Financing income on the concession receivable is recognized using the effective interest rate method over the cooperation period.

Under the terms of the PPA, the SRPC shall receive capital recovery fees representing recovery of the company’s capital cost incurred in relation to the construction of the power station. The carrying value of the capital recovery fees is computed based on the discounted cash fl ow method using an effective interest rate. The effective interest rate is the rate that at inception of the PPA causes the aggregate present value of the total capital recovery fees to be received from the NPC to be equal to the fair value of the power station.

Energy and Operating Fees. Energy fee is recognized based on the actual delivery of energy generated and made available to the NPC in excess of the equivalent energy of the contracted capacity plus energy generated during allowable downtime. Operating fee covers the fi xed operating and maintenance costs of the power station, which is computed at certain rates per kilowatt-hour (kwh) of energy generated and made available to the NPC.

Interest Income. Interest income is recognized as it accrues using the effective interest rate method.



April 2011 - March 2012



Direct Economic Value GeneratedFinance income on concession receivable 8,410,595,312 9,313,986,479 10,017,374,786

Energy and operating fees 1,148,249,154 757,076,006 3,024,454,895Interest income 11,977,450 12,657,822 12,006,559Other income 4,861,018 9,045,951 2,122,634

Total Direct Value Generated 9,575,682,934 10,092,766,258 13,055,958,874

Economic Value DistributedPersonnel costs 350,810,023 375,418,364 355,949,670Regular employees

Foreign-seconded employees 109,513,126 113,159,961 107,382,755Local employees 241,296,897 262,258,403 248,566,915

Other cost of power station operations 343,739,917 502,817,707 628,642,891

Other general and administrative expenses 351,896,939 242,572,842 44,051,974

Depreciation and amortization 85,269,529 85,404,805 85,551,669Amortization of deferred fi nancing costs 47,704,713 81,200,478 114,100,087

Payments to capital providers 5,507,533,192 6,082,016,107 18,108,457,467Interest on loans and other fi nancing charges 213,804,019 321,131,642 490,138,450

Dividends 5,293,729,173 5,760,884,465 17,618,319,017Payments to government 2,010,026,325 1,752,721,249 81,011,131National 1,940,071,623 1,685,357,770 14,119,346

Income tax 1,929,244,954 1,678,826,343 1,062,280Provision for Energy Regulation 1-94 10,826,669 6,531,427 13,057,066

Local 69,954,702 67,363,478 66,891,786Local business tax 37,304,555 34,768,134 30,859,809Permits and other fees 32,650,147 32,595,344 36,031,977

Community investments 70,711,391 55,676,566 110,407,897Community development costs 34,250,979 28,352,168 51,164,761Livelihood costs 36,460,412 27,324,398 59,243,136Equivalent value of pro-bono projects

Total Value Distributed 8,767,692,029 9,177,828,118 19,582,172,787

Economic value retained 807,990,905 914,938,140 (6,472,213,913)

Net income per Audited Financial Statement 6,556,223,863 4,604,109,546 10,001,545,068

Recon (Deferred income tax, Forex gains/losses, Impairment loss,probono projects)

6,556,223,863 4,604,109,546 10,001,545,068

Table 5. Direct Economic Value Generated and Distributed (in JPY)



Energy Regulations (E.R.) 1-94 Benefi t

The SRPC, in lieu of NPC, provides fi nancial benefi ts to the host communities of the SRMP under E.R. 1-94. The company grants fi nancial benefi ts equivalent to one centavo per kilowatt-hour of the total electricity sales of the power plant.

The company has accrued and paid Php 10.8M in contributions to the Department of Energy (DOE) divided into: • electrifi cation (50% of one centavo per kWh); • development and livelihood, also called DL (25% of one centavo per kWh); and

• reforestation, watershed management, health and environment enhancement, also called RWMHEE (25% of one centavo per kWh) projects.

The electrifi cation fund is applied in radiating order to the host communities: resettlement, barangay, municipality, province and region. Both the DL and RWMHEE are allocated as follows: resettlement 5%, barangay 20%, municipality 35%, province 30%, and region 10%.

A number of projects have been completed for 8 municipalities in Pangasinan since the company started remitting E.R. 1-94 fund to the DOE in 2004:

• Electrifi cation of 34 sitios in the municipalities of San Manuel, Asingan, Sta. Maria, Rosales, Umingan, San Quintin, and Balungao

• Purchase of ambulance and service vehicle for the municipality of San Nicolas

• Purchase of barangay patrol vehicles for San Felipe East, San Felipe West, Camindoroan, and Calanutian in San Nicolas

Issued in 2010 was the Notice To Proceed for the repair of the barangay hall, the health center, and the day care center in Narra, San Manuel; and the construction of a farm-to-market road and the purchase of a barangay vehicle for San Bonifacio, San Manuel.

The company provides assistance to the host communities in preparing project proposals and availment of funds. The projects are jointly monitored by the company and the DOE.

Payment of Taxes

The company fulfi lls its tax obligations to the government, including remittances of income and business taxes and payment of permits and other fees. The company had availed an income tax holiday incentive from May 1, 2003 to April 20, 2010, covering a one-year extension of the six- year income tax holiday that it was initially granted. No signifi cant contribution from the government has been received by the company. The company has not been fi ned or sanctioned in relation to its tax obligations and compliance with laws and regulations.

The company does not give contributions, fi nancial or otherwise, to politicians or political parties. However, the company provides assistance to local government units for various activities such as fi estas/festivals or founding anniversaries, sports activities, Christmas programs, fund raising projects, among others. The company’s total fi nancial contributions, including advertisements, amounted to Php 467,750.



EMPOWERING THE WORKFORCE

The company recognizes the universal school of thought that success in running a business relies on the motivation of the workforce. It is therefore the company’s goal to empower and look after the welfare of its employees. The Human Resources Department has established programs and incentive packages

designed to inspire the employees, love their work, and commit themselves to remain in the workplace. A competitive compensation and benefi ts package, healthy working conditions, a skills improvement and personal career development are among the programs the employees enjoy.

Organizational Chart

Human Resource Profi le

The company does not discriminate on the basis of gender, age, religion, political affi liation, and ethnic association in labor recruitment. It does not employ minors who are under the legal working age. In general, job vacancies either due for replacement or a new position, are fi lled up through internal sourcing. External candidates are considered when no internal candidate is qualifi ed. The company’s recruitment policy is currently being reviewed and updated and is targeted to be completed by October 2012.

Figure 2. SRPC Organizational Chart

SOCIAL PERFORMANCE

President & CEO

Senior Vice President for Technical Matters

Technical Improvement

& Audit Operations Maintenance Engineering Safety

Procurement Administration

Human Resources

Plant Systems & Communication

Senior Vice President for Operations & Site Administrator

Vice President for CSR and Security

Vice President & Compliance Offi cer

Vice President, Treasurer & Chief

Finance Offi cer

Corporate Social Responsibility

Internal Audit

Accounting



Status of Employees

The company had 97 employees in 2011 with the following status:

Table 6. Employment StatusEmployment Status NumberRegular 85Probationary 7Cadet Engineer 5

Total 97

The company had 218 contractor’s employees for the period broken down as follows:

Table 7. Contractor’s EmployeeContractor’s Employees NumberSecurity 85Ground, Building, Village Maintenance

72

Road maintenance 17Canteen concessionaire 23Others* 21

Total 218*Health providers, surveyors, and the pest control maintenance group.

For the period, the company hired fi ve employees for regular appointment:

• Junior Civil Engineer• Information Technology Technician • Purchasing Clerk • Maintenance Technician (2)

At the same time, fi ve regular male employees were separated due to resignation, termination, and death (outside the company premises and was not industry related).

• Senior Operator• Electrical Supervisor • Assistant Control Operator• Information & Communication Technician• Offi ce Maintenance Staff

Three of the above employees were from Metro Manila, one from Pangasinan, and one from Baguio City. As to age, three were from the 40-49 group while two belonged to the 30-39 group. The Senior Operator and the Electrical Supervisor belonged to the supervisory level. The three other positions were rank and fi le. As to work assignment, four were under the Operations & Maintenance Department; while the Offi ce Maintenance Staff was assigned at the Makati Administration Offi ce.

Two of the resignees were later hired by private fi rms in north Luzon; while the other one migrated to another country.

There were seven probationary employees needed to fi ll regular positions:

• Social Development Assistant • Maintenance Assistant • Junior Assistant Operators (2)• Maintenance Technician (2)• Plant Systems & Communication Technician



Table 8. Employee Profi le by Type, Nationality and Origin

Filipino

Japa

nese

Am

eric

an

Pang

asin

an

Bagu

io/

Beng

uet

Oth

ers

TOTA

L

Executive 2 1 1 1 5Managerial 2 1 3 4 10Supervisory 1 5 1 7Professional/Technical II 8 8 7 23Professional/Technical I 8 3 3 14Rank-and-File 21 5 26

Total 4 1 40 19 21 85

Majority of the regular employees were from Pangasinan, at 47%. Those who were from Baguio and Benguet comprised 22%; and those from Manila, the Ilocos region, and the Calabarzon area made up 24% of the workforce.

Fifty percent (50%) of the employees from Baguio and Benguet are Indigenous Peoples who belong to different ethnic groups such as the Ibalois, Kankanaeys, and Kalingas.

Employee Profi le by Level

Twenty six percent (26%) of the employees belong to the Executives, Managers and Supervisory level while 74% consists of the Professional/Technical Staff and Rank and File.

Table 9. Employee Profi le by Level

Exe

cutiv

e

Man

ager

Supe

rviso

ry

Prof

essio

nal/

Tech

nica

l Sta

ff II

Prof

essio

nal/

Tech

nica

l Sta

ff I

Rank

and

File

Tota

l

Makati Administration 3 1 1 4 1 5 15Corporate Social Reponsibility 1 4 1 3 9

Operations & Maintenance 1 9 6 15 12 18 61Total 5 10 7 23 14 26 85



Employee Profi le by Age

The average age of the regular workforce of the company is 40. Figure 3 shows the average age for each job category:

Employee Profi le by Gender

As to gender, majority of the SRPC’s employees were male, at 68%. There was a predominance of male employees in the Operations and Maintenance Department. Three out of the 15 Executives and Managers and two out of the seven Supervisors were female, 20% and 28% of the job group’s population, respectively. The ratio of female to male employees is 1:2.

34 | P a g e

Employee Profile by Gender

As to gender, majority of the SRPC’s employees were male, at 68%. There was a predominance of male employees in the Operations and Maintenance Department. Three out of the 15 Executives and Managers and two out of the eight Supervisors were female, 20% and 25% of the job group’s population, respectively. The ratio of female to male employees is 1:2.

Figure 7. Percentage of Employee by Gender

Figure 8. Employee Profile by Age & Gender

Figure 4. Percentage of Employee by Gender

Figure 3. Employee Profi le by Age



Age 21-29 30-39 40-49 50-59 60 & Above

Male

Female

Male

Female

Male

Female

Male

Female

Male

Female

Makati Administration 0 1 4 6 2 1 0 0 1 0Corporate Social Reponsibility 0 1 0 3 2 3 0 0 0 0

Operations & Maintenance 7 2 13 3 26 5 3 2 0 0Total 7 4 17 12 30 9 3 2 1 0

Table 10. Employee Profi le by Age & Gender

Employee Welfare

The SRPC aggressively pursued its employee empowerment programs to institute an excellent work culture. It involved its employees regardless of job level in the planning and implementation of employee programs.

Remunerations, such as salary increases and bonuses (if any), were based on employee performance. The SRPC adopted a competitive remuneration system that refl ects the responsibilities and duties of the position and employee competency; thus no distinction is made whether the position is occupied by a male or a female employee. The ratio of the base salary of female to male employee is Php 1:Php 3.

The minimum wage provided by the company as a new-entry wage was 47% higher than the minimum wage provided by law in Region 1.

The company ensured that the contractors and sub-contractors meet the minimum wage requirement of Php 248 among their employees. To validate this, the SRPC required its contractors and sub-contractors to submit certifi cates of remittances to the Social Security System, the Philippine Health Insurance Corporation, and the Home Development Mutual Fund. When warranted, the company required copies of the acknowledged pay advise of their contract employees. Other benefi ts a regular employee received were retirement benefi ts, housing and transportation allowances, rice and meal subsidy, cellular phone subsidy, and optical and dental reimbursements. The group medical insurance was extended to the employees’

families that included medicine reimbursements, out-patient laboratory procedures, and doctor’s fees as well as in-patient benefi ts. The premium of these insurance benefi ts was fully paid by the SRPC.

In addition to the maximum 20-days vacation and 20-days sick leaves, the regular employees were entitled to other leave of absences: birthday, bereavement, solo parent, violence against women, gynaecological, maternity and paternity.

Aside from the company uniforms, regular employees were provided personal protective equipment. The regular employees who have rendered service for 5, 10, 15 and 20 years were honored with service awards. They were given plaques of appreciation as well as incentives in cash or in kind and additional leave credits.

The SRPC also offered non-wage benefi ts or perks in order to motivate the employees, acknowledge them for their hard work, and strengthen friendships outside offi ce walls. These fun activities included a family summer outing, a sports festival, a Christmas party, a safety day celebration, and teambuilding activities.



The SRPC maintains a retirement fund for its regular employees. The mandatory retirement age is 60, while the retirement pay is at one month per year of service. The Retirement Fund Assets as of March 31, 2012 was Php 79M.

The company implemented the Provident Program, a savings program for the employees that makes available their savings upon retirement or separation. It is also a lending mechanism that offers a very low interest rate to fi nance personal projects such as housing, car, and others. Membership to the program is voluntary among its regular employees. For the period, the members of the program were 76, or 89% of the total regular workforce. Under the program, the members contribute a maximum of 10% of their monthly base rate while the company shares 50% of the employee contribution.

As of March 31, 2012, the fund had reached Php 29.7M, 60% of which were from employee contributions, 30% from company shares, and 10% from income, gains, profi ts, expenses, charges or losses, and service fees incurred in managing the fund.

Performance Management Process

The company conducted the annual performance assessment process, which determines its overall operations and the accomplishments of the employees. The annual review is aimed at evaluating the performance of the employees in relation to employee benefi ts, particularly the annual salary increase and the performance bonus. The process likewise provides the venue to determine the needs of the employees

for career growth. The company underscores the importance of this program as it is the best venue for a superior-subordinate discussion on work performance, improvements in the system, and other related matters. Moreover, the program is promoted to the workforce as an activity that they can look forward to rather than to be concerned about.

The annual review is based on the key result areas and performance indicators identifi ed at the start of the performance planning as agreed by the superior and the subordinate. A quarterly review maybe conducted by the managers and/or supervisors where the employee’s progress is monitored. All employees undergo this assessment. Career Development

The company ensures that it attracts the best individuals for its human resource requirements. Once in, the employees undergo a career development program that prepares them for higher levels of



responsibility across the organization. This program assures the company’s organizational continuity that is crucial in remaining as an excellent provider of reliable hydroelectric power.

The program also enhances the SRPC’s corporate performance as it maximizes the potential and productivity of its personnel.

The technical employees, particularly those who belong to the Operations and Maintenance Department, go through the qualifi cation cards, a process where employees need to meet the required technical skills and knowledge to be able to qualify to higher positions. This process ensures that the company hires the best and most qualifi ed applicants who meet the skill and competency requirements of new or vacant positions.

A skills competency, retention, and leadership program that identifi es succession in identifi ed key positions is also in place in the company. Under the program, competent employees considered as understudies are trained to assume higher positions. The program enabled the succession of an understudy who took the place of one of the key Maintenance Supervisors who resigned late last year. In 2022, two managers and one supervisor are expected to retire from service.

The company also maintains a Cadetship Training Program that is carried out in partnership with nearby universities. The program encourages young engineering professionals, particularly new board passers, to apply for a six-month training program with the Operations and Maintenance Department. Upon engagement, the trainees undergo the required testing and interview. At the end of the training program, a test and panel interview is also undertaken to validate the learnings. The program enables the SRPC to have a ready pool of engineers who may be offered employment when vacancies occur.

Training Program

The company remains committed to develop and strengthen the professional and personal competencies of its employees. It aims to continue to improve its workforce through local and foreign training, a policy that is enforced within the organization. The employee’s other training needs are identifi ed based on the results of the annual performance evaluation, which serves as basis for employee bonuses and increases.

Management trainings are not limited to supervisors and managers. Employees who have potential leadership skills are given the opportunity to undergo trainings. The company allocates a budget for the employees’ work-related training here and abroad. In particular, the SRPC sent two of its technical staff to Japan to undergo a 3-month hands-on training during the overhaul conducted in one of Kansai Electric Power Company’s hydro power plants. A 5-year training program has been installed for the company’s key technical staff who will be involved in the 2018 major inspection of the San Roque Hydro Power Plant. Furthermore, members of the Safety and Engineering technical group are annually sent on a 2-week observation trip to these plants where they could gather and recommend best practices that the SRPC can adopt. The program is likewise aimed at motivating and inspiring the employees to become more productive.



Table 11. Training Hours and Cost for Regular Employees

2009 2010 2011Total Number of Training Hours 3,056 11,280 10,184Training cost per man-hour Php 362.50 Php 850.51 Php 497.23

The training hours for the Professional/Technical Levels I & II comprised 85% of the total training man-hours, while the managerial level was at 7%, the supervisory level at 5%, and the rank-and-fi le at 3%.

Employee Category Average Training Hours

Managerial 71Supervisory 83Professional/Technical I & II 234Rank & File 12

The training under the career development program aims to equip the employees with knowledge and skills for personal and professional advancement.

The total training cost incurred in 2011 was Php 5.064M, equivalent to 10,184 training hours. The company allots a minimum of three trainings per year at an average of three days per training for every employee, which include hard and soft skills, safety, technical, and behavioral training.

Employee Volunteerism

The company encourages employee volunteerism in implementing its social development programs. For the period, a total of 80 personnel (37 regular and 43 contract employees) participated in medical and dental missions, the Brigada Eskwela, a feeding program, the village reading and distribution of school supplies. The employees spent a total of

15,360 regular man-hours or 6% of the total worked man-hours for volunteer works.

In addition, an employee-initiated program dubbed “Nasapa a Paskua” had the employees voluntarily pool funds to purchase school supplies and gifts for public school children. In December, a total of Php 57,700 was raised to purchase school bags and supplies. Used books, clothes, and toys valued at Php 35,000 were also donated. All these were distributed by the employees to six public elementary schools in Benguet and Pangasinan. A total of 909 pupils benefi ted from the program.

Freedom of Association

While there is no employees union in the company, there is also no record that it has restrained them from forming one. The company maintains a constant communication with the employees. Aside from the regular memoranda or announcement, the company observes the minimum 7-day notice regarding signifi cant operational changes in the company. A regular meeting is held every fi rst Monday of the month, attended by managers, supervisors and rank-and-fi le to discuss administrative policies, general safety as well as other pertinent company



announcements. The quarterly performance evaluation is another venue where employees can raise their concerns directly to their supervisors or managers.

The Voice Out session with the President and CEO is also part of the feedback mechanism between the employees and the company. The construction of the multipurpose covered basketball court in 2010 was an idea that was brought up in one of these Voice Out sessions.

Employees’ Cooperative

The employees have established the San Roque Multipurpose Cooperative, which holds offi ce within the company premises. The cooperative serves as a tool in mobilizing employees to participate in bringing about socio-economic development. To date, 64% of the regular employees are members of the cooperative, with a total share capital of Php 10M as of March 31, 2012.

The cooperative provides vehicle rental service and the supply and delivery of pantry supplies to the company, through which it is able to support the socio-economic development and initiatives of its employees.

Human Rights

Human rights are well protected in the SRPC as mechanisms are in place to provide the venue where all employees are fully covered. The Employee Handbook contains two specifi c sections, namely the Code of Conduct and the Rules and Regulations of Disciplinary Actions, which state the policy by which the company adheres to in handling human rights issues within its boundaries.

The company has a set of formal grievance procedures that is guided by the Code of Conduct. The BOD has also laid down the Corporate Creed on Compliance, a memorandum that lists down basic tenets of the SRPC corporate family. The Compliance Committee, headed by the Compliance Offi cer and composed of department heads and managers, monitor the observance of the code and the creed.

The Rules and Regulations of Disciplinary Actions is currently being reviewed by the managers. Its enforcement is carried out by the Investigation Committee that is composed of the concerned Department Head as chairman, the Human Resources (HR) Manager and three other employees as members, one from the human resources department and two from other departments as recommended to the Chairman by the HR Manager.

The HR representative or any other designated employee is assigned to record the minutes of the investigation and hearings. To ensure fairness and impartiality, the employee’s manager or supervisor, who is either a witness or a party in the case, does not sit as member of the Investigation Committee.

This year the company conducted an orientation on Administrative Investigation, given by a labor lawyer and participated in by managers and supervisors. It was aimed at providing the awareness on the current practices of other companies vis-à-vis the current practice of SRPC.

The company is also in the process of drafting a policy on sexual harassment. An orientation on laws on sexual harassment and drug-free workplace to be conducted by the DOLE has been scheduled on the third quarter of 2012.

Since 2010, the company had been fi led three cases of illegal dismissal. An employee who resigned in 2008 fi led a case with the National Labor Relations Commission (NLRC) in 2011. The NLRC ruled in favor of the SRPC. The complainant appealed the case in early 2012 but was denied by the NLRC in May. The second labor case was settled amicably by both parties. The company is awaiting the decision of the NLRC on the third labor case.

It is worthy to report that contracts with all the employees and the company’s suppliers include articles on human rights. All the suppliers undergo accreditation and screening to ensure that they comply with provisions of the Labor Code. No human rights violation, discrimination cases, nor incidence of forced labor among employees of SRPC, its contractors or subcontractors and suppliers have been reported to date.



The regular orientation program of the company makes its new employees and suppliers aware of its operations and organizational culture, as well as issues on safety, security and human rights. While the activity does not specifi cally discuss human rights, the 2-hour meeting held every fi rst Monday of the month gives updates on administrative policies and general safety; employee benefi ts under the Social Security System, the Home Development Mutual Fund, and the Philippine Health Insurance Co.; and labor laws and other concerns such as gender sensitivity and employee’s rights.

Together with the managers and the supervisors, the company gave its contractors an orientation on DOLE’s Department Order 18-A (Rules Implementing Articles 106 to 109 of the Labor Code, as amended) to professionalize the relationship.

The company also monitors and validates the compliance of its manpower contractors with mandatory government contributions, withholding taxes, and wages that are stipulated in contracts.

All the security personnel are trained in handling human rights cases, as part of their regular training as provided by the service contractor. This requirement is provided for in the Security Manual. This year the training was conducted on June 29, which involved all the 89 security guards who were hired for the company. The company also requires that all security guards pass the neuro-psychiatric test as conducted by clinics accredited by the Philippine National Police.

SAFETY IN THE WORKPLACE

The company has a safety policy that regards employees as the most important asset of the company. The safety and health standards as articulated in this policy conform to the Philippine Occupational Safety and Health Standard, the Bureau of Working Conditions of the Department of Labor and Employment, apart from emulating international best practices.

As a safety practice, employees are:• afforded a safe and wholesome working

environment by eliminating unsafe acts and conditions;

• provided with personal protective equipment, as needed; and

• oriented on health and safety practices.

The Central Safety Committee carries out the occupational health and safety function of the company. It works to strengthen the safety culture among all the employees and the contractors. The safety awareness program conducted every Monday morning communicates to the employees safety reminders, health and wellness advisories, housekeeping reminders, and fi tness activities aimed at maintaining a healthy workforce and environment.

This year the company engaged the services of a new health provider, Prevhealth, Inc., to address the health needs of the employees.

As part of the company’s efforts for zero accidents, it reiterates the safety goal to the employees while promoting an understanding that everyone has a responsibility to work in a safe manner. The safety responsibility is extended to all contractors, sub-contractors, as well as visitors as they are considered a part of the company’s safety efforts.

This year the company’s No Lost Time Accident (NLTA) was at 269,159 work-hours, which were rendered by 139 regular and contractor’s employees. In 2010, the company’s NLTA record was reset to zero due to an arc fl ash incident.



Safety Trainings

This year the company conducted four safety trainings: Basic Spill Response and Awareness, Standard First Aid

and Basic Life Support, Advanced Occupational Safety and

Health Seminar on Loss Control Management,

and Basic Water Safety and Rescue.

The training programs were attended by 104 participants composed of 64 contractor’s

e m p l o y e e s , cadets and on the

job trainees, and 40 regular employees. The

participants were chosen based on the training needs analysis, and hence not all employees took the programs. Regular and contractor’s employees were given the priority to

attend the courses; however, sub-contractors who are part

of the emergency teams were included in First Aid and Emergency Rescue trainings. The topics covered depended on their relevance to the workers’ nature of work.

The Safety Orientation, which is a regular course undergone by all employees, contains topics on General Safety and General Safety Rules and Regulations but may include other subject matters depending on the employees’ nature or scope of work. Topics covered in the safety orientation may also be determined through the Job Hazard Analysis. For example, training on confi ned space entry is given only to the Operations and Maintenance team. Safety orientation and refresher courses may take a brief two hours or a lengthy two days.

The Operations and Maintenance team holds weekly toolbox meetings to review safety practices in order to prevent work-related hazards and risks. The Prevhealth, Inc., the company’s health care provider, issues regular safety and health alert and bulletins for the reference and information of all employees as well as the SRMP community. In addition to the health information, the company donates safety signages to the community to increase the people’s awareness on health concerns.

Safety Health and Environment Council

The company’s Safety Health and Environment Council, which is the decision making body on all safety issues, is chaired by the Senior Vice President for Plant Operations and Site Administrator. It has eight members, seven of whom are regular employees occupying executive and managerial positions and one contractor’s employee who heads the security group. The council has one co-chairman, the Operations Manager; a vice chairman, the Senior Vice President for Technical Matters; and one Safety Offi cer who acts as the secretary.

The Central Safety Committee fulfills its commitment to occupational health and safety concerns by strengthening the safety culture among all the employees and the contractors. The Safety awareness program every Monday morning includes safety reminders, health and wellness advisories, housekeeping reminders and fitness activities aimed to maintain a healthy workforce and environment. For the period, the company engaged the services of a new health provider, Prevhealth, Inc. to address the health needs of the employees. As the company aims for zero accident, it continuously reiterates the safety goal that fosters an understanding that everyone has the ultimate responsibility to work safely. This safety responsibility is extended to all contractors, sub-contractors, including visitors of the company as they are part of the company’s safety programs. In 2010, the company’s No Lost Time Accident (NLTA) record was reset to zero due to an arc flash and vehicular incident. This year we had a total of 269,159 work-hours without lost time accident. This was rendered by 139 workers made up of regular and contract employees. (EU17)

Safety Trainings (EU18) For the period, four safety training programs with 104 participants (64 or 61% are contractors’ employees, cadets and on the job trainees and 40 or 38% regular employees) were conducted. Not all employees are included in the training programs because selection of training participants are based on the training needs analysis.

APR MAY JUNE JULY AUG SEPT OCT NOV DEC JAN FEB MAR

WORKHOURS 23,309 26,571 25,909 24,222 24,001 21,914 19,950 19,450 18,465 20,391 21,733 27,195

WORKERS 136 139 133 134 134 118 113 114 118 120 120 120

100

107

114

121

128

135

142

-

5,000

10,000

15,000

20,000

25,000

30,000

NUM

BER

OF

WO

RKER

S

NUM

BER

OF

HOUR

S W

ORK

ED


NUMBER OF WORKERS AND HOURS WORKED

Figure 5. Number of Workers and Hours Worked (April 2011-March 2012)



The council has two committees:1. Central Safety Health and Environment Committee. This committee develops occupational safety and health programs. It is headed by the Safety Offi cer. It has 15 members (eight are regular employees and seven are contractor’s employees). The committee has four working sub-committees: Safety Day Program, composed of fi ve regular employees; Health and Wellness Program, whose members are regular (4) and contractor’s employees (2); Housekeeping Committee, which has eight regular employees; and Contractors Safety Health and Environment Committee, whose membership is made up of 6 regular and 5 contractor’s employees.

2. Emergency/Crisis Management Committee. This committee develops site specifi c emergency response procedures. It is headed by the Senior Vice President for Plant Operations and Site Administrator and the Technical Improvement and Audit Consultant. Its membership is composed of 11 regular and 5 contractor’s employees.

Safety Performance Report

There were no reported leaves without pay, suspensions or prolonged sick leaves caused by any work-related cases for the period.

There were cases of grass fi res near the company facility but these incidents did not cause damage to company properties. However, four minor non collision vehicular incidents resulted to broken windows and dented bumpers. Another grass fi re that almost damaged the seismic station 4 was controlled by the fi re fi ghters composed of security men and contractors. No injuries or fatalities involving the employees and the public resulted from both incidents.

Safety Audit

Job activities performed in the company, including those of sub-contractors, undergo the Job Hazard Analysis and the Safety Assessment as part of the Hazard Identifi cation and Control Program. Safety inspection and audit practice are done in order to measure

compliance. The company has been undergoing annual Safety Audit since 2004. The latest was completed on February 24, 2012. This year’s Safety Audit determined the company’s adherence to: OHSAS 18001, ISO 14001, and OSH Standard. The physical inspection resulted in: no high risk hazards, 10 medium risk hazards, and 146 low risk hazards that are manageable with the 5S program.

Aside from the Safety Audit, the company fully complied with safety regulatory requirements.

The annual inspection of electrical and mechanical equipment done by DOLE found no violations. However, the issuance of a permit-to-operate a low level outlet elevator was held pending its repair to safe conditions. This was issued only after it was restored to safe conditions.

The company also underwent the monthly internal inspections as conducted by the Safety Committees on engineering projects, on-going operations and maintenance activities; as well as the inspection of the canteen premises, the emergency equipment, the power component areas, and other offi ces.



EMPOWERING THE COMMUNITIES

Information, Education, and Communication

Part of the company’s efforts to empower its host communities is promoting public awareness on the SRMP for the people to understand what it represents and what it does as a socially responsible neighbor. The company believes that the people should be given proper information because they are partners and make representations for the company in other communities.

Flooding is the most common issue that confronts the company. As it known that the SRMP operates the dam to harness the power of the Agno River, the issue has become a community relations risk that may unnecessarily bring the company a negative image. The company, however, recognizes the impact of such risk and thus has put in place an aggressive public awareness campaign.

The fl ood control feature of the SRMP attenuates fl ooding in 16 towns downstream. Except for the unprecedented rainfall brought about by Typhoon Pepeng in 2009, fl ood has been signifi cantly reduced in these towns since 2003, thereby reducing damages to crops and properties in the affected areas.

Under the dam discharge protocol, the SRPC receives instructions from the NPC through the Flood Forecasting and Warning Systems for Dam Operation in relation to opening of spillway gates.

Water released for irrigation requirements, on the other hand, takes a separate protocol. The NIA coordinates the irrigation requirement with the NPC. The NIA has no obligation to pay the SRPC or the NPC on water used for irrigation.

The company hosts an annual meeting with the NPC, the NIA, the NWRB, the SPDC, and the farmers to plan for the power generation and the irrigation requirements of the downstream farmlands. As provided for in the basic design of the SRMP, power generation is based on the irrigation requirements of the farmers all throughout the year.

The massive information campaign conducted before the rainy season helped to alleviate the people’s negative reaction to the opening of spillway in September, as ordered by the NPC, at the height of typhoon Pedring. As a result, there was less pressure from the community.

The company conducts other IEC activities such as dam tours, press conferences, and media briefi ngs to inform and educate not only the host community and other stakeholders but also other interested sectors.

Emergency Action Plan

The SRPC regularly conducts information and education campaigns on the Emergency Action Plan (EAP) and Disaster Preparedness Plan, together with the NPC, the PAGASA, the Offi ce of Civil Defense, the Provincial and Municipal Disaster Risk Reduction Management Councils, and the DSWD. The campaign aims to increase the level of awareness of the community on emergency conditions. The EAP is a systematic procedure to notify the government agencies responsible for emergency responses to dam-related emergencies such as operator error, earthquake occurrence, severe fl ooding and overtopping, sabotage, embankment deformation or cracking, embankment seepage or piping, and upstream dam failure. A dam break is one of the possible disasters listed under the Provincial Risk Reduction and Management Council of Pangasinan.



Community Development Program

The company’s policy to assist its host communities in attaining inclusive growth and development is carried out by embedding corporate social responsibility (CSR) in the organization. Since 2006, the company has included CSR as one of its seven corporate values. It has also established the San Roque Power Foundation, Inc. in 2010, which is solely engaged in effecting the company’s CSR programs.

The company is committed to act as catalyst for community empowerment to be able to help improve the quality of life of the socio-economically challenged communities, particularly those directly affected by the construction of the SRMP. It realizes community empowerment by promoting: community entrepreneurship, quality education and health, sustainable community resources and environmental development, and community institution building.

The construction of the SRMP, which took place between 1998 and 2003, displaced 660 families, 287 of which were resettled in the NPC-developed resettlement sites and the other 373 opted to relocate on their own.

Table 12. NPC-developed Resettlement SitesSite No. of Families

Camanggaan Resettlement, San Roque, San Manuel 187

Lagpan Resettlement, San Felipe East, San Nicolas 39

Daynet Resettlement, Ampucao, Itogon 37Bantic Resettlement, Dalupirip, Itogon 24

The NPC prepared a Resettlement Action Plan for the project-affected peoples (PAPs) with the following objectives:

1. To resettle the families residing within the boundaries of the project site and access road;

2. To restore the economic conditions of the affected families or better yet to improve it;

3. To compensate fairly all damaged properties/resources lost and/or damaged; and

4. To develop a program that is socially and economically acceptable to the affected families, the LGUs, NPC and the funding agency.

The NPC compensated all the families displaced by the project, including affected properties and lost resources. To date, the company complements the social development programs started by the NPC.

Table 13. SRMP List of Host CommunitiesBarangay

1. San Roque

San Manuel2. Narra3. San Bonifacio4. San Vicente5. San Felipe East

San Nicolas6. San Felipe West7. Camindoroan8. Calanutian

9. Ampucao Itogon

10. DalupiripMunicipality

1. San Manuel, Pangasinan

2. San Nicolas, Pangasinan

3. Itogon, Benguet

Province

2. Pangasinan

3. Benguet

Region

1. Region 1

2. CAR

Livelihood and Employment

The SRPC aims to help members of the host communities develop a self-help attitude as well as improve their self-employment capacities. In so doing,



they are given the opportunity to stand on their own while economic development in the locality becomes possible. The company is able to assist by providing the following:

• innovative fi nancial services; • technical assistance and capacity-building; • basic livelihood infrastructure support; and • linkages with concerned government or non-government institutions and the market.

Microfi nance Project

In August 2009, the SRPC partnered with the Center for Agriculture and Rural Development, Inc. (CARD), one of the leading microfi nance institutions in the Philippines, to establish a Microfi nance Program (MF) which was aimed at supporting the government’s poverty alleviation program, particularly to benefi t those who were displaced by the construction of the SRMP in 1998.

After obtaining suffi cient training under the CARD, the SRPC has successfully managed the project. Shown in Table 14 is an operations update, which was revised to refl ect the totals during the fi scal year April 2011 to March 2012.

Table 14. MF Operations Summary2009 2010 2011 Cumulative

I. OutreachNo. of Active Centers 6 8 11 11No. of Members 122 192 319 340No. of Members with Loans 102 157 273 306

No. of Loans Disbursed 132 262 632 1,026Amount of Loan Disbursed 579,000.00 1,348,000.00 3,616,000.00 5,543,000.00Average Amount of Loan Disbursed 4,386.36 5,145.04 5,721.52 5,402.53No. of Outstanding Loans* 53 115 294 294Amount of Loan Outstanding 207,217.39 444,380.00 1,317,725.22 1,317,725.22Average Loan Outstanding 3,909.76 3,864.17 4,482.06 4,482.06Interest Income on Loan 61,917.39 153,675.61 359,373.21 574,966.21

No. of Drop-outsAfter Recognized 1 0 3 4After First Loan 2 7 2 11After Second Loan 0 3 3 6

Total Members Savings** 224,897.00 248,920.00 351,364.00 825,181.00II. Portfolio Quality

Repayment Rate 100.00% 100.00% 100.00% 100.00%Total Amount Paid 474,700.00 1,223,513.00 3,102,028.00 4,800,241.00Total Amount Due 474,700.00 1,223,513.00 3,102,028.00 4,800,241.00Past Due Amount 0 0 0 0Total Principal Balance of Loan With Past Due 0 0 0 0Portfolio at Risk Rate 0 0 0 0

*ending balance per fi scal year **total accumulated members savings by end of 2010 – Php473,817; by end of 2011 – Php825,181



Impacts of Microfi nance Project

1. Greater Participation

The total project membership increased by about 66.15%, from 192 in 2010 to 319 in 2011, majority of which were from San Manuel. In terms of geographical location, membership increased by 60.94% in San Manuel, 94.29% in San Nicolas, and 55.17% in Itogon.

Table 15. MF CentersMunicipality/Center Name

2009 2010 2011

San ManuelCalingcamasan1 35 31Calingcamasan2 24Camanggaan1 31 30 33Camanggaan2 29 33 35Cavite 16 25San Roque1 8 14 35San Roque2 23San NicolasLagpan1 27 35 35Lagpan2 33ItogonBantic 16 19 32Daynet 11 10 13Total 122 192 319

Women composed 92.16% of the total membership of the MF. Though the main target of the project are poor women, the SRPC also encourages male heads or members of households to join.

2. Increased Virtues of Accountability

As the MF aims to inculcate accountability and sense of ownership, it also discourages dole-out mentality and

dependency, which the people developed during the construction phase of the SRMP.

At the end of the fi scal year, the repayment rate remained at 100% and the portfolio-at-risk ratio at zero percent with no write-offs. The total loan collection amounted to Php 3.1 M, which corresponded to the total amount due for the period. There were a few cases of delinquency, nevertheless payments were collected.

3. Increased Borrowing Capacity and Household Income

The MF disbursed Php 3.6 M to 273 of its members to fi nance economic activities such as farming, livestock and poultry raising, and vending/buy-and sell.

The MF initially offered its members between Php2000 and Php5000 for start-up capital and/or livelihood project expansion. The average loan per borrower increased by 54.25%, from Php 8,585.99 in 2010 to Php13,245.42 in 2011. An analysis of the members’ cash fl ow showed growth in their capacity to pay as a result of increased income.

The NPC conducted a post relocation socio-economic study of the project-affected persons of the SRMP from September to October 2010. Results of the survey showed that PAP households in Itogon and the MF group, with an average cash income of Php 5,000, received higher incomes than the San Manuel and San Nicolas PAP households. A focus group discussion, however, showed that monthly family income that used to range from Php 4,000 to Php 13,000, had started to receive monthly incomes between Php 8,000 and Php 11,000.



Using the data from the 632 MF loan applications received from 273 borrowers in 2011, the average household income of members reached Php 13,590 (San Manuel - Php 13,536, San Nicolas - Php 13,298, and Itogon – Php14,455).

4. Capacity on Finance Management and Awareness on the Value of Money

Focus group discussions and key informant interviews were conducted by the PinoyME Foundation, Inc. (PMEF) on December 6 to 8 to gather microfi nance project insights and learning, among others. The respondents disclosed that they learned to manage their fi nances carefully, borrowed only what was needed/required by their respective livelihood projects/activities, and became prudent.

5. Improved Savings Behavior

The savings component of the MF serves as fi nancial source for emergencies and family needs.

The total accumulated capital build-up (CBU) or members’ savings increased by 74.16%, from Php 473,817 by the end of 2010 to Php 825,181 as of end of 2011. New members, however, had lesser accumulated savings resulting in a 14.29% decline in per capita savings, from Php 3,017.94 in 2010 to Php 2,586.77 as of March 2012.

6. Increased Capability on Center Management

The MF centers are envisioned to grow into associations or cooperatives. To realize the vision, promising MF members are given training, coaching, and exposure to handle their respective centers better.

Each MF center conducted weekly meetings that were presided by its chief; the minutes of the meeting taken down by the secretary; and the payments collected by the treasurer. Point persons conducted loan inventories and assisted in project monitoring. Moreover, the centers established their own policies.

7. Increased Awareness towards Social Responsibility

Members of the MF centers organized tree planting activities and launched clean up drives in their respective areas. One center also organized a feeding activity in Camanggaan that benefi ted approximately 70 pre-school children.

Technical Assistance and Capacity Building

As part of the company’s efforts to promote sustainable livelihood, it also provided technical assistance to MF members and also implemented a capacity-building program that involved business development assistance, technical training, and exposure trips/fi eld visits through the SRPFI.

The members were assisted throughout the livelihood project cycle—from project identifi cation and prioritization, conduct of feasibility studies, project proposal preparation, and conduct of market studies. The market studies involved participatory project and enterprise development workshops, project implementation, monitoring, and linking to potential market. Technical trainings/seminars such as basic bookkeeping and recording, food handling, preparation and costing and handicraft making were provided to 178 members; 53 were exposed to successful plantations, demonstration farms, and production areas.



Agriculture technicians conducted onsite coaching on crop management to about 80 farmers in Camanggaan, Lagpan, Daynet, and Bantic. To increase soil quality and maximize productivity, the technicians also introduced vermi-composting and multi-crop farming technology.

Other Business Development Services

The demand for and prices of the products produced by the communities being supported by the company were regularly monitored by the staff in close coordination with market masters. The farmers and micro entrepreneurs were linked up with potential buyers and suppliers of inputs to production.

The company promoted the products of the community, such as kintoman rice, basket, tapuey or rice wine, using them as company giveaways.

Livelihood Infra Support

Various basic livelihood infrastructure support projects were launched by the community, concerned local government units, and the SRPC, following the Community-Driven Development process. The concreting of San Roque–San Felipe East farm-to-market road, which cost Php 2.5 M, benefi ted about 2,700 households, including Lagpan relocatees. The perimeter fencing and water system improvement in Daynet, which amounted to Php2 M, benefi ted at least 13 farming households; while at least 20 hog raisers in Camanggaan started to use the rehabilitated piggery facility that cost Php 242,959.

Education Program

Reading and Mathematics Profi ciency Program

8,417 Number of children-benefi ciaries134 Number Grades I & II teachers trained

89 Number of public elementary schools under the program

3 The remaining percent of non-readers of San Manuel after 4 years

73 The percent of readers in San Nicolas both in fi rst and advanced reading levels

38 The percentage drop of Itogon’s frustration readers after 3 years

The Reading and Mathematics Profi ciency Program, which started in 2007, was conceptualized based on the identifi ed needs of the host communities of the SRMP. In partnership with Synergeia Foundation, Department of Education (DepEd), local government units, and the Parents-Teachers Community Association, the program was implemented in 89 public elementary schools in the municipalities of San Manuel and San Nicolas in



Pangasinan and in Itogon, Benguet. The program aims to improve the students’ reading and comprehension skills and understanding of numbers and logical thinking.

Program Benefi ciaries 2009 2010 2011No. of pupils 6,559 8,975 8,417No. of teachers 249 357 384No. of schools 89 89 89No. of workbooks distributed 9,610 11,936 11,216

No. of lesson plans distributed 369 472 150

For school year 2011-2012, the program accomplished the following:

• Distribution of 8,417 English workbooks to Grades I, II and III students and 2,799 Mathematics workbooks to Grade II students.

At the start of the program in 2007, one of the issues presented by the Department of Education, Parents Teachers Community Association and the Local Government Units was lack of instructional materials such as textbooks and workbooks.

To address the concern, every student had been provided a workbook since. The workbooks cover lessons for the entire school year. The student is allowed to bring home the workbook and do the sample work exercises. For school year 2012-2013, the students will use workbooks developed by the teachers from the host communities that promote their culture and local setting.

• Distribution of 384 teachers’ manuals to Grades I, II and III teachers.

The teachers’ manuals complement the workbooks given to the students. The manuals provide teachers with ready reference for their daily lessons.

• Conducted teachers’ training in English entitled “Getting Ready in Becoming the Best Teacher.”

One hundred thirty four Grades I and II teachers participated in the training held on May 19-21. Based on the result of the Needs Assessment Test in Reading Comprehension the teachers took in 2010, the modules included were: phonemic awareness, strengthening strategies to develop decoding skills, multi-dimensional approach in developing comprehension, developing higher order thinking skills, personality development, and art appreciation.

Is the Program Making An Impact?

The program conducts Dolch sight word, comprehension, and mathematics pre- and post- tests every school year as a means to measure the performance of students.

The Grade I pupils in San Manuel started with a high non-reader rate of 66%, but was reduced to 3% at the end of school year 2010-2011. On the other hand, only 1% of the Grade I pupils were found to be advanced readers at the beginning of the year; however, this increased to 22% by the end of the year.

In San Nicolas, the test scores revealed that 56% of the Grade I pupils were non-readers at the start of the school year. This percentage went down to 8% at the end of the school year. Advanced readers, who comprised only 2% before the program, went up to 25%.

10 | P a g e

San Manuel

itogon

San Nicholas

pre test post test 0

10

20

30

40

50

60

Pre Primer Primer

1st Reader 2nd Reader 3rd

Reader

pre test

post test


20

40

60

80

100

Pre Primer Primer


Reader

pre test

post test

Pre-Primer Primer 1st reader 2nd reader 3rd reader

pre-test 66 21 9 3 1

post-test 3 19 23 33 22

San Manuel Grade 1 Dolch Test ResultsSY 2010-2011

80

60

40

20

0Pre-Primer

Primer

In p

erce

nt

1st Reader 2nd Reader

3rd Reader

pre-testpost-test



In Itogon, the percentage of non-readers at the start of the school year dropped from 83% to 11%. There were no advanced readers before the program, but 27% of the Grade I pupils became advanced readers thereafter.

The students’ performance in the National Achievement Test (NAT) in San Manuel and Itogon for school year 2009-2010 and 2010-2011 registered increased rates, from 69.58% to 70.11% and from 64.90% to 67.38%, respectively. On the other hand, the NAT performance of students in San Nicolas dropped from 70.87% to 64.81% in the same period.

Other Education Support Programs

Summer Arts Workshop. This is an enrichment activity conducted during the summer break that aims to enhance the children’s creativity and artistic talents. It includes story telling sessions that supplement the reading program. On June 1 and 2, 160 children aged 5-12 participated in the summer arts workshop entitled “I Love My Planet Earth.”

Donate A Book Make Reading Fun. This is an employee-initiated program that collects used books to be given to selected public elementary schools. Eighty regular and contract employees participated in outreach programs in eight schools. They held village reading, supplemental feeding, and distributed dictionaries, story books, papers, pens, and pencils. In addition, they gave hygiene kits that contained toothbrush, toothpaste, shampoo, and slippers. The program reached out to 1,690 pupils.

Support to Volunteer Teachers. The company supported 21 volunteer teachers for school year 2011-2012—fi ve in high school, 13 in elementary school, and three in day care. Each volunteer teacher was given a Php 5,000 as monthly subsidy. The program aims to help meet the standard teacher-pupil ratio of 1:40 of the Department of Education.

Balik Baterya. The Balik Baterya Program, which started in June, aims to promote environment clean-up and raise fund to support the Learning Enhancement Assistance Package program. The program is being carried out in partnership with Oriental and Motolite Marketing Corporation and the Philippine Business for Social Progress (PBSP).

On October 12, the SRPC and the PBSP donated science textbooks to San Vicente Elementary School in San Manuel and Don Cristobal Elementary School in San Nicolas. On October 13 the Cabayaoasan Elementary School in San Nicolas received donations of science textbooks, CDs in English, Mathematics and History, and a television set and video player. The school’s library was also repaired. A total of 222 pupils and 21 teachers from these schools benefi ted from the donation of educational materials.

Itogon Grade 1 Dolch Test Results SY 2010-2011


pre-test 83 10 5 2 0

post-test 11 10 17 35 27

10 | P a g e

San Manuel

itogon

San Nicholas


10

20

30

40

50

60

Pre Primer Primer


Reader

pre test

post test


20

40

60

80

100

Pre Primer Primer


Reader

pre test

post test

San Nicolas Grade 1 Dolch Test Results SY 2010-2011


pre-test 56 25 11 6 2

post-test 8 19 20 28 25

Pre-Primer

80

60

40

20

0

100

80

60

40

20

10

0In p

erce

ntIn

per

cent

Pre-Primer

Primer 1st Reader 2nd Reader 3rd

Reader

Primer 1st Reader 2nd Reader 3rd

Reader

pre-testpost-test

pre-testpost-test



Skills Training

Welding

The Shielded Metal Arc Welding

is a 35-day training program aimed

at increasing the employability of out-of-

school youths via vocational and technical education. The

course also includes guidance on how to develop positive work attitudes, values, and adhere to occupational standards.

For the period, 62 out-of-school youths fi nished the training. The program, which started in 2008, has already produced 124 graduates. Forty nine are currently employed, fi ve are working abroad, and 44 employed in the locality.

The program is being carried out in partnership with the Technical Education and Skills Development Authority (TESDA) and the Provincial Employment Service Offi ce.

Advanced sewing

Twenty persons (17 female, 3 male) attended the training on Dressmaking NC II, a 40-day in-house training course conducted by Pangasinan School of Arts and Trade. Graduates of the program were expected to venture into sewing as livelihood project.

Education-support infrastructure

As part of the efforts in promoting quality education in the area, the company completed the following

infrastructure projects in 2011, incurring a total expense of

Php 2.6 M:

• Construction of multipurpose stage – Bobon Elementary School• Construction of one classroom building – Bulangit Elementary School• Construction of one classroom building – San Felipe Integrated School• Repair of one classroom building – San Bonifacio Elementary School • Repair of seven classroom building – Bobon Elementary School• Repair of teacher’s quarter – Cabayaoasan Elementary School• Installation of window grills – Oling Elementary School• Painting of classrooms – Fianza Memorial National High School

Health & Nutrition Program

Medical Mission

The annual “Taking Time to Care” medical/dental mission conducted on December 15 and 16 benefi ted 1,593 residents of Bobon, Bulangit, and Tabu from the free consultation, tooth extraction, eye check-up, and free medicines. The activity was held in partnership with the local government units, the Department of Health, the Department of Education, the Virgen Milagrosa University Foundation, the Region I Medical Center, the Philippine Military Academy, the Baguio General Hospital, and Prevhealth, Inc. The medical mission was supported by 19 medical doctors, 15 dentists, and fi ve ophthalmologists.

Table 16. Mission Benefi ciaries

Health Care ProvidedNo. of Benefi ciaries

2009 2010 2011Medical 1,043 1,069 962Dental 329 424 348Eye - 427 283

Total 1,372 1,920 1,593



Supplemental Feeding Program

A total of 548 underweight and severely underweight children,

aged 5 to 12, from selected public elementary and day care centers were enrolled in the program. The benefi ciaries were selected based on the assessment

of the school nutrition coordinator. This in-school

feeding program was conducted for 10 consecutive weeks from October to December.

The supplemental feeding program was conducted in partnership with the DepEd, Parents-Teachers Community Association, and the DSWD. The SRPC took charge of the feeding requirements for 30 days or three times a week; while the Municipal Social Welfare and Development Offi ce and the DepEd provided lunch for 20 days or twice a week. Volunteer employees, parents, and barangay health workers provided assistance in preparing the food.

Compared to previous years, the program was able to reach out to more benefi ciaries this year as more resources were contributed by the partners.

Table 17. Supplemental Feeding Benefi ciaries

SiteNo. of Benefi ciaries

2009 2010 2011Bobon Elem. School 52 45 82San Roque Day Care School 17 24Narra Day Care School 28 23 60San Felipe Elem. School 27 85Bulangit Elem. School 23 124 40Daynet Elem. School 48Cabayaoasan Elem. School 70San Roque Elem. School 14San Bonifacio Elem.School 15San Vicente East Elem. School 18San Vicente West Elem. School 15Laklak Elem. School 61Ningning Day Care Center 17Camindoroan Day Care Center 17San Felipe East Day Care Center 75Calanutian Day Care Center 14Fianza Day Care Center 18Bomboaya Day Care Center 30Camangggan Day Care Center 72

Indigenous Peoples

One of the communities where the company operates is home to IPs, whom may have been directly or indirectly affected by the SRMP. It is the policy of the company to comply with the Indigenous Peoples Right Act, therefore, it does so in partnership with the National Commission on Indigenous Peoples, especially in developing and implementing the Indigenous Peoples Development Plan (IPDP).

The IPDP is a commitment of the government that addresses matters affecting the IPs who are affected by the project. The plan, as prepared by the IPs in February 2004, incorporates the basic concerns about the SMRP contained in the development framework they developed in 2001. These concerns include the following:

• compensation of the remaining lands and improvements;

• completion of the resettlement sites; • provision of sustainable sources of livelihood; • co-management of the forest/watershed areas;

and• the issuance of land tenure instruments for their

ancestral land claims.

The IPDP calls for the commitment of different agencies in its execution. As provided in the Memorandum of Agreement signed on 23 February 2004, these agencies are: the NCIP, as the lead agency; the NPC, the SRPC, the DENR, and the DSWD. As a result of proper coordination and execution, there have been no reported violations of the rights of the IPs.



The company also supports the Sebbang ni Pansegshan, an indigenous people’s organization whose members are the IPs affected by the SRMP. For the period, 45 IP members of the organization were involved in the following livelihood projects using their indigenous knowledge, skills, and practices:

• Microfi nance Project • Kintoman (indigenous rice variety) rice farming • Tapuey (rice wine) making• Fishing• Soft broom making• Vegetable farming

To support the 41 families in Bantic engaged in kintoman rice farming, the SRPC and the local government units of Itogon and Benguet provided assistance in introducing ways to improve rice production, such as use of bio-fertilizers, proper waste management, integrated pest management, and crop rotation. The SRPC also donated plastic pipes for irrigation and 12 heads of carabaos to help increase the production of about

20 hectares of ricefi eld. Together with the municipal veterinary offi ce of Itogon, the SRPC provided technical assistance on stock care and maintenance. As of March 2012, the number of stocks increased to 16.

The SRPC works closely with the local government units and the IPs in studying the feasibility of constructing a bi-cable tramline transport system to speed up the transport of harvest from the area to the marketplace. The project is seen to save on transport cost and shorten the travel time as well as reduce spoilage.

The company likewise supported the livelihood projects of the Ibaloi tribe, comprised of more or less 50 families located in sitio Cabayaoasan, San Felipe East, San Nicolas. Technical assistance and planting materials, e.g., ginger rhizomes and tiger grass suckers, were given to the families. About 600 kilos of ginger were harvested in February, while tiger grasses were made into brooms that were sold at Php150 per piece in their neighboring communities.

ENVIRONMENTAL PERFORMANCE



Clean Power – Our Contribution to Climate Protection

The company is able to contribute to the country’s efforts in reducing and/or sequestering carbon emissions primarily by making its plant operations more effi cient. In 2011, the company delivered 1,082.27 GWh of hydroelectric energy, which consequently reduced equivalent CO2 emissions by 718,107 tons. The SRPC shall continue to be reliable in delivering renewable energy that signifi cantly contributes to the country’s quest for a cleaner and economically viable power supply.

The SRMP underwent a rigorous environmental review process set forth by the Philippine Environmental Impact Assessment (EIA) system as basis for the issuance of the Environmental Compliance Certifi cate that specifi es, among others, the management and monitoring plan to be undertaken by the project proponents, i.e., the NPC and the SRPC, in order to mitigate, if not prevent, negative impacts on the environment during the operation of the dam and the power plant.

The SRMP’s Environmental Management Plan (EMP) includes site-specifi c monitoring and protection plans for locations and activities where potentially signifi cant environmental impacts might occur. Through the EMP, the company commits to sound environmental management and practices, to provide

adequate resources to fulfi ll that responsibility, and to continuously improve its environmental performance.

2011 Highlights

•Support to the National Greening Program (NGP) by adopting 500-hectare degraded portion of the San Roque watershed•Partnering with the Philippine Eagle Foundation, Inc. in implementing the San Roque Initiative: Saving Agno

River watersheds through public education and Philippine Eagle conservation

• Periodic monitoring of water and sediment quality at pre-designated locations within the dam reservoir and along a limited segment of the upstream and downstream reaches of the Agno River

• Fish stocks enhancement and assessment of the concentration levels of heavy metals in the protein tissues of reservoir fi shes

• Periodic air quality monitoring and noise level surveys

• Solid waste management and containment and mitigation techniques for hazardous wastes present on site in accordance with applicable standards

• Monitoring of sediment control measures and re-vegetation works within the project site to appropriately address potential slope stability and erosion concerns that may arise

• Regular ocular inspections with the NPC and the Multipartite Monitoring Team (MMT) of watershed conditions within the reservoir and

ENVIRONMENTAL PERFORMANCE

1.1 million MWhClean energy generated in 2011

More than 718,000Tonnes of CO2 equivalent abated

More than 5 millionTonnes of CO2 equivalent abated

since its commercial operation in 2003

adjacent catchment areas



• Control and implementation of counter-measures to any spills or releases of petroleum and chemical products to the environment, including response and identifi cation procedures

• Continued operations of the SRMP-Multipartite Monitoring Teams for the provinces of Pangasinan and Benguet

• Maintenance of the Environmental Guarantee Fund (EGF) and Environmental Monitoring Fund (EMF)

• Zero Notice of Violations (NOVs) and Permits non-compliances

Challenges

The SRPC shares the value of promoting environmental stewardship and sustainable development. The challenge for the company is to continue improving a performance that complies with key environmental obligations and go beyond what is required to achieve its sustainability goals.

Opportunities

The opportunity for the SRPC is to continue to implement best management practices in its initiatives to maintain biodiversity and assess its carbon footprint in order to identify reduction opportunities.

Water Use

The company’s material and energy use is mainly driven by the utilization of water for hydropower generation and some secondary materials comprised mostly of petroleum, oil and lubricants necessary for plant maintenance.

The main source of water for hydroelectric power generation is the headwaters of the Agno River that originate from the Cordillera Mountains. The San Roque watershed was established as a watershed forest reserve by virtue of Presidential Proclamation No. 2320 on November 22, 1983 for the purpose of protecting, maintaining and improving its water yield for hydroelectric power generation, irrigation, and other ecological enhancement purposes.

The San Roque reservoir involves impounding water behind the dam to enable fl ow regulation throughout the year (i.e., based on rule curves), providing a reserve to satisfy irrigation and electricity demand especially during dry seasons or periods of peak demand.

During the period, the plant satisfactorily delivered the electrical as well as irrigation requirements of the NPC and the NIA, respectively.

The hydroelectric power plant uses water by converting the energy of falling water into electricity by passing it through the turbines. The water, after passing through the turbines entirely converges into the lower Agno River. This process is referred to as the operational releases, which become the source for the SRMP irrigation component being managed by the NIA. Of these operational releases, agriculture accounts for majority of water use, not precluding domestic utilization and river ecology maintenance downstream.

In 2011, the plant’s non-consumptive water withdrawal for power generation accounts for 2,647 million cubic meters (MCM). On the other hand, our administrative offi ces and other plant facilities consumed 0.48 MCM of water. Access to water is essential to the SRPC’s production of electricity and the company understands the importance of being responsible stewards of this critical resource.

Table 18. Water Consumption for 2011First

QuarterSecond Quarter

Third Quarter

Fourth Quarter

Specifi c requirement for power generation

461.26 million cubic

meters


meters

1,122.81 million cubic

meters


meters

Domestic Use54,000 cubic

meters

54,000 cubic

meters

54,000 cubic

meters

54,000 cubic

meters

Wash Water63,000 cubic

meters

63,000 cubic

meters

63,000 cubic

meters

63,000 cubic

meters

Treated Wastewater58,320 cubic

meters

58,320 cubic

meters

58,320 cubic

meters

58,320 cubic

meters



Monitoring of Water Quality

The operational water releases all go to the Agno River, and then diverted to

the NIA intake structure where water eventually

traverses link canals for irrigation use. At present, the c o n s t r u c t i o n of the NIA re-regulating pond is on-going. Upon completion

in the third quarter of 2012, the re-

regulating pond will function to temporarily

hold/store regulated water discharges from the dam until the

water is conveyed to the main irrigation canals and released depending on irrigation water requirement. Irrigation releases will be managed by the NIA.

Assessment of water quality downstream refl ected signifi cant improvement especially in terms of turbidity/clarity and total solids (dissolved and suspended). Suspended sediments play a major role in water quality as sediments may clog and damage fi sh gills and interfere with the photosynthetic processes of crops, as well as recreational activities and aesthetic enjoyment. Sediment may also carry other pollutants, such as nutrients and toxic chemicals, into the body of water. As such, the signifi cant reduction of sediment loads in water fl owing downstream of the dam

essentially proved that the project’s objective on water quality enhancement was being met. Furthermore, results for both in situ measurements and chemical analyses indicated that all the identifi ed parameters that defi ne the desired quality of water for its intended benefi cial use (i.e., for irrigation) were generally within the guideline limits.

Routine monitoring in selected stations upstream, within the reservoir area, and downstream of the dam were carried out with representatives from the SRMP-MMT and the DENR. These designated sampling areas represented specifi c settings which were signifi cant in obtaining data that could produce representative results to determine relative differences between sites and identify trends in terms of degradation or improvement in water quality condition over time. The requisite water quality monitoring parameters and guideline values are specifi ed in DENR Administrative Order No. 34, Series of 1990 (DAO-34). The monitoring involved onsite measurements and collection of samples from various depths (i.e., 0.5 meter from the surface, one-half of the reservoir depth, and 1.0 meter above the reservoir bottom) with a Van Dorn sampling device.

Specifi c parameters regularly monitored included, among others, cyanide and heavy metals (i.e., mercury, arsenic, copper, cadmium, chromium and lead) in consideration of the lower Agno River as a receiving water body where mining and other similar activities are

Figure 6. Annual Mean TSS Values

64 | P a g e

Assessment of water quality downstream reflected significant improvement especially in terms of turbidity/clarity and total solids (dissolved and suspended). Suspended sediments play a major role in water quality as sediments may clog and damage fish gills and interfere with the photosynthetic processes of crops, as well as recreational activities and aesthetic enjoyment. Sediment may also carry other pollutants, such as nutrients and toxic chemicals, into the body of water. As such, the significant reduction of sediment loads in water flowing downstream of the dam essentially proved that the project’s objective on water quality enhancement was being met. Furthermore, results for both in situ measurements and chemical analyses indicated that all the identified parameters that define the desired quality of water for its intended beneficial use (i.e., for irrigation) were generally within the guideline limits.

Figure 10. Annual Mean TSS Values

Total Suspended Solids (TSS) measures the extent of un-dissolved solid particles in water, such as silt, decaying plant and animal matter, and domestic and industrial wastes. The above graph illustrates that the highest TSS levels were apparent in the up-lake portions of the reservoir (Stations R1 and R2) and diminished significantly at down-lake portion (Station R3) and downstream (Stations D1 and D2)

Routine monitoring in selected stations upstream, within the reservoir area, and downstream of the dam were carried out with representatives from the SRMP-MMT and the DENR. These designated sampling areas represented specific settings which were significant in obtaining data that could produce representative results to determine relative differences between sites and identify trends in terms of degradation or improvement in water quality condition over time. The requisite water quality monitoring parameters and guideline values are specified in DENR Administrative Order No. 34, Series of 1990 (DAO-34). The monitoring involved onsite measurements and collection of samples from various depths (i.e., 0.5 meter from the surface, one-half of the reservoir depth, and 1.0 meter above the reservoir bottom) with a Van Dorn sampling device.

Total Suspended Solids (TSS) measures the extent of un-dissolved solid particles in water, such as silt, decaying plant and animal matter, and domestic and industrial wastes. The above graph illustrates that the highest TSS levels were apparent in the up-lake portions of the reservoir (Stations R1 and R2) and diminished signifi cantly at down-lake portion (Station R3) and downstream (Stations D1 and D2)



operating upstream. One of the monitoring stations, Station U-1, located along Balog Creek prior to its confl uence to Agno River, was regarded as a control point and captured the effect of any waste loads that might come from Philex Mining Corporation’s Tailings Dam No. 3. Previous results of analysis for water samples at this site refl ected that concentrations of target pollutants including substances typically used in mineral processing (i.e., mercury, cadmium, arsenic, cyanide) were generally within the DENR Water Quality Criteria.

Analysis of heavy metals for water samples from the tail-end parts of the reservoir were likewise conducted on a quarterly basis to estimate pollutant loads from infl ow waters that might have traversed small scale mining areas upstream. The same parameters were measured at established down-lake points to generally account for the downstream routing of such contaminants including disproportionate levels, if any.

Water samples were properly preserved and transported to a DENR-certifi ed laboratory for the analysis of water quality indicators, such as biochemical oxygen demand (BOD), total suspended solids (TSS), total dissolved solids (TDS), coliforms (total and fecal), hydrogen sulfi de, nitrate-nitrogen, phosphate-phosphorus, dissolved copper, total arsenic, total cadmium, total chromium (hexavalent), total cyanide, total lead, total mercury, surfactants, oil and grease, phenols, chloride, pesticides, and polychlorinated biphenyl (PCB). All

laboratory analyses were performed in accordance with the Standard Methods for the Examination of Water and Wastewater (American Public Health Association-American Waterworks Association and the US Environmental Protection Agency).

Report in-use inventory of solid and liquid high level and low level PCBs contained in equipment

Any hazardous/toxic substances or other non-conventional pollutants present on site that are regulated by Philippine statutes or their implementing rules and regulations were assessed and controlled under the company’s hazardous materials standards, procedures and practices (ENV-01-02). The Environmental Management Bureau-Region 1 had confi rmed that the transformers being used by the plant were PCB-free. On the same note, the SRPC had complied with the criteria for the grant of exemption from the requirements of the Chemical Control Order (CCO) on PCBs.

Overall water usage for processing, cooling and consumption in thermal and nuclear power plants, including use of water in ash handling and coal cleaning

The SRPC generates electricity using water-driven turbine generators and does not use water in processes like cooling water to condense steam, ash handling, and coal cleaning.

Figure 7. Annual mean DO variation with depth at Station R3 (deepest portion of the reservoir)

66 | P a g e

Figure 11. Annual mean DO variation with depth at Station R3 (deepest portion of the reservoir)

Dissolved oxygen concentrations exhibited decreasing trend from top to bottom. The surface waters were well-oxygenated and consistently conformed with DO criterion (>5 mg/L), while the bottom waters typically had depressed levels of DO (<4 mg/L). There were no anoxic conditions identified (DO at <1 mg/L). As reflected in Figure 10, DO at Station R3 showed depth-dependent variations where peak concentrations were confined within the upper portion of the water column ranging from >7 mg/L to < 9 mg/L, which met the DENR criterion for DO at >5mg/L.

Report in-use inventory of solid and liquid high level and low level PCBs contained in equipment Any hazardous/toxic substances or other non-conventional pollutants present on site that are regulated by Philippine statutes or their implementing rules and regulations were assessed and controlled under the company’s hazardous materials standards, procedures and practices (ENV-01-02). The Environmental Management Bureau-Region 1 had confirmed that the transformers being used by the plant were PCB-free. On the same note, the SRPC had complied with the criteria for the grant of exemption from the requirements of the Chemical Control Order (CCO) on PCBs. Overall water usage for processing, cooling and consumption in thermal and nuclear power plants, including use of water in ash handling and coal cleaning The SRPC generates electricity using water-driven turbine generators and does not use water in processes like cooling water to condense steam, ash handling, and coal cleaning.

Dissolved oxygen concentrations exhibited decreasing trend from top to bottom. The surface waters were well-oxygenated and consistently conformed with DO criterion (>5 mg/L), while the bottom waters typically had depressed levels of DO (<4 mg/L). There were no anoxic conditions identifi ed (DO at <1 mg/L). As refl ected in Figure 7, DO at Station R3 showed depth-dependent variations where peak concentrations were confi ned within the upper portion of the water column ranging from >7 mg/L to < 9 mg/L, which met the DENR criterion for DO at >5mg/L.



Electricity Consumption

Table 19. Electricity ConsumptionMegawatt-hour Gigajoules

First Quarter 2,077.55 M Wh 7,479 GJSecond Quarter 1,285.73 MWh 4,629 GJThird Quarter 3,087.36 MWh 11,114 GJFourth Quarter 2,850.97 MWh 10,263 GJ

One hundred percent of the company’s electric consumption comes from its station power, i.e., from a renewable energy source. Renewable source that is derived from hydroelectric power is classifi ed as carbon neutral as no additional CO2 is released into the atmosphere through its use. In 2011, the company’s total electricity consumption was 9,301.61 MWh or 33,485 gigajoules of direct energy consumption from a renewable s ource.

The SRPC endeavors to sustain its energy effi ciency both as generator of electricity that incorporates state of the art technology to produce energy cleanly and effi ciently; and as an end-user that improves energy effi ciency in its workplace through basic administrative procedures, such as turning off electric equipment beyond operational hours and giving preference to energy-effi cient products such as lightings, computers, and air-conditioning units. Although currently, the company does not calculate the energy reductions that result from these practices, it aims to conduct specifi c campaigns to further improve energy effi ciency in the workplace by raising employee awareness. Likewise, the company plans to install assessment mechanisms so that opportunities to conserve may be further identifi ed, prioritized, and implemented.

Fuel Consumption

A total of 33,956 gallons of diesel were used in 2011 or 4,686 gigajoules of indirect energy consumption. This consists of fuel to run standby generator sets and company-owned vehicles for employee travel. Flexible work policies, systematic arrangement of employee errands and carpooling, and use of teleconferences were some of the ways that we reduce our fuel consumption. The company does not currently track reductions in fuel consumption resulting from these initiatives.

Greenhouse Gas Emissions and Air Quality

The company is committed to maintain air quality conditions inside its premises, facilities, and adjacent areas within the national air quality standards as defi ned in the Clean Air Act of 1999. Since no fuel is burned or no combustion is associated with the process of producing hydroelectricity, the company has close to zero Greenhouse Gas (GHG) emissions in its operational activities. The electricity used for offi ce building lighting, cooling, heating, and for offi ce equipment (e.g., printers, photocopiers) comes from hydroelectric power; hence, indirect emissions from these sources are considered insignifi cant. Nonetheless, the company encourages GHG emission reductions through investment in energy-effi cient offi ce equipment and lightings, as well as reduction in the use of materials, such as paper.

Most of the company’s carbon footprint, therefore, comes from company-owned vehicles used for business travels and for transporting employees to and from the power plant. With the development of GHG emissions accounting, the company initially carried out inventory of its direct GHG emissions as a result of fuel use in vehicles. In future reports, the company hopes to expand its inventory to include other categories such as paper consumption so that its GHG assessment is made more comprehensive. The company derived its GHG accounting protocols from the World Resources Institute and the World Business Council for Sustainable Development (WRI/WBCSD) GHG Protocol.

Table 20. CO2 EmissionsCategory Emissions (tonnes of CO2)

Direct emissions (due to vehicular fuel use) 371.05 tonnes

Indirect emissions due to electric consumption 0

Total CO2 emissions 371.05 tonnes

Furthermore, the ventilation, air conditioning and refrigeration systems installed in the company do not use chlorofl uorocarbon (CFC) or hydro fl uorocarbon-based (HFC) refrigerants, which are known to deplete the ozone layer.



No air emission characterization for NOx and SOx had been conducted for this reporting period. Standby generator sets were operated under normal conditions for testing/maintenance purposes at an average of one hour/month, hence, there were minimal generator exhaust stack emissions.

Noise generated from power plant operations (e.g., power turbines) are confi ned within the powerhouse main working area. Appropriate noise protection devices, such as ear plugs and ear muffs with appropriate noise reduction rating are provided to the personnel assigned in the area to mitigate exposure to excessive noise levels. There is also a vibration monitoring system to stop the generating unit at excessive vibration. The company likewise conducts watering of unpaved road areas to minimize fugitive dust emissions on a day-to-day basis. For future construction maintenance works, temporary total suspended particulates (TSP) and noise quality monitoring sites shall be established at the actual construction site and downwind towards the nearest affected communities.

Waste Management

The company manages its waste based on the guidelines provided for in the Solid Waste Management Act and the Toxic Substances and Hazardous and Nuclear Wastes Control Act. Currently, the company has no critical issues pertaining to non-hazardous and hazardous wastes, and the types and volume generated are well covered by the company’s current waste management approach.

Measures such as prevention, minimization, reuse and substitution with environment-friendly products are observed in the company. The employees are encouraged to decrease consumption of water in plastic bottles and food in styrofoam packaging, as well as increase the reuse and recycling of materials. Minimization and reuse of common offi ce wastes, such as paper, aluminum cans, cardboards, etc., is also being practiced.

Table 21. Total Weight of Solid Waste Generated and Collected

Average Weight of Solid Wastes Generated per month

0.40 ton

Total Weight of Solid Wastes Generated in 2011

4.5 tons

Average Weight of Solid Wastes Collected per month

0.20 ton

Total Weight of Solid Wastes Collected in 2011

2.5 tons

Waste by Type and Method of Disposal

About fi fty percent of the solid wastes generated are source-separated recyclable materials such as scrap metals, paper products, glass products, rubber products, plastics, and aluminum and tin cans, which are stored at designated junk and salvage areas for haulage. Almost all of these materials were collected and sold to local junkshops within the area for recycling. The remaining fi fty percent consists of garden waste (e.g., grass clippings, twigs and branches) disposed of to a composting facility, and kitchen and food wastes which are regularly collected by some employees who are engaged in piggery operations.

Receiving Body of Water Outlet Location

Estimated Ave. Rate of Discharge

(m³/day)

BOD(mg/L)

TSS(mg/L)

Color(PCU) pH

Oil & Grease(mg/L)

The Agno River is the discharge point for all

outlets.

STP, Operator’s Village 2 m³/day 7.83 14.88 22.33 8.04 0.92STP, Powerhouse 1 m³/day 6.58 57.0 65.08 8.07 1.06Oil/water Separator, Powerhouse

10 m³/day 3.25 6.38 14.58 7.97 0.88

Acceptable Value (as per DAO 35) 80.0 90.0 200 6.0-9.0 10.0

Table 22. Wastewater Discharge and Effl uent Assessment Results for 2011 (mean values)



Hazardous wastes, such as used oil and batteries, are collected and stored in a designated storage area. These wastes are transported and treated locally at licensed facilities, and do not cross international boundaries. The company maintains its partnership with the Motolite Group “Balik Baterya” program that covers the collection, transport, and recycling of used lead acid batteries (ULABs). Moreover, 72 drums of used oil, petroleum, and lubricants were safely impounded at the company’s designated storage area and scheduled to be treated and recycled by an authorized hazardous waste transporter and treater in June 2012.

Effl uents

To properly manage wastewater, the company implements wastewater characterization (quality and quantity and sources of liquid effl uents in the facility), segregation of effl uents (industrial and domestic) and identifi cation of opportunities to prevent or reduce wastewater (reuse and improvement of operating conditions). The company’s water usage and discharges are permitted and managed according to regulatory requirements.

A sewage treatment facility located near the powerhouse has a complete mix/extended aeration process capable of treating approximately 3.8 cubic meters of domestic wastewater per day. Another sewage treatment facility located at the Operator’s Village can treat 33.88 cubic meters of domestic wastewater per day. Oily waste drainage systems, which have oil/water separators that automatically separate and retain the waste oil via the fl oatation process, and sump oil detection systems are installed in areas and in equipment likely to be contaminated with oily water drips and spills. Portable spill control materials support these systems.

Chemical Spills

The company has standard procedures and practices that cover prevention of accidental spills of hazardous materials. No signifi cant spills were recorded during the period. In the event of unintended release of oil and other hazardous materials to the environment, the company has facility-wide spill management procedures to identify the cause and consequently implement preventive and corrective measures as needed.

Biodiversity and Habitat Protection

The Lower Agno Watershed (LAW), which has a total drainage area of 39,304 hectares, is situated within the provinces of Benguet and Pangasinan and occupies a very small portion of Nueva Vizcaya province. The LAW was established as a watershed forest reserve in November 1983 by virtue of Proclamation 2320 for the purpose of protecting, maintaining and improving its water yield for hydroelectric power generation, irrigation, and other ecological enhancement purposes and providing restraining mechanism for inappropriate land use and forest exploitation. Pursuant to the principle of co-managership in the management of public forests and by virtue of Presidential Decree No.1749, the immediate watershed of the SRMP consisting of 9,550 hectares was put under the administration and control of the NPC.

The watershed serves as the immediate water catchment from which rainwater can drain as surface run-off via the Agno River, which is the main source of water supply that sustains the dam’s hydroelectric power generation and irrigation components.



The implementation of plans and programs for the sustainable management of the watershed and all the natural resources found therein are vested through the integrated efforts of various stakeholders including the DENR, concerned LGUs, the NPC, and other collaborating government and non-government sectors, including the SRPC.

To support the watershed management initiatives of the DENR and the NPC, the SRPC has been implementing projects that give prime consideration in conserving and protecting the watershed and its biodiversity. The projects are signifi cantly aimed at providing a channel for watershed stakeholders to better understand the importance of the watershed, including the biophysical processes involved, and the interaction of biophysical and socio-economic factors and their infl uences on watershed condition. Such interventions by the SRPC consistently emphasize that the sustainability of one resource is linked with the sustainability of the other resources.

In November 2008, the SRPC and the NPC conducted a comprehensive Reservoir Sedimentation Study and Sediment Management Plan by commissioning the Northwest Hydraulic Consultants of Canada and the University of the Philippines-Engineering Research and Development Foundation, Inc. The study used wide arrays of watershed numerical models and simulations to predict future sediment scenarios that may result in the sediment infl ow and deposition rates for the San Roque reservoir. Out of these scenarios, appropriate measures were recommended to deal with siltation issues within the watershed.

The study concluded that the total storage volume in the San Roque reservoir would be approximately 86% of its initial volume after 25 years of operation and would be approximately 50% of its initial volume after 70 years as a result of sedimentation. These results had been presented to all key stakeholders of the watershed, including the DENR, local government units, Philex Mining, the host communities, and local organizations such as the Small Scale Miners and the Indigenous People’s Organization.

Considering that the SRMP is one of the government’s vital installations as regards sustaining power and irrigation supply, the study helped to demonstrate that in order to maintain the storage capacity and to maximize the intended design life of the San Roque reservoir, current and future developments in the basin (e.g., road construction, mining activities, construction of new settlements) would need to adopt best management practices to avoid increase in siltation and land disturbance that would lead to accelerated sediment deposits in the reservoir, and that to be effective, sediment management plans should be integrated to address conditions in the entire basin.

The biodiversity component in the watershed area as previously noted in the SRMP 1994 EIA included a survey of trees, shrubs, grasses, weeds, crops, fi sh, aquatic invertebrates, reptiles, mammals, and birds. The biodiversity analysis showed that most of the fl oral species that thrived along the streambank and riparian areas were introduced through various reforestation programs over the past years. The aquatic fauna were only occasionally seen along the mainstream of the



Agno River during the rainy season when the upstream dams release water and reservoir fauna along with it. A thorough assessment of the SRMP’s ecological impacts that formed part of the EIA documented that there were no rare, endangered, or critically-endangered fl ora and fauna species affected by the project. All recorded species were considered common, endemic, and/or introduced in the area.

Prior to reservoir clearing in 2002, the impoundment area was cleared of vegetation to avoid water quality issues arising from decomposing biomass as well as to ensure the safety of project facilities. Prior to any cutting, an inventory of affected vegetation was conducted in close coordination with the regional offi ce of the DENR and appropriate permits were obtained.

There were no endangered species involved; mostly affected were common species such as grasses, pioneer shrubs, and herbs. The Project’s EIA documented the fauna species as being comprised primarily of domesticated animals. During fi lling of the impoundment, other forms of species (such as snakes, monitor lizards, etc.) had presumably relocated to higher elevations as water level rose overtime or had been assimilated into other existing habitats of adjacent areas outside of their former home ranges.

Revegetation was the most extensive control measure used to stabilize disturbed areas. Aside from restoring greenery, it kept the soil in place, preventing runoff water from carrying it down to water bodies.

Two methods of revegetation were employed: manual planting and hydroseeding. Manual planting used vetiver grasses and various indigenous tree species. Because of the longer period required to establish vegetation using this method and the small area it covers at a time, hydroseeding was also widely used. Signal grass, local vines (Centrosema), and ipil-ipil, which is a local tree that grows abundantly at the area, were hydroseeded.

As regards the replacement of the trees cut in the reservoir area, then DENR Secretary Heherson Alvarez approved the proposal of the NPC and the SRPC to establish an Ecology Park within the left and right abutments of the dam. The Ecology Park had been planted with about 200,000 various indigenous tree species found in the locality. The SRPC, the NPC, and the DENR are currently maintaining the area jointly.

Likewise, the San Roque Watershed Area Team of the NPC, with the support of the DENR and the SRPC, implements comprehensive watershed management procedures to control destructive practices such as illegal logging, forest fi res, kaingin, as well as encourage reforestation efforts, public education on watershed protection, sustainable land management, and ecosystem research initiatives. Maximum benefi ts of the San Roque watershed management plan is envisaged to be achieved by integrating it with existing plans of the regional DENR offi ces and concerned LGUs for Pangasinan and Benguet. With the government highly promoting ecotourism as a means to save degrading natural resources, the NPC is presently studying the potential of the San Roque watershed as an ecotourism destination. This plan is being viewed as an avenue to build greater awareness, cooperation and support of the citizenry, and potential partners in the protection, development, and rehabilitation of watershed reservation areas. The SRMP reservoir has created an impoundment of water covering an area of about 12.8 km2. Entrapment of sediments in the dead storage portion of the reservoir has reduced the pollution load in the reservoir water released downstream, and, therefore, result in long-term positive impacts on the Agno River and its associated aquatic communities. The reservoir fi sheries have also created socio-economic benefi ts to host communities through subsistence fi shing.

It is important to note that the stretch of the Agno River immediately downstream of the dam is still a riverine ecosystem; hence, riverine species particularly dominant population of tilapia and carp still have their original habitat conditions preserved. The reservoir area has also been noted by the Bureau of Fisheries



and Aquatic Resources (BFAR) as a favorable substrate for such fi sh species. Thus, the BFAR periodically conducts stocks enhancement by dispersing tilapia and carp fi ngerlings into the reservoir. In 2011, a total of 530,000 tilapia fi ngerlings and 300,000 carp fi ngerlings had been seeded.

The reservoir has also been providing a good quality habitat that is attractive to waterfowl like Philippine ducks. Various species of water dependent birds are also attracted and evidently established permanent home ranges in this area. In fact, based on the most recent bird survey on August 25-26 conducted by the Wild Bird Club of the Philippines together with the SRPC and the Team Energy Foundation, sightings of 65 different species of bird had been confi rmed.

The company has a water and sediment quality monitoring program in the reservoir and a limited stretch of the Agno River upstream and downstream of the dam that is aimed at addressing risks in the aquatic environment. The program measures on a quarterly basis the loading of nitrogen and phosphorous into the reservoir, which, at excessive levels, may increase the rate of algae and aquatic plant growth, i.e., eutrophication. Also conducted are reservoir clearing operations that remove free fl oating debris

and vegetation to prevent proliferation of organic matter. Decomposition of this excess organic matter can deplete dissolved oxygen, which could result in fi sh kills and other aesthetic problems in the reservoir.

Together with the MMT and the NPC, the company closely monitors fi sh habitat conditions especially in terms of DO (dissolved oxygen), pH, nutrient levels, heavy metals, and aquatic plant growth. The BFAR likewise undertakes collection of reservoir fi sh samples for laboratory analysis of target contaminants like arsenic, mercury, cadmium, copper, and lead.

In evaluating fi sh toxicity analytical results, several criteria are used. Human health concerns related to fi sh consumption are screened by comparing results with the Fisheries Administrative Order No. 210, Series of 2001 and the International Standards compiled by the Food and Agricultural Organization (FAO) of the United Nations.

There were three sets of samples collected in 2011. Toxicity test runs for these samples showed that the concentration levels of arsenic, cadmium, copper, and lead were all within their corresponding limits. Results for mercury were below its analytical limit of detection.



on August 25-26 by the Wild Bird Club of the Philippines with SRPC and the Team Energy Foundation, sightings of 65 different species of bird had been confirmed. Our water and sediment quality monitoring program in the reservoir and limited stretch of the Agno River upstream and downstream of the dam is aimed at addressing risks in the aquatic environment. We measure on a quarterly basis the loading of nitrogen and phosphorous into the reservoir, which, at excessive levels, may increase the rate of algae and aquatic plant growth, i.e., eutrophication. We also conduct reservoir clearing operations by removing free floating debris and vegetation to prevent proliferation of organic matter. Decomposition of this excess organic matter can deplete dissolved oxygen, which could result in fish kills and other aesthetic problems in the reservoir. (EN13) Together with the Multipartite Monitoring Team and NPC, we continue to closely monitor fish habitat conditions especially in terms of DO, pH, nutrient levels, heavy metals and aquatic plant growth. The BFAR likewise undertakes collection of reservoir fish samples for laboratory analysis of target contaminants like arsenic, mercury, cadmium, copper, and lead. In evaluating fish toxicity analytical results, several criteria are used. Human health concerns related to fish consumption are screened by comparing results with the Fisheries Administrative Order No. 210, Series of 2001 and the International Standards compiled by the Food and Agricultural Organization (FAO) of the United Nations. There were three sets of samples collected in 2011. Toxicity test runs for these samples showed that concentration levels of arsenic, cadmium, copper, and lead were all within their corresponding limits. Results for mercury were below its analytical limit of detection. The figure below shows the levels of arsenic concentration in reservoir fish samples collected from December 2007 to February 2012.

Arsenic concentrations in fish samples collected from December 2007 to February 2012

0 0.5 1 1.5 2 2.5

Arsenic (ppm)

Sam

plin

g D

ate

Carp (>1.0 kg body weight) Tilapia (>1.5 kg) Tilapia (<1.5 kg body weight)

2/27/20121/27/2011

10/27/20115/26/20108/26/20107/28/20105/28/20102/26/20109/25/20097/3/2009

6/22/20095/28/20091/29/200912/4/20087/3/2009

6/22/20095/28/20091/29/2009

11/18/200811/18/200811/18/20088/14/20082/20/20082/20/2008

12/13/200712/13/2007

Support to the National Greening Program

During the year, the SRPC actively supported the government’s National Greening Program (NGP). In collaboration with the NPC and the DENR and other partner organizations, the SRPC also spearheaded advocacy projects to care for and nurture the San Roque watershed areas. Considered as the lifeblood of the SRMP, the watershed provides continuous water supply that sustains the dam’s hydroelectric power-related functions, irrigation, and other life-sustaining benefi ts.

The company initiated the Grow a Tree for the San Roque Watershed, which was launched on July 7 through a socially mobilized tree planting activity that was participated in by 1,200 volunteers from 18 different government and private organizations. In the said event, volunteers planted 22,000 seedlings of different tree species distributed along predetermined sites within the San Roque watershed reservation. The participating groups also entered into a memorandum of agreement to formally signify their commitment to support the project.

The project was based on the development priorities of the National Greening Program that consolidates and harmonizes all greening efforts of the government, civil society, and the private sector. This initiative sought to adopt a 500-hectare portion of the watershed identifi ed to be in critical state due to recurring forest fi res, erosion, and other forest-destructive activities. These sites would be rehabilitated and their biodiversity enhanced through reforestation or agro-forestry in order to help in sustaining the benefi ts this watershed brings and make certain that it remains to be benefi cial in the future.

The company continued its efforts on the Tree Library aimed at collecting and planting seedlings of indigenous trees, which is envisioned to eventually become a venue

Figure 8. Arsenic concentrations in fi sh samples collected from December 2007 to February 2012

Figure 8 shows the levels of arsenic concentration in reservoir fi sh samples collected from December 2007 to February 2012.



for plant exhibits that demonstrate the ecological attributes and values of unique tree species endemic in the area. It is also in this area where children from host communities explore and learn about the forests including different indigenous trees and animal species, and become aware of the causes and effects of forest destruction and degradation. In the long run, schools from the host communities shall be assigned particular areas to reforest where the children will be taught how to plant trees and care for them. The company sees these activities as an essential activity in preparing the children to become responsible stewards and future managers of their environment.

Support Strategies for the NGP

The areas of support for the NGP over a fi ve-year period (2011 to 2015) are:

• Nursery operation (procurement of seeds/planting materials and seedling production);

• Establishment of tree plantation (site preparation and design, planting and replanting of indigenous/native and other tree species);

• Maintenance of tree plantation (ring weeding and cultivation, fertilization, fi re prevention and control, monitoring of project implementation);

• Advocacy, IEC/awareness campaigns on environmental protection and wise use of resources; and

• Monitoring and evaluation.

Benefi ts of the Project

The fi ve-year project is a meaningful intervention that stimulates people’s awareness of the wide range of benefi ts of the San Roque watershed such as biodiversity, wildlife habitat, climate benefi ts, and water quality and yield. The project aims to emphasize the watershed’s benefi cial effect on water catchments along the Agno River, including its effects on fl ow quantity and timing, and of protecting soils from erosion thereby slowing down sediment deposition in the reservoir.

On another note, the project serves as a venue for collaboration and partnerships for responsible environmental stewardship. Under the program, each volunteer will have the opportunity to help in protecting the San Roque watershed, which is a very important natural resource in the area because of its environmental and economic benefi ts.



SAN ROQUE Initiative: Saving Agno River watersheds through public education and Philippine Eagle conservation

To strengthen advocacy on conservation and protection of birds and wildlife that are considered as meaningful indicator of ecosystem’s health and overall environmental quality condition in the area, the company has partnered with the Philippine Eagle Foundation (PEF) for a Philippine Eagle Species Restoration Program within the Agno River Watersheds and surrounding mountains.

The project features the Philippine national bird as a rallying point for the rehabilitation and protection of the San Roque watershed areas through environmental education/public awareness campaigns, support to forest and watershed protection initiatives, ecological research, conservation breeding, and translocation or test releases if found feasible at suitable and protected sites in the Cordillera and Caraballo mountain ranges.

By using the charisma and global fame of the country’s national bird, the Philippine Eagle, and the prime importance of sustaining the region’s water needs, the SR Initiative’s ultimate aim is to install a comprehensive program for the preservation of the Agno River’s watersheds and its biodiversity through a coordinated and systematic cooperation between the government, the corporate sector and the civil society.

Currently, the NPC, which has jurisdiction and authority over the San Roque watershed reservation implements a watershed management plan through

various projects such as reforestation, sustainable community livelihoods, forest and reservoir patrolling, and environmental education and information drives. There was also a cooperative bird monitoring program initiated by the SRPC and the Wild Bird Club of the Philippines. The Philippine Eagle conservation project complements all of these. Strategically, this initiative will integrate biodiversity conservation outcomes into the present watershed rehabilitation framework, making the approach even more holistic. In practical terms, this means that forest rehabilitation results not only in sustainable water sources and improved quality of human life but also in restoring wild populations of endangered Philippine biodiversity, including the critically endangered Philippine Eagle as declared by IUCN (International Union for Conservation of Nature).

Collaboration with stakeholders/public perception studies/education campaigns

Along with the technical experts of the PEF, the company collaborated with various stakeholders, including concerned local government units in Pangasinan, Benguet and Apayao, DepEd CAR/Region 1, DENR CAR/Region 1, and the NPC. Preliminary education campaigns and community perception surveys were conducted to know what specifi c education interventions are necessary to increase public commitment to conserving eagles, forests, and wildlife. In the last quarter of 2011, the company campaigned to about 2,000 individuals from schools and communities around the watershed areas.

The education campaigns in schools consisted of lecture and fi lm showing about the Philippine Eagle, the forest and the importance of conservation, and an outdoor educational game called “Kalabugao Goes Hunting,” which tested the students’ memory of the different preys of the Philippine Eagle as taught in the lecture. In the game, the students were divided into groups, and each player wore the head, wings and talons of the Philippine Eagle mascot as they outran one another to pick the fl ash cards that showed the correct prey.

The company also conducted campaigns and consultations with the communities in lower Agno Watershed from October 18 to 26. The motivation



behind the campaigns was to help protect the remaining forest habitats in the watershed, particularly from the forest fi res that usually start in November. The campaigns included discussions on the occurrence, causes and effects of forest fi res in the watershed. Mitigation schemes like fi re breaks (also called fi re lines) and “green belts” were also discussed.

Survey of eagle population

There had been previous efforts to study Philippine Eagles (Pithecophagajefferyi) in the Sierra Madre Mountain Range in Luzon as well as to educate the communities about conservation. However, because of limited funding and insurgency problems, among others, the results of these efforts had been insuffi cient. The ecology and status of the eagles in Luzon remain unknown. The presence of Philippine Eagles in the Cordillera Mountain Range in Luzon has remained anecdotal in the past years despite the potential of the forests in this area to harbor a population. Knowing this, the company considered the Cordillera Mountain Range a focal area in Luzon for Philippine Eagle research and conservation.

The long yearning for this endeavour fi nally came into reality when the PEF, the SRPC, the Protected Areas and Wildlife Bureau (PAWB), the Regional Eagle Watch Team of the DENR in the Cordillera Administrative Region (REWT – DENR CAR), the Community Environment and Natural Resources Offi ce (CENRO), and the local government of Calanasan embarked on an expedition involving Philippine Eagle survey, community perception study, and public education held from November 4 to 20 in the Northern Cordillera Mountain Range in Eva, Calanasan, Apayao Province. As a result, the activity was able to:(1) verify the presence of Philippine Eagles in the area

as previously reported by the locals and REWT; (2) identify probable locations of the nest of those

eagles in the area; (3) assess community perception and knowledge about

Philippine eagles and forests; and (4) educate communities about the importance of

conservation.



San Roque Initiative: Philippine Eagle Conservation Project Briefer

What are the objectives of the project?

In the short-term (two years), the SR initiative has three objectives:

1. Study and improve the level of awareness and appreciation of the Philippine Eagle and its rainforest habitat among rural communities within the Agno Watersheds and the surrounding forests of the Cordillera and Caraballo mountain ranges;

2. Know the status of wild eagles within the Agno Watersheds and the surrounding mountain ranges by coming up with an eagle distribution map for the region and describing threats to eagles and habitats in each area where eagles are found;

3. Assess the suitability of forest habitats within the San Roque Watershed Reservation and nearby mountains as eagle release sites as a prelude to future eagle reintroduction, translocation, and/or restocking experiments.

Preliminary Phase (2011-13)

The fi rst two years of the project (2011-2013) will set the tone for long-term biodiversity conservation investments within the Lower Agno Watershed Forest Reservation.

(i) Public perception studies and education campaigns

The surveys of rural community perception about the Philippine Eagle and its conservation started in January. This aimed to know what specifi c education interventions are necessary to increase public commitment to conserving eagles, forests and wildlife. After doing perception interviews, standard eagle and biodiversity information sessions will be held. Such sessions will involve powerpoint lectures, fi lm shows, question and answer forum and among kids, outdoor games. It is important that the information sessions are held right after the perception survey and not before to ensure that the opinions of the respondents during the interviews are not infl uenced by the campaigns.

(ii) Survey of wild eagle populations

Survey of wild eagle populations will be done to know how wild eagles are faring within the Cordillera and Caraballo mountain ranges. Ideally, the goal is to fi nd occupied eagle nests as there have been no active nests found yet in Luzon. Historical records of eagle sightings and captures will be studied and updated land cover maps will be analysed to come up with a tentative list of survey sites. Reconnaissance trip will be done to fi nalize survey sites. Community and school information sessions and public perception studies will also be held whenever there is opportunity during reconnaissance and surveys.

(iii) Assessment of candidate eagle release sites

Site suitability assessments of potential eagle release sites will be done in preparation for future eagle releases. This will happen between January to June 2013. The assessment has three goals. The fi rst is to know whether there are enough prey animals to support the food needs of any eagles that may be released in the future. The second is to know whether the forest in the candidate release site has enough large trees to support the nesting requirements of an eagle pair. Last but not the least we would also like to know how supportive communities are to future



release programs. The candidate release sites will be identifi ed based on the results of eagle surveys across the Agno Watersheds.

How the results from the preliminary phase will be used?

By the end of the preliminary phase, we would have a better idea of how the conservation of Philippine Eagles and the biodiversity it represents can be best achieved within the Agno Watersheds.

Specifi cally, the primary data from the public perception survey will form the bases for the right conservation interventions for the next three years. For example, if the perception study shows that a signifi cant proportion of rural dwellers perceive a confl ict between meeting human and eagle (or wildlife) needs, information campaigns that prove otherwise must be instituted. Similarly, if research shows there is much public apathy towards the plight of the eagles (wildlife), conservation programs - including education and providing practical incentives - must be pursued to change public behaviour from indifference to care and concern.

In a similar vein, the knowledge on wild populations derived from eagle surveys will become an important reference for next actions. For example, if surveys prove that there are forests whose eagle populations have already died out or if eagle populations are present but the numbers are perilously low, then release of eagles to vacant habitats (i.e., reintroduction) or to habitats with very low population numbers (i.e., restocking) can be a conservation option.

There are three sources of eagles for reintroduction and restocking. One source can be birds from the wild. If survey shows that wild breeding pairs in the region exist and that the young eagles they breed are not safe, these young birds can be captured and relocated to vacant but protected habitats (i.e., translocation). Previously injured or sick eagles that were rehabilitated successfully and found fi t to be back in the wild can be released too. Lastly, we can also release captive-bred birds that are suitably reared for release.

However, reintroduction and/or restocking are possible only if release sites are found to be suitable (i.e., able to meet the eagles’ ecological requirements) and that the causes of eagle disappearance or decline are substantially controlled. The suitability of a habitat as a release site can be examined through standard biological and social assessments.

Birds for release must also be genetically compatible to the population they are being introduced to. A genetic divergence study of Philippine Eagles from Luzon, Leyte, Samar and Mindanao is on-going. While awaiting results, a practical way to ensure genetic compatibility is to release birds bred from eagles on the same island where they are to be released.

Onwards (Year 3-5)

Actions for year 3 and onwards will greatly depend on the outcomes of the initial phase. But based on experiences in Mindanao where a comprehensive Philippine Eagle conservation program has been going on for over two decades, the key conservation strategies might include 1) protection and monitoring of eagle pairs and the management of their nesting territories; 2) continuing public education through innovative learning techniques; 3) detailed research on eagle ecological requirements because we have very little information on eagles in Luzon; and (4) eagle test releases either of wild or captive-bred birds not only as a research endeavour but also as entry points for public education as eagle releases is a powerful and charismatic platform for developing public knowledge and awareness.



Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation

The company has procedural manual, standards and practices that address the environmental compliance obligations in operating and maintaining the San Roque Multipurpose Project set forth in the Environmental Compliance Certifi cate and the original, updated and supplemental Environmental Impact Studies, and as further set forth in other applicable permits, regulatory approvals, laws, rules and regulations. We also maintain linkages with our stakeholders for collaborative partnerships towards environmental protection and conservation.

Compliance

We recognise our responsibility to protect and improve the environment and are committed to conducting our operations in accordance with all applicable environmental laws and regulations. During the period, we have not received any violation notices pertaining to non-compliance with environmental requirements or penalized for any environmental offenses.

Transport

Flexible work policies, programs to support use of mass transit, carpooling, and use of teleconferences are some of the ways of the company to reduce the environmental impact associated with workforce transport. Quarterly fuel consumptions are reported in our quarterly submission of self-monitoring reports to the Environmental Management Bureau. On the other hand, carbon footprint assessment has started, taking into consideration FY- 2011 as the base year to help quantify our emissions, and explore possible opportunities of decreasing such emissions.

Overall

SRPC strives to minimize the negative effects on the environment and continue to abide by relevant environmental regulations, policies and standards by allocating substantial investments and resources on a continuous basis to adopt and implement environmental protection and pollution-control measures. In 2011, over fi ve million pesos were spent by the company, encompassing all environmental management programs such as water quality monitoring, NGP support activities and Philippine Eagle Conservation Project. Additionally, the company maintains an account for Environmental Monitoring Fund with an initial amount of Php 1,000,000.00. This is a fund that SRPC committed to establish in support of the activities of the SRMP-MMT for compliance monitoring and validation.

The company has also been maintaining an environmental guarantee fund in the form of interest-bearing cash and trust accounts initially amounting to Php 800,000.00 and Php 5,000,000.00, respectively. The EGF is a contingency fund to compensate project-related impacts where such impacts are not already addressed through other mitigation measures or programs of the SRMP. The company replenishes these accounts whenever their respective balances fall below one-half of the agreed initial amounts.

The EMF and the EGF were established as agreed upon and specifi ed in the MMT/EMF/EGF MOA by and among the DENR, SRPC, NPC, LGUs and other offi cial members of the MMT.

We have an excellent environment compliance record since the start of our commercial operation in 2003. Nevertheless, we hope to bring more efforts in the coming years to continually improve on our environmental performance and sustain our role in responsible environmental stewardship.



INDEPENDENT ASSURANCE STATEMENT(External Review Committee)

General Disclosures

San Roque Power Corporation (SRPC) issued its Sustainability Reports (SR) in 2009 and 2010; both self-declared documents utilizing the Global Reporting G3 Guidelines (GRI G3). This year, the company decided to strengthen its sustainability reporting process by pursuing a B+ application level using the GRI Electric Utilities Sector Supplement (EUSS) and engaging the services of independent experts collectively referred to as the External Review Committee (ERC), to provide assurance for its 2011 Sustainability Report. The ERC is composed of four independent experts in the fi eld of economics, environment, labor and human rights and community development.

The company also entered into a partnership with the Center for Social Responsibility of the University of Asia and the Pacifi c (CSR-UA&P), which agreed to serve as the principal agency for coordinating the work of ERC, the outcome of which is the following assurance statement.1

Scope, Process and Objectives

We reviewed SRPC’s 2011 Sustainability Report based on the GRI G3 EUSS Guidelines, using the latter’s Principles for Defi ning Report Content and Principles for Ensuring Report Quality as the framework for assessing the SR. We were engaged to provide a B+ assurance, which included an evaluation of SRPC’s reporting against GRI’s reporting guidelines.

We started our assurance review in late May 2012 and completed our work at the end of June 2012. During this period, we convened four times and conducted a 3-day assessment and validation of SRPC’s company site in San Manuel, Pangasinan. In the course of this assessment, we were given extensive opportunities to interview company offi cers, employees and key stakeholder representatives.

1 This Assurance Statement expresses the views of the ERC members in their capacity as individual experts. Aside from issuing the statement, the ERC members also submitted to SRPC their individual recommendations reports on the company’s performance data and on its overall sustainability initiatives. The ERC members were compensated individually for the time and expertise they contributed to conducting the external review. SRPC underwrote all professional fees and out-of-pocket expenses related to this assurance.



We also undertook checking of the key sustainability performance data and provided feedback on the drafts of the report and, where appropriate, changes were made. We found that the report is positively aligned with the GRI reporting guidelines primarily with the principles of materiality, stakeholder inclusiveness, completeness, accuracy, balance, timeliness, and reliability.

Findings & Observations

For Economic Performance, we examined EC1 to EC9 including EU10 to EU12. Our review determined that the disclosure on the economic indicators is well within the defi ned boundary of the SR. The disclosure of economic performance across time provided a good snap shot and a comparative view of the company’s performance since 2010, for instance, by showing “how much” and “to whom value was generated from and distributed to”. We noted that the SR provided a detailed discussion of its economic value especially in relation to its contracted power arrangements with the national government.

As well, the narratives and disclosures on the local labor and supplier content of value generated, including payments to other parties such as capital providers, the government and the community, afforded readers with an appreciation of the company’s overall economic performance and impacts. Likewise, the company’s policy requiring suppliers to adhere to mandated wages and payments has been well disclosed.

To maintain a balance reporting, the SR identifi ed areas that need further review such as the policy on labor recruitment as well as the level of fi nancial and reputational risks the company might be facing in the future.

Under the Environmental Performance, we reviewed 29 of the 30 environmental performance indicators (only EN27 is not applicable) provided for in the GRI G3 EUSS Guidelines. The review included a visit to the Pangasinan lower catchment area where the hydropower generating plants and operation facilities are located. A boat cruise on the watershed reservoir was conducted to observe the various socio-economic and environmental attributes of the dam including visits to 2 key resettlement areas of residents affected by the hydropower project.

It can be considered that the environmental practices of SRPC constitute an effective way to steward its water reservoir and the adjoining areas affected by its watershed, biodiversity and forest management activities. Specifi cally, we observed that there is good management of renewable water fl owing from the head watershed in Benguet down to the main reservoir of the dam in Pangasinan.

In 2011, the plant’s non-consumptive water withdrawal for power generation accounts for 2,647 million cubic meters (MCM). This volume of material has been managed to support irrigation of farms, peaking hydropower supporting the Luzon electricity grid, fl ood control, and water quality improvement in the lower Agno River. (The water used for hydropower is recycled for irrigation of downstream farms managed by NIA). Likewise, the water quality conditions in the total Agno River watershed meet the quality standards of government for irrigation and fi shery, i.e., class C and D. Other water quality parameters like pH, temperature, dissolved oxygen, suspended solids, heavy metals and toxic substances are



way below the threshold values for these water classes. Moreover, a major accomplishment of the company is the formulation and implementation of Environmental Management and Monitoring Plan (EMMP) and the Site-specifi c Environmental Standards, Procedures and Practices (ES&Ps).

A major concern though is the operation of many gold panners in the upper watershed of the Agno River that may cause negative impacts on water quality downstream up to the reservoir area in Pangasinan. A more serious environmental issue is the operations of commercial mining companies in the upper Agno watershed that are posing more danger to water quality downstream. These need further investigation and evaluation.

The operation of SRPC has not produced any signifi cant air emissions harmful to the environment. In fact, the company is contributing to national efforts on reducing and/or sequestering carbon emissions primarily by making its Plant operations more effi cient. In 2011, the company was able to deliver 1,082.27 GWh of hydroelectric energy, which consequently reduced equivalent CO2 emissions by 718,107 tons. The company also has no problems with solid waste disposal and there is no recorded spill of oil and hazardous materials. It has no notice of violations for non- compliance with environmental laws and regulations and have not been penalized for any environmental offenses.

It is worth citing that biodiversity conservation is gaining momentum within the company’s priority plans and projects for 2011. The company is actively supporting the National Greening Program of the government. It initiated the “Grow a Tree for the San Roque Watershed” which planted 22,000 seedlings of different tree species distributed along predetermined sites covering some 50 hectares within the San Roque watershed. It aims to contribute about 500 hectares of forest plantations in the next fi ve years. This project has also benefi tted the indigenous peoples and resettled communities.

While there are no recorded IUCN classifi ed rare, endangered and critically endangered wildlife species in the area, SRPC has partnered with the Philippine Eagle Foundation in the conduct of site suitability assessment in the Cordillera and Caraballo mountain ranges as possible release sites of Philippine Eagle to serve as endangered wildlife icon for watershed and forest conservation.

Along the Labor and Human Rights Performance, we reviewed LA1 to LA14 (except LA7 & LA8), EU17 to EU18 and, HR1 to HR9. Overall, we found that SRPC is a model of a socially responsible employer. It has complied with all the provisions of the Labor Code of the Philippines, particularly the codal provisions on various labor standards (working hours, compensation, etc.) and labor relations rules (freedom of association, dispute settlement, etc.). It also complied with other related labor laws such as the mandatory employee enrolment in the Social Security System (SSS) and Philippine Health Insurance.These Philippine labor laws are consistent with the core International Labor Conventions (on freedom of association, collective bargaining, non-discrimination, elimination of child labor and prohibition on forced labor) and the various Disclosure Guidelines and Key Performance Indicators (KPIs) of the Global Reporting Initiative (GRI) on labor and human rights.



2 An employee fi led a nuisance labor case of “dismissal” in 2011, three years after he voluntarily resigned from SRPC and after he received his separation benefi ts. This case was dismissed by the labor court, and, on appeal, dismissed by the appellate court.

Specifi c to compensation and benefi ts, SRPC exceeded the mandated minima. SRPC’s entry wage is 47 per cent higher than the minimum wage prescribed for Northern Luzon. Apart from the SSS pension, retiring employees can receive a generous retirement lump sum from the SRPC’s Retirement Fund (shouldered solely by SRPC) plus the employees’ contribution to a Provident Fund (50 per cent contributed by SRPC). Employees are also entitled to other benefi ts (leave, medical, etc.) that are generally higher than what the law provides. There is no child labor at SRPC. There is no forced labor. There is no policy or practice discriminating on the hiring of employees based on gender, religious belief, ethnicity, sexual orientation, etc. The ratio of male to female workers is roughly 3:1, simply because the ratio of male to female job applicants is 10:1, obviously on the perception by job seekers that work at SRPC requires male workers. However, female engineers and skilled workers are seen working side by side with their male colleagues in various areas of the power plant. On collective bargaining, there is none because there is no union. However, there are no records of any efforts of SRPC to stop any employee initiative to form a union. In fact, a number of SRPC employees came from unionized establishments, meaning these employees have the choice to form a union and conclude a collective bargaining agreement if they feel there is such a need. But since its commercial operation in 2003, SRPC has zero labor case.2 Moreover, the SRPC maintains an open-door communication policy. On training, SRPC has a remarkable record of nearly two weeks of training per average employee.

In the area of Society and Product Responsibility, the assurers have reviewed SO1 to SO8, PR1 to PR9, and EU23 to EU30. We are pleased with the very detailed reporting on the company’s community programs, especially on disaster management and livelihood restoration, two aspects that would not only have the greatest impact on the surrounding communities but also pose the greatest public relations risk to the company. The monitoring of projects, such as the Microfi nance and the Literacy and Numeracy projects refl ects SRPC’s commitment to ensure that its initiatives are making serious and lasting impacts in the lives of the people. One signifi cant step made by SRPC in strengthening its community initiatives is the creation of the San Roque Power Foundation, Inc. in order to manage, support and further expand community efforts of SRPC’s community relations offi ce. This effort, in our view, shows that the company is “walking the talk,” with the strong focus on long term programs that deviate from the usual short-term “dole out” programs that dominate most CSR programs in the country.

One of the greatest challenges that the community relations team is facing is mobilizing the people and empowering them to be able to help themselves. The Microfi nance project is a highly excellent fi rst step in developing self-regulation among the project benefi ciaries. In the future, SRPC can strengthen the capacity of these benefi ciaries to eventually participate in the “contracted services” being offered by the company.



The Road Ahead

Beyond the fi ndings above, we would like to suggest to SRPC the following set of activities to further enhance its value creation and impacts:

(1) Formulate a climate change action plan in relation to watershed reservation and sustainable forests ecosystem management of all affected water infl uenced areas. The action plan should treat climate change as separate environmental criteria with distinct indicators which can include, among others, baseline emissions and total potential sinks as well as inventory and monitoring assessment of wildlife biodiversity and training of employees on sustainable development topics. Likewise, the plan should have an updated GIS-based data system with digital geospatial technology that can be made available to the broader public by way of an Internet portal. It can also address the vulnerabilities and risks from extreme weather conditions arising from typhoons and fl ooding.

(2) Payment for environmental services (PES) should be internalized in SRPC’s operations. These include economic-ecologic benefi ts for watershed management, climate change, biodiversity conservation and ecotourism. Valuation of these environmental externalities is the fi rst key step for implementation. Published values agreed by sellers and buyers in the literature should be augmented by pilot negotiations with concerned stakeholders in the hydropower reservation and resettlement areas. As plough back mechanisms the payments should accrue to benefi ciaries and stakeholders in equitable manner.

(3) In the area of labor relations, SRPC can benefi t from continually professionalizing its contractors services by, for instance, monitoring their compliance with all labor laws, especially the rules on service contracting (“casual employees”) as outlined under Department Order 18-A issued November 2011 by the Department of Labor and Employment. As well, we would like to suggest to SRPC to adopt a formal policy on employee grievances despite the existence of a highly-effective communication system within the company. All these efforts are part of a good housekeeping and plant maintenance practices (which can be manualized) known as the 5S program, an original Japanese management innovation.

(4) In the treatment of economic impact, SRPC may consider expanding its coverage by including, among others, the irrigation of the farms downstream in terms of crop cycles, crop yields, farmer savings, as this will allow a more balanced view of the company’s impact as a multi-purpose dam.

Overall the level of transparency exhibited by the company facilitated an effi cient and effective conduct of the review process by the external review committee giving them a deeper understanding of the company’s operations, the impacts and issues.



MEMBERS OF THE EXTERNAL REVIEW COMMITTEE

RENE OFRENEO, Ph.D.Former Undersecretary, Department of Labor and Employment (DOLE)

Professor and former Dean, School of Labor and Industrial Relations (SOLAIR)University of the Philippines, Diliman

RICARDO UMALIFormer Undersecretary/ Acting Secretary

Department of Environment and Natural Resources (DENR)President & CEO, Sustainable Ecosystems International Corporation

RENE OFRENEO, Ph.D.

REVIEW COMMITTEE

President & CEO, Sustainable Ecosystems International Corporation

WINSTON CONRAD PADOJINOG, DBADean, School of Management

University of Asia and the Pacifi c

RICARDO UMALIFormer Undersecretary/ Acting Secretary

JAY YACATAssistant Professor, Department of Psychology

University of the Philippines, DilimanPresident, Pambansang Samahan sa Sikolohiyang Pilipino (PSSP)

[National Association for Filipino Psychology]



Page No.1. Strategy and Analysis1.1 Statement from the most senior decision-maker of the

organization. 4-6

1.2 Description of key impacts, risks and opportunities. 5, 23, 25, 42, 54

2. Organizational Profi le2.1 Name of the organization 92.2 Primary brands, products, and/or services. 92.3 Operational structure of the organization, including main

divisions, operating companies, subsidiaries, and joint ventures.

30

2.4 Location of organization’s headquarters. 92.5 Number of countries where the organization operates, and

names of countries with either major operations or that are specifi cally relevant to the sustainability issues covered in the report.

9

2.6 Nature of ownership and legal form. 92.7 Markets served (including geographic breakdown, sectors

served, and types of customers/benefi ciaries).22, 24

2.8 Scale of the reporting organization. 262.9 Signifi cant changes during the reporting period regarding

size, structure, or ownership.8

2.10 Awards received in the reporting period. 9EU1 Installed capacity, broken down by primary energy source

and by regulatory regime.23

EU2 Net energy output broken down by primary energy source and by regulatory regime.

24

EU3 Number of residential, industrial, institutional and commercial customer accounts.

24

EU4 Length of above and underground transmission and distribution lines by regulatory regime.

24

3. Report Parameters3.1 Reporting period. 83.2 Date of most recent previous report. 83.3 Reporting cycle. 83.4 Contact point for questions regarding the report or its

contents.8

3.5 Process for defi ning report content. 83.6 Boundary of the report. 83.7 State any specifi c limitations on the scope or boundary of

the report.8

Global Reporting Initiative and Electric Utilities Sector Specifi c Index



3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that can signifi cantly affect comparability from period to period and/or between organizations.

8

3.9 Data measurement techniques and the bases of calculations.

8

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

8

3.11 Signifi cant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

8

3.12 Table identifying the location of the Standard Disclosures in the report.

76

3.13 Policy and current practice with regard to seeking external assurance for the report.

8

4. Governance, Commitments and Engagement4.1 Governance structure of the organization, including

committees under the highest governance body responsible for specifi c tasks, such as setting strategy or organizational oversight.

14-15

4.2 Indicate whether the Chair of the highest governance body is also an executive offi cer.

15

4.3 For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.

14-15

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

17

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance).

15

4.6 Processes in place for the highest governance body to ensure confl icts of interest are avoided.

17-18



4.7 Process for determining the qualifi cations and expertise of the members of the highest governance body for guiding the organization’s strategy on economic, environmental, and social topics.

15

4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

10

4.9 Procedures of the highest governance body for overseeing the organization’s identifi cation and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.

14

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.

15

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization.

15-16

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.

16

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: Has positions in governance bodies; Participates in projects or committees; Provides substantive funding beyond routine membership dues; or Views membership as strategic.

18

4.14 List of stakeholder groups engaged by the organization. 204.15 Basis for identifi cation and selection of stakeholders with

whom to engage.19-20

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

21

4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.

20-21

Economic Performance IndicatorsDisclosure on Management Approach 11EU6 Management approach to ensure short and long-term

electricity availability and reliability.22

EU7 Demand-side management programs including residential, commercial, institutional and industrial programs.

24



EU8 Research and development activity and expenditure aimed at providing reliable electricity and promoting sustainable development.

24

EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

28-29

EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change.

23

EC3 Coverage of the organization’s defi ned benefi t plan obligations.

35

EC4 Signifi cant fi nancial assistance received from government. 29EC5 Range of ratios of standard entry level wage compared to

local minimum wage at signifi cant locations of operation.34

EC6 Policy, practices, and proportion of spending on locally-based suppliers at signifi cant locations of operation.

26

EC7 Procedures for local hiring and proportion of senior management hired from the local community at signifi cant locations of operation.

30, 32

EC8 Development and impact of infrastructure investments and services provided primarily for public benefi t through commercial, in-kind, or pro bono engagement.

29, 37, 47, 50

EC9 Understanding and describing signifi cant indirect economic impacts, including the extent of impacts.

42, 54-55

EU10 Planned capacity against projected electricity demand over the long term, broken down by energy source and regulatory regime.

23

EU12 Transmission and distribution losses as a percentage of total energy.

24

Environmental Performance IndicatorsDisclosure on Management Approach 13EU13 Biodiversity of offset habitats compared to the biodiversity

of the affected areas.61-62

EN1 Materials used by weight or volume. 54, 56EN2 Percentage of materials used that are recycled input

materials.54

EN3 Direct energy consumption by primary energy source. 54EN4 Indirect energy consumption by primary source. 57EN5 Energy saved due to conservation and effi ciency

improvements.57

EN6 Initiatives to provide energy-effi cient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

53



EN7 Initiatives to reduce indirect energy consumption and reductions achieved.

57

EN8 Total water withdrawal by source. 54EN9 Water sources signifi cantly affected by withdrawal of water. 55EN10 Percentage and total volume of water recycled and reused. 54EN11 Location and size of land owned, leased, managed in, or

adjacent to, protected areas and areas of high biodiversity value outside protected areas.

59

EN12 Description of signifi cant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

61

EN13 Habitats protected or restored. 61EN14 Strategies, current actions, and future plans for managing

impacts on biodiversity.63, 65, 67

EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

60-61

EN16 Total direct and indirect greenhouse gas emissions by weight.

57

EN17 Other relevant indirect greenhouse gas emissions by weight. 57EN18 Initiatives to reduce greenhouse gas emissions and

reductions achieved.57

EN19 Emissions of ozone-depleting substances by weight. 57EN20 NOx, SOx, and other signifi cant air emissions by type and

weight.58

EN21 Total water discharge by quality and destination. 59EN22 Total weight of waste by type and disposal method. 58EN23 Total number and volume of signifi cant spills. 59EN24 Weight of transported, imported, exported, or treated

waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

59

EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats signifi cantly affected by the reporting organization’s discharges of water and runoff.

61-62

EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

69

EN28 Monetary value of signifi cant fi nes and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.

69

EN29 Signifi cant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce.

69



EN30 Total environmental protection expenditures and investments by type.

69

Social Performance IndicatorsDisclosure on Management Approach 11EU14 Processes to ensure the availability of a skilled workforce. 35-36EU15 Percentage of employees eligible to retire in the next 5 and

10 years broken down by job category and by region.36

EU16 Policies and requirements regarding health and safety of employees and employees of contractors and subcontractors.

39

EU17 Days worked by contractor and subcontractor employees involved in construction, operation and maintenance activities.

39-40

EU18 Percentage of contractor and subcontractor employees that have undergone relevant health and safety training.

40

EU19 Stakeholder participation in the decision making process related to energy planning and infrastructure development.

42

EU20 Approach to managing the impacts of displacement 43EU21 Contingency planning measures, disaster/emergency

management plan and training programs, and recovery/restoration plans.

42

EU23 Programs, including those in partnership with government, to improve or maintain access to electricity and customer support services.

29

LA1 Total workforce by employment type, employment contract, and region.

31-32

LA2 Total number and rate of employee turnover by age group, gender, and region.

31

LA3 Benefi ts provided to full-time employees that are not provided to temporary or part-time employees, by major operations.

34

LA4 Percentage of employees covered by collective bargaining agreements.

17, 37

LA5 Minimum notice period(s) regarding signifi cant operational changes, including whether it is specifi ed in collective agreements.

37

LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.

40

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region.

41

LA8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

40



LA10 Average hours of training per year per employee by employee category.

37

LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

36, 37

LA12 Percentage of employees receiving regular performance and career development reviews.

35

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.

33

LA14 Ratio of basic salary of men to women by employee category.

34

HR1 Percentage and total number of signifi cant investment agreements that include human rights clauses or that have undergone human rights screening.

38

HR2 Percentage of signifi cant suppliers and contractors that have undergone screening on human rights and actions taken.

38

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

38-39

HR4 Total number of incidents of discrimination and actions taken.

38

HR5 Operations identifi ed in which the right to exercise freedom of association and collective bargaining may be at signifi cant risk, and actions taken to support these rights.

17, 38

HR6 Operations identifi ed as having signifi cant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.

30

HR7 Operations identifi ed as having signifi cant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor.

38

HR8 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations.

39

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken.

51-52

SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.

42-52

EU22 Number of people physically or economically displaced and compensation, broken down by type of project.

43

SO2 Percentage and total number of business units analyzed for risks related to corruption.

17-18



SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures.

17-18

SO4 Actions taken in response to incidents of corruption. 17-18SO5 Public policy positions and participation in public policy

development and lobbying.18

SO6 Total value of fi nancial and in-kind contributions to political parties, politicians, and related institutions by country.

29

SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.

24

SO8 Monetary value of signifi cant fi nes and total number of non-monetary sanctions for non-compliance with laws and regulations.

29, 69

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of signifi cant products and services categories subject to such procedures.

41

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

41

EU25 Number of injuries and fatalities to the public involving company assets, including legal judgments, settlements and pending legal cases of diseases.

41

PR3 Type of product and service information required by procedures, and percentage of signifi cant products and services subject to such information requirements.

23

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes.

24

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

22

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.

24

PR9 Monetary value of signifi cant fi nes for non-compliance with laws and regulations concerning the provision and use of products and services.

24

EU26 Percentage of population unserved in licensed distribution or service areas.

24

EU27 Number of residential disconnections for non-payment, broken down by duration of disconnection and by regulatory regime.

24

EU28 Power outage frequency. 23EU29 Average power outage duration. 23EU30 Average plant availability factor by energy source and by

regulatory regime.23



ReportApplication Level

Report on:1.12.1 - 2.103.1 - 3.8, 3.10 - 3.124.1 - 4.4, 4.14 - 4.15

Not Required

Report on a minimum of 10Performance Indicators,including at least one fromeach of: Economic, Social and Environmental.

*Sector supplement in fi nal version

Report on a minimum of 20Performance Indicators,at least one from each of: Economic, Environmental,Human rights, Labor, Society,Product Responsibility.

Report on each core G3 andSector Supplement* Indicatorwith due regard to the Materiality Principle by either: a) reporting on the Indicator or b) explaining the reason for its omission.

Repo

rt Ex

tern

ally

Assu

red

Repo

rt Ex

tern

ally

Assu

red

Repo

rt Ex

tern

ally

Assu

red

Stan

dard

Disc

losu

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Management ApproachDisclosures for eachIndicator Category

Management ApproachDisclosures for eachIndicator Category

Report on all criteria listed forLevel C plus:1.23.9, 3.134.5 - 4.13, 4.16 - 4.17

Same as requirement forLevel B

C C+ B B+ A A+

OUT

PUT

OUT

PUT

OUT

PUT

G3 Profi leDisclosures

G3 ManagementApproach

Disclosures

G3 PerformanceIndicators &

Sector SupplementPerformance Indicators



Enhancing Corporate Value 2011 SR

Documents

Transcript of Enhancing Corporate Value 2011 SR