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- G\i\..ATOR y C. «-'(; 0% $ \, Republic of the £ t\ppro\fed f@r (~ ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City

IN THE MATTER OF THE APPLICATION FOR APPROVAL OF REGULATED ENTITIES' EMERGENCY CAPITAL EXPENDITURE PROJECTS ERC CASE NO. 2011-103 RC

FIRST ELECTRIC COOPERATIVE, INC. (FLECO), Applicant. x------x

DECISION

Before the Commission for resolution is the application filed on July 18, 2011 by First Laguna Electric Cooperative, Inc. (FLECO) for approval of its emergency capital expenditure projects.

In the said application, FLECO alleged, among others, that:

1. It is an electric cooperative duly organized and existing under and by virtue of the laws of the Philippines, with principal office at Lewin, , Laguna;

2. It is the exclusive franchise holder issued by the National Electrification Administration (NEA) to operate an electric light and power services in the Municipalities of , Cavinte, Lumban, Kalayaan, , , , , , and Sta. Maria, all in the Province of Laguna; ""

3. Its 5 MVA Power Transformer at Pakil Substation at Pakil, Laguna, was already defective and thus, there is a need for its immediate repair in order to ensure reliable service to its consumers; ERC Case No. 2011-103 RC DECISION/August 27,2013 Page 2 of 8

4. The loads at the Pakil Substation were temporarily transferred and distributed to Famy Substation and Lumban Substation. The repair and immediate commissioning of the 5 MVA Power Transformer at Pakil Substation will bring back the loading of Lumban Substation to its former ideal loading. Moreover, it will result to the increase of its power reliability;

5. The estimated cost of the emergency capital expenditure project is Eight Hundred Thousand Pesos (PhP800,000.00) which will be financed through its Reinvestment Fund for Sustainable Capex (RFSC);

6. The implementation of the project commenced on May 14, 2011 and was completed on July 12, 2011;

7. It submitted the following documents in support of the instant application:

a) Project Description; b) Justification or Benefits to be delivered; c) Estimated Project Costs; d) Project Financing Plan; and e) Project Schedule;

8. The said project is consistent with its Distribution Development Plan (DDP), the Philippine Grid Code (PGC), the Philippine Distribution Code (PDC) and other relevant government issuances and in accordance with the Commission's Resolution No. 26, Series of 2009 (Resolution Amending the Rules for Approval of Regulated Entities' Capital Expenditure Projects);

9. The approval of the instant application is necessary to maintain efficient, reliable and safety delivery of power to its existing and future consumers and will redound to the benefits of the consuming public; and

10. It prays that after due notice, hearing and consideration, the instant application be approved by the Commission. '"

ERC Case No. 2011-103 RC DECISION/August 27,2013 Page 3 of 8

Having found said application sufficient in form and in substance with the required fees having been paid, an Order and a Notice of Public Hearing, both dated July 20, 2011, were issued setting the case for initial hearing on August 26, 2011.

In the same Order, FLECO was directed to cause the publication of the Notice of Public Hearing, at its own expense, twice (2x) for two (2) successive weeks in two (2) newspapers of general circulation in the Philippines, with the date of the last publication to be made not later than ten (10) days before the date of the scheduled initial hearing. It was also directed to inform the consumers within its franchise area, by any other means available and appropriate, of the filing of the instant application, its reasons therefor and of the scheduled hearing thereon.

The Office of the Solicitor General (OSG), the Commission on Audit (COA) and the Committees on Energy of both Houses of Congress were furnished with copies of the Order and the Notice of Public Hearing and were requested to have their respective duly authorized representatives present at the initial hearing.

Likewise, the Offices of the Provincial Governor of Laguna and the Mayors of the Municipalities within FLECO's franchise area were furnished with copies of the Order and Notice of Public Hearing for the appropriate posting thereof on their respective bulletin boards.

On August 26, 2011, FLECO filed its "Pre-Hearing Brief' and "Compliance" .

During the August 26, 2011 hearing, only FLECO appeared. No intervenor or oppositor appeared nor was there any intervention/opposition registered.

At the said hearing, FLECO presented its proofs of compliance with the Commission's posting and publication of notice requirements which were duly marked as Exhibits "A" to "H-7", inclusive. Thereafter, it conducted an expository presentation of its application. ERC Case No. 2011-103 RC DECISION/August 27,2013 Page 4 of 8

Upon termination of the expository presentation, FLECO presented its witnesses: 1) Ms. Anna Riza Villas, its Finance Service Department Manager; and 2) Engr. Enrico P. Benitez, its Technical Service Department Manager, who testified on the financial and technical aspects, respectively, in support of the application.

Thereafter, the Commission propounded c1arificatory questions on the said witnesses. FLECO was directed to submit several documents together with its formal offer of evidence (FOE).

On May 8, 2012, FLECO filed its "Compliance" and "Formal Offer of Evidence".

On August 8, 2013, the Commission issued an Order admitting the said formal offer of evidence and declaring the instant application submitted for resolution.

DISCUSSION

FLECO sought the Commission's approval of its emergency capital expenditure projects involving the repair of its 5 MVA power transformer at Pakil Substation located in Pakil, Laguna, as follows:

A. Project Description:

The project involves the immediate repair of FLECO's defective 5 MVA power transformer at Pakil Substation.

B. Rationale of the Project:

The 5 MVA power transformer became defective on January 31, 2011. The initial field test result showed that only one (1) primary coil was damaged. However, upon un- tanking the said transformer, it was found that two (2) primary coils were damaged that require the immediate repair. FLECO's management decided to repair the damaged transformer instead of purchasing a brand new ..,

ERC Case No. 2011-103 RC DECISION/August 27,2013 Page 5 of 8

5 MVA power transformer valued at PhP7,OOO,OOO.OOto PhP9,OOO,OOO.OO.Further, it was estimated that after its repair, said transformer would become serviceable for another fifteen (15) years.

The repair was necessary in order to ensure a reliable and continued service to FLECO's member-consumers. As a consequence thereof, the load of its Pakil Substation was transferred and distributed to Famy and Lumban Substations. Shown below are the loading schedules, to wit:

Load of Pakil Substation

Feeder NO./Town Peak Demand Feeder NO.5 - Pakil/Paete 1.9 MVA Feeder NO.6 - Panail 1.1 MVA Substation Caoacitv - 5 MVA 3.0 MVA

Result of Load Transferring

LUMBAN SUBSTATION

Without Pakil With Pakil and Feeder NO./Town and Paete Loads Paete Loads 0.754 MVA 0.754 MVA 2.138 MVA 3.338 MVA

2.892 MVA 57.84%)

FAMY SUBSTATION

Without Feeder No. With Feeder NO.6 Feeder NO./Town 6 and Load of Pakil and Load of Pakil Feeder No. 7 - Mabitac/Sta. Maria 2.020 MVA 2.020 MVA Feeder NO.8 - Siniloan 1.600 MVA 3.400 MVA Feeder NO.9 - Famv 0.549 MVA 0.549 MVA Substation Capacity -10 MVA 4.169 MVA 5.969 MVA (59.69%) (41.69%\ -,

ERC Case No. 2011-103 RC DECISION/August 27,2013 Page 6 of 8

It is worthy to note that the transfer of load from one substation to another is only necessary during emergency situation to minimize power outages. Substation feeders have limitation since they can provide power in certain distance without voltage violation.

In the case of FLECO, the load of Pakil Substation cannot be transferred permanently either to Famy or Lumban Substations due to voltage violation. The repair and immediate commissioning of the 5 MVA power transformer of Pakil Substation will bring back the loading of Lumban Substation to its former ideal loading. Moreover, it will maintain power reliability.

C. Project Cost:

The actual project cost amounted to Eight Hundred Thousand Pesos (PhP800,000.00).

PROJECT FUNDING

FLECO utilized its RFSC to finance the said project.

A perusal of the evidence presented herein showed that the approval of the FLECO's proposed emergency capital expenditure projects is in accordance with the provisions of Republic Act No. 9136 and the "Resolution Amending the Rules for Approval of Regulated Entities' Capital Expenditure Projects" and will redound to the benefit of its consumers in terms of continuous, reliable and efficient power supply as mandated by Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (Section 2. Declaration of Policy - (b) "to ensure the quality, reliability, security and affordability of the supply of electric power').

WHEREFORE, the foregoing premises considered, the application filed by First Laguna Electric Cooperative, Inc. (FLECO) for approval of its regulated entities' emergency capital expenditure projects is hereby APPROVED. ERC Case No. 2011-103 RC DECISION/August 27,2013 Page 7 of9

Accordingly, FLECO is hereby directed to remit a permit fee in the sum of Six Thousand Pesos (PhP6,000.00), within fifteen (15) days from receipt hereof, computed as follows:

PhP800,000.00 Permit Fee = ------)( PhPO.75 = PhP6,000.00 PhP100.00

SO ORDERED.

Pasig City, August 27,2013.

hi. A ~ ,- ENAIDA G/CRUZ-~ Chairperson

O. /([~(ff ALFREDO J. NON GLO~~TOR~A qj YAP-TARUC Commissioner Commissioner

~/40/~s~ECO CAPEX ERC CASE NO. 2011-103 RC/Decision ,..i....•. 'J ERC Case No. 2011-103 RC DECISION/August 27,2013 Page 8 of 8

Copy Furnished:

1. ATTY. ARNIDO O.INUMERABLE Counsel for FLECO 405 Elisa Street, U.E. Village, ,

2. First Laguna Electric Cooperative, Inc. (FLECOl Brgy. Lewin, Lumban, Laguna

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

4. Commission on Audit Commonwealth Avenue City, Metro Manila

5. Senate Committee on Energy GSIS Bldg. Roxas Blvd., Pasay City Metro Manila

6. House Committee on Energy Batasan Hills, Quezon City, Metro Manila

7. Office of the Provincial Governor Sta. Cruz, Laguna

8. Office of the Municipal Mayor Lumban, Laguna

9. Office of the Municipal Mayor Pagsanjan, Laguna

10. Office of the Municipal Mayor , Laguna

11. Office of the Municipal Mayor Kalayaan, Laguna

12. Office of the Municipal Mayor Paete, Laguna

13. Office ofthe Municipal Mayor Pakil, Laguna

14. Office of the Municipal Mayor Pang ii, Laguna

15. Office ofthe Municipal Mayor Siniloan, Laguna

16. Office ofthe Municipal Mayor Famy, Laguna

17. Office of the Municipal Mayor Mabitac, Laguna

18. Office of the Municipal Mayor Sta. Maria, Laguna