EDC shuts down geothermal plants

Accident pulls shares of Lopez firms lower

By: Amy R. Remo, March 1st, 2013 11:27 PM

ENERGY Development Corp. has temporarily shut down the 110-megawatt Bacon-Manito geothermal plants in Albay and Sorsogon, only days after they resumed operations.

In a disclosure to the Philippine Stock Exchange Friday, EDC reported that it had shut down the 55-MW Unit 2 of BacMan I after a turbine blade was sheared off, causing damage to the unit.

“We recognize the serious nature of this new setback to the BacMan Unit 2. We will do everything to determine the cause of this problem and to ensure that this is completely resolved at the soonest time possible,” said EDC president Richard B. Tantoco.

In the meantime, EDC also decided to temporarily suspend the operations of the 55-MW Unit 1 of BacMan I, even if the unit did not experience similar problems.

It should be recalled that EDC resumed commercial operations of the BacMan facilities only last Monday.

However, only the BacMan I geothermal facility, which has two 55-MW power units both commissioned in 1993, has been fully rehabilitated. The BacMan II facility, which has only one remaining 20-MW unit from the original two units, was not yet online, Tantoco said earlier.

Stocks of EDC and its parent firm First Gen, as well as those of First Philippine Holdings, took a beating at the Philippine Stock Exchange with the temporary suspension of the BacMan operations. EDC shares fell 11.35 percent to P6.72; First Gen was down 7.98 percent to P24.20 and First Holdings lost 6.95 percent to P105.80.

The resumption of BacMan’s commercial operations would have allowed the facility to finally generate revenues, previously estimated at about P4.3 billion annually. EDC, however, might not hit this targeted annual revenue generation because this estimate assumed 130 MW of generated capacity for a full year, according to Tantoco.

EDC acquired the geothermal complex from the government in 2010, during which the power plants were practically shutdown, with a generating availability of only 3 percent. The target then of the rehabilitation activities, which began in 2010,      was to ramp up the capacity to 130 MW.

The Lopez affiliate believed then that once rehabilitated and operating, the Bacman geothermal facilities could generate strong returns and cash flow from a vertically integrated operation.

EDC remains the biggest producer of geothermal energy in the Philippines, accounting for 62 percent of the total installed geothermal capacity.

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