..;;;,

Republic of the ENERGY REGULATORYCOMMISSI San Miguel Avenue, Pasig City

IN THE MATT~R OF THE APPLICATION FOR APPROVAL OF THE POWER PURCHASE AND . SALE AGREEMENT (PPSA) BETWEEN SOUTHERN ELECTRIC INC. AND GNPOWER DINGININ LTD. CO. WITH PRAYER FOR CONFIDENTIAL TREATMENT. OF INFORMATION AND THE ISSUANCE OF PROVISIONAL AUTHORITY

ERC CASE NO. 2016-054 RC

ORDER

For the Commission's consideration is the prayer for issuance of provisional authority included in the Joint Application filed by Electric Cooperative (SOLECO) and GNPower Dinginin Ltd. Co. (GNPD) on 26 April 2016.

THE FACTS

Relative to their prayer for issuance of provisional authority, Applicants SOLECO and GNPD alleged the following:

1. SOLECO is a non-stock, non-profit electric cooperative, duly organized and existing under and by virtue of Philippine laws, with principal office address at Soro- Sora, City, Southern Leyte. It is authorized t ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 2 Of19

distribute and provide electricity services to its member consumers in the Municipalities of , Padre Burgos, Malitbog, Tomas Oppus, Bontoc, Sogod, , Lilo-an, San Francisco, , , St. Bernard, San Juan, , , and , and the City of Maasin, Province of Southern Leyte (collectively, the "Franchise Area").

2. GNPD is a duly registered limited partnership organized and existing by virtue of the laws of the Republic of the Philippines. Its principal office is at 28th Floor Orient Square Building, Don Francisco Ortigas Jr. Road, Ortigas Center, Pasig City. Its primary purpose is to develop, construct, operate and own an approximately 2 x 600MW (net) coal-fired power plant to be located at Sitio Dinginin, Mariveles, Bataan.

3. SOLECO, together with the other Region 8 ECs, needs to address the insufficiency of its power supply due to the increasing demand within its franchise area.

4. The additional supply from GNPD will significantly reduce the supply deficiency of SOLECOand will decrease the adverse effects thereof providing a stable and adequate source of electricity.

5. Among alternative suppliers capable of providing additional energy to SOLECOand the rest of the Region 8 ECs, GNPD's rates proved to be more reasonable and competitive.

6. After the conduct of a competitive selection process and subsequent negotiations, on December 16, 2015, SOLECO and GNPD executed the PPSA, providing the terms and conditions for the supply of 12 MW baseload power to SOLECO to assure the adequate and reliable supply of power to SOLECO'sfranchise area.

7. As alleged by the Applicants and as stated in the Judicial Affidavit of Mr. Arnel O. Bilaoen, the issuance. of a provisional authority is a vital requirement in the release of loan proceeds from banks/financial institutions needed to construct the Dinginin Power Plant. The timeliness of the financial closing ensures the construction of the generation facility as scheduled and the implementation of the PPSA. Any delay in the implementation of the project shall expose SOLECO to supply risk and unstable marketpdee, inthefulur/f . ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 3 Of19

8. Based on the Department of Energy's (DOE) 2015-2030 Luzon and Visayas Grids Supply-Demand Outlook, Luzon's peak demand in 25015 is 8,974MW with an Annual Average Growth Rate (AAGR) of 4.85% while Visayas' Peak Demand is 1,847MW with AAGR of 3.4%. therefore, Luzon's peak demand is expected to increase to 11,347MW in 2020, and to 18,264MW in 2030.this electricity demand growth has led to DOE's call for planning and investments in the power sector.

9. Contributing to the Luzon Grid's demand growth is SOLECO's base load demand which increases at a rate of 2.66% per year. By 2019, it is projected that SOLECO's existing power suppliers will not be able to meet the power needs of its member consumers, which is expected to have increased to 6-4%

10. The PPSA with GNPD is crucial for SOLECO to guarantee that its forward power needs are satisfied without compromising the reasonableness of the generation rate to be passed on to its member-consumers.

11. While target delivery of power under the terms and conditions of the PPSA is expected to commence not later than thirty-six (36) months after the final approval of the Commission, the Parties, however, intend to commence delivery whether on an interim or full capacity basis on December 26, 2018. Applicants, nonetheless, shall begin at the earliest opportune time their compliance with all financial and regulatory requirements and processes leading up to the timely completion of GNPD's facility.

12. It is worthy to note that part of the funds needed to construct GNPD's facility will be sourced from loans coming from banks/financial institutions. The Commission's provisional approval of the instant Application is a vital requirement for the release of the loan proceeds. Hence, a timely financial close ensures stable source of funds and timely construction of the generation facility, and the implementation of the PPSA, as amended, as contemplated by the Applicants.

13. With continuous financing, the timely implementation of the project shall be assured, to the full benefit of SOLECO. Otherwise, any delay in the implementation of the project shall expose SOLECOto supply risk and unstable market prices in the futur~ ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 4 of19

THE ISSUE

The issue for the Commission's resolution is whether SOLECO and GNPD have satisfied the requirements provided by law for the grant of provisional authority.

THE COMMISSION'S RULING

The Commission grants provisional authority to Applicants.

I. THE LAW EMPOWERS THE COMMISSION TO GRANT PROVISIONAL AUTHORITY IN THE INSTANT CASE.

Section 4(e), Rule 3 of the Implementing Rules and Regulations of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA IRR) empowers the Commission to issue provisional authority, to wit:

SECTION4. Responsibilities ofthe ERC. -

(e) Any application or petition for rate adjustment or for any relief affecting the consumers must be verified, and accompanied with an acknowledgment of receipt of a copy thereof by the LGU Legislative Body of the locality where the applicant or petitioner principally operates together with the certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than seventy-five (75) calendar days from the filing of the application or petition, based on the same and the supporting documents attached thereto and such comments or pleadings the consumers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving proper notices to all parties concerned, with at least one public hearing in the affected locality, and shall decide t~~ ~ m'tte< on th, m,rit, not l't" than twelve (lY( ERC CASE NO. 2016-oS4 RC ORDER/ OSJULY 2016 Pages oftg

months from the issuance of the aforementioned provisional order.

This Section 4(e) shall not apply to those applications or petitions already filed as of 26 December 2001 in compliance with Section 36 of the Act. xxx

The above provision was upheld by the Supreme Court in the landmark case of Freedom from Debt Coalition (FDC) us. Energy Regulatory Commission (ERC)! (FDC Case). The Court, speaking through Justice Tinga, traced the origin and development of the Commission's authority to grant provisional rates, to wit:

Historically, therefore, in this jurisdiction, at least beginning with the Public Service Act in 1936, the regulatory bodies concerned have exercised the power to grant provisional rate adjustments only because there was a statutory grant of such power.

The foregoing recital establishes the following salient points: (1) Section 16(c) ofthe Public Service Act authorizing the approval of provisional rate increases has never been repealed and as such continues to be in full force and effect up to the present; (2) The BOPW had the power to grant provisional rate increases on the basis of the provision of the Integrated Reorganization Plan that the pertinent powers of the PSC were transferred to it; (3) The applicability clause found in Section 44 of the EPIRA is the same as or similar to the applicability clauses contained in Sections 11 and 21 of P.D. No. 1206 and Section 14 of E.O. No. 172; and, (4) The applicability clause or transfer of power provision is sufficient to effect the transfer of powers from a regulatory agency to its successor.

All told, the provisions of the Public Service Act and E.O. No. 17275 which relate to the power of the regulatory body to approve provisional rates continue to have full force and effect, and the power was transferred to the ERe by virtue of Section 80 in relation to Section 44 ofthe EPIRA. Said provisions are not inconsistent with the EPIRA except the directives therein dispensing with the need for prior hearing. They are deemed modified to t~~ /' ______e_xt_e_n_t_thatthe EPIRA imposes a pUblicati~

'G.R. No. 161113, 15 June 2004. ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 6of19

requirement and, through the IRR, assures the customers affected the opportunity to oppose or comment on the application for provisional rate adjustment beforeit is acted upon by the ERC.

Indeed, both the letter and spirit of the law require that the authority of the ERC to grant provisional power rate adjustments should be upheld. The law is so clear that it cannot be misread.

[Emphasissupplied.]

The Supreme Court expounded further on the Commission's power to grant provisional authority in the case of National Association of Electricity Consumers for Reforms vs. ER0 (NASECORE Case). The Court emphasized therein that Section 4(e), Rule 3 of the EPlRA IRR does not make a distinction as to which applications or petitions are subject of the Commission's power to grant provisional authority.

The Court said that the prOVISIOncovers any application or petition for as long as it affects the retail rate3 charged by distribution utilities to the consuming public. However, on 21 June 2007, the Department of Energy (DOE) issued an amendment to Sec 4(e), Rule 3 of the EPIRA IRR adding therein the following paragraph:

This section4(e) shall not applyto Generation Rate Adjustment Mechanism (GRAM), Incremental CurrencyExchangeRecoveryAdjustment (ICERA), TransmissionRateAdjustment Mechanism,System Loss Rate Adjustment Mechanism, Lifeline Rate Recovery Mechanism, Cross-Subsidy Mechanism, Local Franchise Tax Recovery Mechanism, Business Tax Recovery Mechanism, Automatic Generation Rate Adjustment Mechanism, VAT RecoveryMechanism,Incremental Generation Cost Adjustment Mechanism,and Recoveryof Deferred Accounting Adjustment for Fuel Cost and Power Producers by NPC and NPC-SPUG,Provided that, such adjustment shall be subject to subsequent verificationby the ERCto avoid under recoveryof charges.

Thus, with the exception of the foregoing, the Commission has the power to grant provisional relief, through the provisional

, G.R. No. 163935, 02 February 2006. 3 Paragraph uuu, Rule 4, IRR of EPlRA, defines Retail Rate as the total price paid by end-UnerS consisting ofthe charges for generation, transmission and related Ancillary Services, distribution 1 supply and other related charges for electric service. ERC CASENO. 2016-054 RC ORDER/ 05 JULY 2016 Page 70£19

approval of applications or petitions affecting retail rates filed before the Commission.

The instant Application seeks the Commission's approval of the PPSA entered into between SOLECO and GNPD. The Commission is empowered to grant provisional approval in the instant Application.

Furthermore, the same provision of Section 4(e), Rule 3, EPIRA IRR states that the Commission has seventy five (75) days from the filing of the Application within which to grant provisional relief. SOLECO and GNPD filed the Joint Application on 26 April 2016. The seventy five (75) day period within which the Commission may issue a provisional authority ends on 10 July 2016.

Thus, the instant Order is being issued well within the reglementary period prescribed by law.

II. THE APPLICANTS HAVE SATISFIED THE DUE PROCESS REQUIREMENTS FOR THE GRANT OF PROVISIONAL AUTHORITY.

In the same NASECORE Case, the Supreme Court reiterated the procedural requisites before the Commission may grant provisional authority under Section 4(e), Rule 3, EPIRA IRR, to wit:

xxx

(1) The applicant must file with the ERC a verified application/petition for rate adjustment. It must indicate that a copy thereof was received by the legislative body of the LGU concerned. It must also include a certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

(2) Within 30 days from receipt of the application/petition or the publication thereof, any consumer affected by the proposed rate adjustment or the LGU concerned may file its comment on the application/petition, as well as on the motion for provisional rate adjustment.

(3) If such comment is filed, the ERC must consider it in its action on the motion for provisional r~~: / adjustment, together with the docume/ I ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 8 of19 .- .... -.' submitted by the applicant in support of its application/petition. If no such comment is filed within the 30-day period, then and only then may the ERCresolvethe provisionalrate adjustment on the basis of the documents submitted by the applicant.

(4) However,the ERC need not conduct a hearing on the motion for provisional rate adjustment. It is sufficient that it consider the written comment, if there is any.

(5) The ERC must resolve the motion for provisional rate adjustment within 75 days from the filing of the application/petition.

(6) Thereafter, the ERC must conduct a full-blown hearing on the application/petition not later than 30 days from the date of issuance of the provisional order. Effectively,this provision limits the lifetime ofthe provisionalorder to only 12months.

xxx

SOLECO and GNPD filed their Application on 26 April 2016 attaching therewith the following documents:

a) Verification and Certification of Non-Forum Shopping;

b) Affidavit of Service attesting to the service of copies of the Application and its annexes to the legislative bodies of the following local government units:

1. Provincial Government of Southern Leyte

ll. City Government of Maasin

lll. City Government of Pasig

c) Affidavits of Publication issued by the Philippine Daily Inquirer newspaper attesting to the publication of the Application on 23 April and .26 April 2016, respectively.

No Comment was received by the Commission within the thirty (30) day period within which the same may be filed, or until 26 May 2016. Thus, the prayer for provisional authority is being. resolved on the basis of the documents submitted by Applicants. Likewise, t4e instant O,de, ",anting p,"vision,] authority i, being i",ued witbi/(' ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 9 of19

the seventy-five (75) day reglementary period which is set to end on 10 July 2016.

In light of these circumstances, the Commission has determined that the procedural requirements for the issuance of a provisional authority as outlined by the Supreme Court in the NASECORE Case have been complied with.

III. THE APPLICANTS HAVE SATISFIED THE SUBSTANTIAL REQUIREMENTS FOR THE GRANT OF PROVISIONAL AUTHORITY.

Table 1below shows the actual and forecasted demand-supply scenario of SOLECOfor the period of 2013 to 2023.

Table 1.SOLECO's supply-demand scenario 2013 to 2020.

Historical Forecasted

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Peak Demand (MW) 16.993 17.576 18.02 17.438 18.171 18.898 19.621 20.339 21.051 21.757 22.456 Supplierjs:

PCPC 4 4 4 4 4 4 4 4

PSALM 15.748 16.535 17.203

TRANS-ASIA 3 2 FDCUI 1 2

GNPOWER 5

SMEC 10 10 . I GNPD 12 12 12 12 12

TotaISupply(~ 15.748 16.535 21.2°3 '3 '4 14 16 16 16 16 16

;(Deficit)/Surplus -1,245 -1,041 3.138 -4.438 .4.171 -4.898 -3.621 -4.339 -5.051 -5.757 -6.456

As can be seen from the data above, SOLECO will consistently suffer from supply deficit from 2013 to 2023. SOLECO's Distribution Development Plan (DDP), attached to the Application as Annex "Z", likewise expects a growth in the total demand of its end-users. SOLECO however continues to experience difficulty in sourcing its power requirements.

The Commission recognizes the need for Applicant SOLECO to source its power deficiency from the power purchase' and sale. agreement with generation companies which have available capacity.

Thus, the Commission finds merit in Applicants' allegations. The factuol milieu ,u",ounding the Applicatiou"ti,fie, th~ ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 10 Of19

substantial requirements for the grant of provisional authority. In view of the projected spike in demand, the immediate implementation of the PPSA subject of the instant case is seen as beneficial to the consuming public.

IV. TECHNICAL EVALUATION OF APPLICATION

A. Background ofthe power plant subject of the PPSA

GNPower proposes to build, own and operate a 2 x 660 MW (net) coal fired power plant and associated facilities located in an approximately 61-hectare industrial property adjacent to the 2 x 300 MW (net) GNPower Mariveles Ltd. Co. (GMCP) coal fired power plant situated area in Alasasin, Sitio Dinginin, Mariveles, Bataan, for the purpose of supplying baseload requirements of its customers of environmentally clean electric power (the "Project"). The Applicants alleged that although the Dinginin project is on a land immediately adjacent to the land occupied by GMCP, it is not contemplated that there will be any shared facilities with GMCP.

The EPC Contract will enable GNPower to build a low-cost, efficient and clean power plant. The construction period of the Project is expected to be approximately 36 months. GNPower expects to complete the development and construction of the Project by 2019.

B. Salient Features of the SOLECO-GNPD PPSA

Name of Plant GNPowerDinginin Power Plant

Type of Plant CleanPulverizedCoal-FiredPlant

Type of Operation BaseLoad Power Plant

Proposed Installed 2 x 660 MW(net) Capacity Location Sitio Dinginin, Barangay Alasasin, Mariveles, Bataan

Term Two hundred and forty (240) months from the commencement date notice (20 years)

Agreement Means any of the following: (i) The Scheduled Termination Date Termination Date, or (ii) the EarlyTermination Date, or (iii) the Termination Date referred to in Section 3.6 of the PPSA, or (iv) such later writi/fdate ~~ot~ate as the Parties may agree to in ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 11 of 19

Delivery Point The DU shall take delivery at GNPD's meter at the high voltage connection with the Transmission Utility located at the gantry inside the switchyard of the facility

1. Term of Agreement. The PPSA shall be effective at the date of its execution, and shall terminate after 240 months from the date specified in the Commencement Date Notice4 defined as the written notice that indicates the commencement of the first delivery of the Product after GNPD begins commercial operations in the market, which shall not be later than the first day of the Billing Period immediately after the lapse of thirty six (36) months from the ERC's final approval of the PPSA;5 • 2. Source of Supply. GNPD shall make available, sell, and deliver or cause to be delivered to SOLECO the Product6 at the Delivery Point, whether sourced from GNPD's facility or from other electricity generators, including the Wholesale Electricity Spot Market (WESM).

3. Contract Price. The Contract Price shall be composed of Capacity Price and Energy Price. The Capacity Price shall be computed as the product of the Capacity Fee for a Billing Period multiplied by the quantity of Product delivered at the Delivery Point. The Energy Price shall be computed as the product of the Energy Fee for a Billing Period multiplied by the quantity of Product delivered at the Delivery Point, and shall be inclusive of the existing Government Charges under Energy Regulations No. 1-94 as of Effective Date.

a. Capacity Fee. It is the component of the Contract Price allocated to pay for the cost, as well as the operations and maintenance of the power plant and is designated as the Capacity Fee in Schedule 1 of the PPSA, as such may be adjusted from time to time based on GNPD's Capacity Factor.

The corresponding Capacity Fee for a given Capacity Utilization Factor is set forth in the table below:

Capacity Fees for Specific Capacity Utilization Factors

4 Section 1.3, Schedule 1. Contracted Capacity, Contract Price and Terms of Agreement, PPSA, page 30 5 Section 1.1, Article 1. Definitions and Interpretations, PPSA, page 4 6 Refers to electric capacity, contracted on a variable Capacity Utilization Factor basis, together with energy, as specified in Schedule 1 of the PPSA, as the context requires, or as otherwise agreed by the Parties. (Section 1.1, Article 1. Definitions and Interpretations, PPSA, page 'l ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 12 of 19

Capacity Capacity Fee Utilization Factor ($jkWh) (%) 100% 0.0456 99% 0.0460 98% 0.0464 97% 0.0467 96% 0.0471 95% 0.0475 94% 0.0479 93% 0.0483 92% 0.0487 91% 0.0491 90% 0.0496 89% 0.0500 88% 0.0505 87% 0.0509 86% 0.0514 85% 0.0519 84% 0.0524 83% 0.0529 . 82% 0.0534 81% 0.0540 80% 0.0545 79% 0.0551 78% 0.0556 77% 0.0562 76% 0.0568 75% 0.0575 74% 0.0582 73% 0.0589 72% 0.0596 71% 0.0603 70% 0.0611 69% 0.0618 68% 0.0626 67% 0.0634 66% 0.0643 65% 0.0651

For the resulting CapacitY Utilization Factor which is not a whole number, the corresponding Capacity Fee shall be computed using the formula as set forth below:

Capacity Fee = - 0.10971 X(CUF)3 +0.344263 X (CUF)2 - 0.39644 x (CUF) + 0.207'i ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 13 Of19

Where:

Capacity Fee = is the Capacity Fee in $/kWh CUF = is the Capacity Utilization Factor between 65% and 100%, provided that if the actual CUF is below 65% (the "Minimum Capacity Utilization Factor"), the Capacity Price shall be calculated based on the Capacity Fee and quantity associated with the Minimum Capacity Utilization Factor.

The Capacity Utilization Factor (CUF) shall be computed asfollows:

CUF = Q CC * [Rr - EHTo]

Where:

Q = Quantity as defined in Section 1.1 of the i . Agreement CC = Contracted Capacity, in kW, as setforth in Schedule 1 = Total number of hours in such Billing Period EHro = the sum of the duration, in Equivalent Hours, of Scheduled Outages an d Unscheduled Outages in such Billing Period For example

Q = 18,648,000 kWh CC = 37,000kW HT = 720 hours EHTO = 101 hours

CUF= 18,648,000 kWh 37,000 kW * [720 hours ~ 101 hours]

= 18.648,000 kWh 22,903,000 kWh

= 81.42%

D.2 The Energy FEE

Energy Fee = IEF x

., ~j,

,~ ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 14 of 19

Where:

IEF = Initial Energy Fee equal to $O.0328/kWh CIFn = CIF Cost of Fuelfor Billing Period n CIFo = Base CIF Cost of Fuel equal to $1O.2514/million kcal

4. Capacity Utilization Discount. Section 5.3 (c) of the PPSA provides that if SOLECO pays the invoice amount in full in accordance with GNPD's invoice instruction on or before the twenty-fifth (25th) day of the succeeding calendar month from the relevant Billing Period and SOLECO's CUF is greater than or equal to 65%, SOLECOshall receive a credit on the next subsequent bill equal to 2.8% of the Energy Fee multiplied by the actual quantity of the Product actually delivered set forth in such invoice for the Billing Period for which the credit was earned.

5. Scheduled and Unscheduled Outage. Pursuant to Section 3.2, GNPD is allowed Scheduled Outage not to exceed five hundred forty (540) Equivalent Hours for each Contract Year, during which times reduced or no deliveries will be available to SOLECO. GNPD is likewise allowed Unscheduled Outage of five hundred forty (540) Equivalent Hours for each Contract Year during which times reduced or no deliveries will be available to the Buyer;

C. RATE IMPACT of the PPSA

The table below shows the impact on SOLECO's generation rates of the Commission's approval of the proposed Generation Rates under the PPSA:

With GNPD PPSA Forecasted 2019 Wcighted Percent Share Resulting Capacity Average Rate Power Supplier Average Quantity Amount (PhP) Average Rate (%) Factor (%) (P/kWh) (kWh) (kWh) PCPC 17,520,000.00 86,198,400.00 17.27% 5°% 4.9200 GNPD 80,54°,911<).33 302,399,043.61 79.39% 75% 3.7546 WESM 3,390,°39.27 12,641,945.35 3.34% 3.7291 3-9550 TOTAL 101,451,028.60 401,239,388.96 100%

Without GNPD PPSA Forecasted 2019 Weighted Percent Share Resulting Capacity Average Rate Power Supplier Average Quantity Amount (PhP) Average Rate (%) Factor (%) (P/kWh) (kWh) (kWh) PCPC 35,04°,000.00 172,396,800.00 34.54% 100% 4.9200 GNPD 0.00 0,00 0,00% 0% 0.0000 WESM 66,410,424.96 243,245,918.92 65.46% 3.6628 4.0970 TOTAL 101,450,424.96 415,642,718.92 100%

Generation Rate Impact ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 15 Of19

Based on the table and as contended by the Applicants, the entry of GNPD could result to a rate decrease of PhPO.1420/kWh.

IN VIEW OF THE FOREGOING, Applicants Southern Leyte Electric Cooperative, Inc. (SOLECO) and GNPower Dinginin Ltd. Co. (GNPD) are hereby GRANTED PROVISIONAL AUTHORITY to implement their Power Purchase and Sale Agreement (PPSA), subject to the following conditions:

1. The final generation cost that can be recovered shall be determined by the Commission in its Decision in the instant application;

2. In the event that the final rate is higher than that provisionally granted, the resulting additional charges shall be collected by GNPD from SOLECO. On the other hand, if the final rate. is lower than that provisionally granted, the amount corresponding to the reduction shall be refunded by GNPD to SOLECO; and

3. Direct the Applicants to submit the basis/justification on the following:

a. Interest Rate of 1% per month on overpayment or underpayment (Section 8.8 of the PPSA); b. Any premium and other costs of exchange (Section 5-4 of the PPSA); and c. Settlement Protocol (Section 5.4 ofthe PPSA).

SO ORDERED.

P.,ig City, 05 Joly 2"'"1 '. '.

ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 16 Of19

JOSE VICENTE, - --~B. S . Chairman and CEO ALJJ!J!vcLoN G!kdt~(OjAP-TARUC Commissioner commissi~~;

(On Leave) JOSEFINA PATRICIA A. MAGPALE-ASIRIT GE NIMO D. STA. ANA Commissioner Commissioner

*/~:ERC CASE NO. 20'6-054 RC

I . hi

ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 170f19

Copy furnished:

1. Atty. Lourdy D. Torres and Atty. Franchesca T. Ovalles Counsels for Applicant GNPD 28th Floor, The Orient Square Building Don Francisco Ortigas, Jr. Road Ortigas Center, Pasig City

2. Atty. Maria Concepcion O. Ojeda Counselfor Applicant SOLECO 240 J.P. Rizal, Marikina City

3. Southern Leyte Electric Cooperative, Inc. (SOLECO) Brgy. Soro-Sora, Maasin City, Southern Leyte

4. Office of the Solicitor General 134 Amorsolo Street, Legaspi Village Makati City, Metro Manila

5. Commission on Audit Commonwealth Avenue Quezon City, Metro Manila

6. Senate Committee on Energy GSIS Building, Roxas Boulevard Pasay City, Metro Manila

7. House Committee on Energy Batasan Hills Quezon City, Metra Manila

8. President Philippine Chamber of Commerce and Industry (PCCI) McKinley Hill, Fort Bonifacio Taguig

9. Office of the Provincial Governor Province of Southern Leyte

10. Office of the LGU Legislative Body Province of Southern Leyte

11. Office of the City Mayor PasigCity

12. Office of the LGU Legislative Body PasigCity

13.Office of the Municipal Mayor Anahawan, Southern Leyte

14.Office of the LGU Legislative Body Anahawan, Southern Leyte

15.Office of the Municipal MayJ1 Bontoc, Southern Leyte / ~ ERC CASE NO. 2016-054 RC ORDER/ 05 JULY 2016 Page 18 of 19

16.Office of the LGU Legislative Body Bontoc, Southern Leyte

17.Office of the Municipal Mayor Hinunangan, Southern Leyte j 18.Office of the LGU Legislative Body Hinunangan, Southern Leyte

19.Office of the Municipal Mayor Hinundayan, Southern Leyte

2o.0ffice of the LGU Legislative Body Hinundayan, Southern Leyte 21.Office of the Municipal Mayor Libagon, Southern Leyte

22.Office of the LGU Legislative Body Libagon, Southern Leyte

23.Office of the Municipal Mayor Liloan, Southern Leyte

24.Office of the LGU Legislative Body Liloan, Southern Leyte

25.Office of the City Mayor Maasin City, Southern Leyte

26.Office of the LGU Legislative Body Maasin City, Southern Leyte

27.Office of the Municipal Mayor Macrohon, Southern Leyte

28.0ffice of the LGU Legislative Body Macrohon, Southern Leyte

29.Office of the Municipal Mayor Malithog, Southern Leyte

30.0ffice of the LGU Legislative Body Malitbog, Southern Leyte

31.Office of the Municipal Mayor Padre Burgos, Southern Leyte

32.Office of the LGU Legislative Body Padre Burgos, Southern Leyte

33.Office of the Municipal Mayor Pintuyan, Southern Leyte 34.Office of the LGULcgi.mti~ '7'!" ERC CASE NO. 2016~054 RC ORDER/ 05 JULY 2016 Page 19 Of19

Pintuyan, Southern Leyte

35.Office of the Municipal Mayor Saint Bernard, Southern Leyte

36.Office of the LGU Legislative Body Saint Bernard, Southern Leyte

37.Office of the Municipal Mayor San Francisco, Southern Leyte

38.0ffice of the LGU Legislative Body San Francisco, Southern Leyte

39.Office of the Municipal Mayor San Juan, Southern Leyte

40.0ffice of the LGU Legislative Body San Juan, Southern Leyte

41.Office of the Municipal Mayor San Rieardo, Southern Leyte

42.0ffiee of the LGU Legislative Body San Ricardo, Southern Leyte

43.Office of the Municipal Mayor Silago, Southern Leyte

44.0ffiee of the LGU Legislative Body Silago, Southern Leyte

45.Office of the Municipal Mayor Sogod, Southern Leyte

46.Office of the LGU Legislative Body Sogod, Southern Leyte

47.Office of the Municipal Mayor Tomas Oppus, Southern Leyte

48.0ffice of the LGU Legislative Body Tomas Oppus, Southern Leyte

49. PSA-TWG 1 Energy Regulatory Commission (ERC) 14th Floor, Pacific Center BUildin~ San Miguel Avenue, Pasig City~