Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City ENERGY REGULATORY COMMISSION IN THE MATTER OF THE APPLICATION FOR APPROVAL OF CAPITAL EXPENDITURE PROGRAM FOR YEARS 2015 to 2017, WITH MOTION FOR PROVISIONAL AUTHORITY 2016-002 ERC CASE NO. RC . CENTRAL PANGASINAN ELECTRIC COOPERATIVE, INC. (CENPELCO), Applicant. x-------------------x I. • hj ...........LLiJi APPLICATION Applicant, CENTRAL PANGASINAN ELECTRIC COOPERATIVE, INC. (CENPELCO), through counsel, unto this Honorable Commission, respectfully alleges, that: THE APPLICANT 1. Applicant is a non-stock, non-profit electric cooperative, duly organized and existing under and by virtue of Philippine laws, with principal office at Padilla St., San Carlos City, Pangasinan; 2. It holds an exclusive franchise from the National Electrification Commission, to operate an electric light and power distribution service in the city of San Carlos and the municipalities of Aguilar, Alcala, Basita, Bautista, Bayambang, Binmaley, Bugallon, Labrador, Lingayen, Malasiqui, Mangaldan, Mangatarem, Sual, Urbiztondo, all in the Province of Pangasinan; 1 1 P a g e LEGAL BASIS 3. The instant application is being filed for the Honorable Commission's consideration and approval of CENPELCO's proposed Capital Expenditure (CAPEX) Projects for Years 2015 to 2017, pursuant to ERC Resolution No. 26 Series of 2009 and Resolution No. 20, Series of 2011, as well as other pertinent laws and rules. THE PROPOSED PROJECTS 4. CENPELCO's proposed CAPEX Projects subject of the instant application are summarized hereunder, as follows: PROPOSED NETWORK CAPEX PROJECTS No Project Project Project cost Year of . Project Description Type Category (PhP) Implementation Extension of 1-span 69kV line, lot acquisition and installation of additional 32,633,797.82 2017 1OMVA Substation in Bayambang Extension of 4-Span 69KV Line, Lot Acquisition and 2 Installation of Additional 33,030,066.18 2015 Substation Capacity 10MVA Substation in (Uprating) Malasiqui Extension of 2-Span 69kV Line and Installation of 3 29,170,704.21 Additional 10MVA 2015 4 Substation in Lingayen Extension of 2-Span 69kV Line and Installation of 4 32,712,553.84 Additional 10MVA 2015 Substation in Binmaley Upgrading of 10MVA 5 Safety Bayambang Substation 15,243,378.80 2015 Protection Substation Relocation, Upgrading of Primary and Secondary (Upgrading) Protection and 6 Safety 37,904,045.15 Replacement of 1OMVA 2015 Rented Power Transformer at Bugallon Substation Replacement of Defective 7 Air Break Switch at Malasiqi 1,054,700.00 2015 and Labrador S/S Property ' Installation of 69kV Air 8 Safety Equipment! Break Switch at Mangaldan 610,857.00 2015 Others S/S Replacement of Defective 9 SF6 Circuit Breaker and 3,956,693.28 2015 Installation of 69kV Air I 21 P a g e S I I Break Switch at Mangatarem S/S Construction of 5.41 5km. 10 69kV Subtransmission line 30,060,772.88 2015 Subtrans- Reliability from Balingueo to Malasiqui mission I Looping Construction of 15.5km. (Acquisition/ 69kV Subtransmission Tie 11 49,880,653.43 2016 Expansion) line from San Carlos City to Bayambang S/S Rehabilitation of Backbone Lines from San Carlos 12 Substation Feeder 1 & 2 to 44,247,384.10 2016 Bayambang Substation Feeder 3 Safety Rehabilitation of Backbone Distribution Lines from SCCP S/S 13 29,090,166.66 2015 (Rehabilita- Feeder 3 to Binmaley tion/ Feeder 1 Upgrading) Rehabilitation of Backbone 14 Lines from SCCP S/S to 25,393,513.39 2017 Urbiztondo S/S Rehabilitation of Lines due S 15 Safety to DPWH Road Widening 85,641,588.17 2015-2017 Projects Total 450,630,874.90 PROPOSED OTHER-NETWORK CAPEX PROJECTS Project Project Project Cost No. Project Description Year or Type Category (PhP) Implementation Requisition of Distribution Other Other Transformers, Service Drops and Network 122,759316.90 CAPEX Metering Equipments for New 2015-2017 Assets Customer Connections Procurement of Spare substation equipments (69kV Sf6, 69kV CT, 2 Reliability 11,872,219.67 69kV PT, 69kV LA, 15kV PT, 2015-2017 Property! 15kVCB) Equipment 3 Safety Replacement of dilapidated poles 27,065,627.51 2015-2017 /Others Replacement of Overloaded 4 Capacity Distribution Transformers to 53,153,173.07 2015-2017 Amorphous Transformers Total 214,850,337.15 PROPOSED NON-NETWORK CAPEX PROJECTS Project Project Project Cost No. Project Description Year of Type Category (PhP) Implementation Procurement of Testing and 1 11,575,550.00 Measudng Equipments 2015-2017 Non- Property! Procurement of 2 units Pick-Up Network Equipment 44 wI Cannopy, 4 units Double 2 Projects /Others Cab-6 Wheeler, 1 unit Crane 30 36,600,000.00 201 5-2017 Tonner, and 12 units Man Lift service vehicles 31 P a g e S S Procurement of Tools and Safety 4,201,579.20 2015-2017 Gadgets Procurement of Buffer Stock for 4 Contingency! Emergency / 57,558,353.53 2015-2017 Calamities Installation of CENPELCO 7716,452.63 2015 Broadband Non- Property / Contruction of add'I warehouse for 6 Network Equipment the typical equipments for 4,799,912.30 2016 substation - Projects ! Others Renovation of CENPELCO 1,200000.00 2016 Multipurpose Gym Renovation of CENPELCO 8 IAn+nrnnnI 1,500,000.00 2016 Power Engineering Software and 11,273,345.00 2015 its Program Modules and Acquiring of Server-Type (313 Total 136,425,192.66 GRAND TOTAL 801,906,404.71 CAPITAL EXPENDITURE PLAN 5. The proposed projects together with justifications are discussed in detail in the cooperative's Capital Expenditure Plan and Distribution Development Plan (DDP) for the years 2015 to 2017 together with supporting data presented in ERC-specified templates. FINANCIAL AND ECONOMIC EVALUATION 6. Financing Plan. CENPELCO's proposed projects will be financed partly with its Reinvestment Fund for Sustainable Capital Expenditure (RFSC) and partly from funds acquired through loans from lending institutions. Presented in the Table below are the CAPEX plan financiers to be pursued and the corresponding costs to be financed, to wit: ANNUAL PROJECT COST (PhP) SOURCE OF FUNDS TOTAL (PhP) 2015 2016 2017 Reinvestment Fund for Sustainable capital Expenditures (RFSC) 202,978,117 75,836,939 63,508,944 63,632,235 National Electrification Administration (NEA) 462,503,095 261,811,567 125,084,544 75,606,983 Banks 136,425,193 74,135,405 33,487,630 28,802,158 TOTAL 801,906,405 411,783,911 222,081,118 168,041,375 4 P a g e S I 7. Cash Flow. CENPELCO's cash flow shows that it can viably pursue and implement the 3-year CAPEX Plan without necessarily effecting a significant increase in its electricity rates. The Table below presents its Annual CAPEX Budget, to wit: Annual Amortization!Financial Requirements (PhP) SOURCE OF FUNDS TOTAL 2015 2016 2017 Reinvestment Fund for Sustainable Capital Expenditures (RFSC) 202,978,117 75,836,939 63508,944 63,632,235 National Electrification Administration 90,126,287 - 39377,367 50,748,920 Banks 70,576,277 - 29,548,276 41,028,001 TOTAL 363,680,681 75,836,939 132,434,586 155,409,155 8. Further, the whole capital expenditure structure of CENPELCO also considered previous indebtedness incurred in • financing past capital projects outstanding as of 2014, such that including the amortization of the said indebtedness will have the cash flow shown in the Table below, as follows: SUMMARY OF CASH FLOW COST OF CAPEX PLAN INCLUDING AMORTIZATION OF PAST INDEBTEDNESS 2015 2016 2017 TOTAL Revenue from RFSC 61,993,651 64,768,420 67,543,190 194,305,261 CAPEX Plan (Internal Financing/ 202,978,117 RFSC) 75,836,939 63,508,944 63,632,235 CAPEX Plan ArnortizaUon - 68,925,643 91,776,921 160,702,563 CAPEX Approval Fee 3,088,379 1,665,608 1,260,310 6,014,298 Sub-Total CAPEX Plan Cost 78,925,319 134,100,195 1 156,669,466 369,694,979 Previous Loan 109,310,247 Amortization- NEA 40,075,136 37,711,728 31,523,383 Others 22,388,553 16,791,415 39,179,968 Total CAPEX Plan Cost 141,389,008 188,603,338 188,192,849 518,185,194 Net cash Flow (79,395,357) (123,634,917) (120,649,658) (323,879,933) 9. Rate Impact. The CAPEX Plan is envisioned to have the least rate impact focusing on a capital expenditure plan that will bring the most value to CENPELCO's customers at the most reasonable and justifiable electricity rate or at the least cost of service. Presented in the Table below is the annual rate impact on the RFSC of the CAPEX Plan, to wit: 51 P a g e S . EXCERPTS FROM CASH FLOW ANALYSIS SHOWING RATE IMPACT IN TERMS OF RATE PER KWH Projected Rate per TOTAL kWh 2015 2016 2017 Net Cash Flow based on the existing RFSC Rate 0.2178 (79395,357) (123834917) 120, 649, 658 (323,879,933) Rate Increase- Distdbution Project 0.3630 103334821 107,959978 112585134 323,879933 Cash Balance end based on the new RFSC Rate 1 0.5808 1 23,939,464 1 (15,874,940) 1 (8064,524) (0.00) MOTION FOR PROVISIONAL AUTHORITY 10. As shown in the table of proposed projects, some of the projects will need implementation while the instant application is . pending evaluation of the Honorable Commission, or unforeseen situations or occurrences may arise which might necessitate the immediate implementation of a particular proposed project. In view thereof, applicant respectfully moves for issuance of a provisional authority while the case is pending, to implement said projects as may be deemed necessary and urgent under the circumstances, to enable the cooperative to deliver a safe, more reliable and efficient electric service to its consumers. DOCUMENTARY AND PRE-FILING REQUIREMENTS 11. Finally, in compliance with the documentary as well as • pre-filing requirements for the instant application, applicant is likewise submitting herewith the following documents which are being made integral parts hereof, to wit: Annex Nature of Document A Distribution Development Plan for 2015 to 2017 with supporting data in ERC-specified templates B to Affidavit of Posting with Notice on the Proposed Projects B-i as proof of public information dissemination C Affidavit of Undertaking that the corresponding application for approval of concerned agencies shall be filed, when required 6IPace S .