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Energy Regulatory Commission Joint Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City NERGY REGULATORY COMMISSION IN THE MATTER OF THE JOINT APPLICATION FOR APPROVAL EOVE OF THE POWER •SUPPLY EP 92016U CONTRACT (PSC) ENTERED R t D INTO BY AND BETWEEN CENTRAL PANGASINAN ELECTRIC COOPERATIVE, INC. (CENPELCO) AND LIMAY PREMIERE POWER CORPORATION (LPPC), WITH PRAYER FOR CONFIDENTIAL Jr TREATMENT OF INFORMATION ERC CASE NO. 2016- 141 RC CENTRAL PANGASINAN ELECTRIC COOPERATIVE, INC. (CENPELCO) AND LIMAY PREMIERE POWER CORPORATION (LPPC), Applicants. x----------------------x JOINT APPLICATION WITH PRAYER FOR CONFIDENTIAL TREATMENT OF INFORMATION The Joint Applicants Central Pangasinan Electric Cooperative, Incorporated (CENPELCO) and Limay Premiere Power Corporation (LPPC), through their respective undersigned counsels and unto the Honorable Commission, most respectfully state, that: Joint Application (CENPELCO and LPPC) Paae2of25 The Joint Applicants CENPELCO is an electric cooperative duly registered with the National Electrification Administration (NEA) pursuant to Presidential Decree No. 269, as amended, with principal office address at øadilla Street, SanCarlos City, Pangasinan. It holds a franchise to operate light and power services in the City of San Carlos and in the Municipalities of Aguilar, Alcala, Basista, Bautista, Bayambang, Binmaley, Bugallon, Labrador, Lingayen, MalasiqUi, Mangaldan, Mangatarem, Sual, and Urbiztondo, all in the Province of Pangasinan (Franchise Area). It shall also be herein referred to as the "Buyer"; 2. LPPC is a corporation duly created and existing by and under the laws of the Republic of the Philippines, with business address at the No. 40 San Miguel Avenue, Mandaluyong City. It shall also be herein referred to as the "SeIler'; 3. The Joint Applicants may be served with the orders, notices and other processes of the Honorable Commission through their respective undersigned counsels at the addresses indicated herein; Nature of the Application 4. The Joint Application for approval of the Power Supply Contract (PSC) dated 28 April 2016 entered into by and between CENPELCO and SMC Consolidated Power Corporation (SCPC) which was subsequently assigned to LPPC, is being submitted to the Honorable Commission for its review and approval pursuant to Sections 25 and 45(b) of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 or the EPIRA, Rules 5, Section 4(e) and 11, Section 5 of its Implementing Rules and Regulations (IRR), Rule 20(B) of its Rules of Practice and Procedure, and other pertinent rules and regulations; Joint Application (CENPELCO and LPPC) Paae3of25 Statement of Facts 5. Competitive Selection Process (CSP). Prior to the enactment of the Electric Power Industry Reform Act of 2001 or the EPIRA, CENPELCO sources one hundred percent (100%) of its power supply requirements from the National Power Corporation (NPC); 5.1 On 29 October 2009, CENPELCO received a letter from the Power Sector Assets and Liabilities Management Corporation (PSALM) informing it that San Miguel Energy Corporation (SMEC) is the Independent Power Producer Administrator (IPPA) for the NPC's Sual Coal-fired Power Plant; 5.2 On 6 November 2009, SMEC notified CENPELCO on the preliminary transfer/assignment of the NPC's existing Transition Supply Contracts (TSCs) pursuant to the privatization of the latter's assets. In this regard, the PSALM absolutely and unconditionally assigned, transferred and conveyed all its rights, interests, and participation in its existing TSCs/Contracts for the Supply of Electric Energy (CSEE5) to SMEC; 5.3 On 9 December 2009 and 14 December 2009, CENPELCO published its 'invitation to Bid" to supply its power requirements for a period of five (5) years in the "Philippine Daily Inquirer; 5.4 On 14 January 2010, CENPELCO conducted a Pre- Bid. Conference wherein the following generation companies attended: SMEC, Trans-Asia Oil and Development Corporation (TA-OIL), Aboitiz Power (AP), AES Philippines-Masinloc Power (AES), and First Gen Corporation (First Gen). Subsequently, on 10 February 2010, CENPELCO conducted the Opening of Bids; 5.5 On 14 April 2010, CENPELCO's Public Bids and Awards Committee (PBAC) recommended to the Board to award the power supply contract SMEC for the supply of its power requirements for a period of five (5) years or from 2010 until 2015; Joint Application (CENPELCO and LPPC) Paqe 4 of 25 5.6 on 19 June 2010, CENPELCO's Board issued Resolution No. 98, Series of 2010 awarding the power supply contract to SMEC; 5.7 While in the process of finalizing its power supply contract with SMEC, CENPELCO had several issues and concerns which remained unsettled which eventually caused the non-implementation of their contract. To avoid power supply interruption, CENPELCO and SMEC agreed that the original TSC be renewed every two (2) to three (3) months. This arrangement continued until 2014; 5.8 On 17 May 2014, CENPELCO's Board issued Resolution No. 63 approving the execution of an Interim Supply Agreement (ISA) with SMEC; and 5.9 CENPELCO's Board also noted that since the Sual Power Plant has been operating for a significant period, the power reliability thereof may no longer be guaranteed. In this regard, CENPELCO's Board issued Resolution No. 63-A approving the execution of a PSC with SCPC. In said Resolution, the contracted base load of 20 MW from SMEC will be sourced from SCPC upon its commercial operations and the remaining 20 MW will be sourced from SMEC. CENPELCO's Board deemed it necessary to execute the PSC with SCPC to ensure its member-consumers a continuous and reliable power supply for the next ten (10) years; 6. Assignment of the PSC to LPPC. Article 17.2 (Assignability) of said PSC expressly states, that: "This Contract shall be binding between the Parties, their successors-in-interest and assigns. A Party may not assign this Contract or its rights and obligations therein to a third party without the other Party's written consent However, the BUYER acknowledges that the SELLER has, without the need to secure the BUYER's consent, the right to a) assign or transfer this Contract any affiliate of the SELLER and b) to pledge, transfer, sell, encumber or assign this Contract or the accounts, revenues or proceeds hereof in connection with any project financing Joint Application (CENPELCO and LPPC) Paae 5 of 25 or financial arrangements; provided that the assignee under (a) and (b) hereof shall agree in writing to assume and be bound by the terms and conditions of this Contract, and upon such assumption, the assignor shall be relived from any further liability under this Contract "; 6.1 on 23 December 2015, SCPC and LPPC executed a Deed of Assignment whereby the Assignor SCPC assigned and transferred all its rights, interests, and obligations under the PSC it executed with CENPELCO in favor of the Assignee LPPC. LPPC, likewise, agreed to acquire all of said rights and interests and assumed all of said obligations under the same PSC for the supply of electtic energy to CENPELCO from its 2 x 150 MW Circulating Fluidized Bed Coal-Fired Thermal Power Plant located in Barangay Lamao, Limay, Bataan; and 6.2 CENPELCO is fully aware of the import of the aforementioned assignability clause under Article 17.2 of the PSC it executed with SCPC. As such, it interposed no objection to the implementation of its PSC with LPPC as its new power supplier inasmuch as LPPC agreed to acquire all of the rights and interests and assumed all of the obligations of SCPC under said PSC for the supply of electric energy to CENPELCO; 7. Salient Features of the PSC. 7.1 Contract Capacity. The Contracted Capacity for the duration of the PSC shall be 20,000 kW. The Buyer shall maintain a minimum hourly nomination of at least forty percent (40%) of the Contract Capacity for the duration of the said PSC. The Contract Capacity shall be subject to a separate Nomination Protocol; 7.2 Generation Source. LPPC is constructing a 2 x 150 MW Circulating Fluidized Bed Coal-Fired Thermal Power Plant (the Plant) located in Barangay Lamao, Limay, Bataan, which is expected to be commercially operational by the 3" quarter of calendar year 2016; Joint Application (CENPELCO and LPPC) Paqe 6 of 25 7.3 Contract Term. The PSC shall take effect between the Parties on the date of signing (Execution Date) and shall remain effective for a period of ten (10) years from Commercial Operations Date (COD). The supply of electric power by the Seller shall commence on COD and shall continue until the end of the Contract Term; 7.4 Contract Charges. Under the PSC, the Buyer shall pay the following Contract Charges for the duration of the Contract, subject to the applicable value- added tax (VAT), and computed as follows: Partiàulars Unit Amount Capacity Fee Capital Recovery Fee PhP/kW-month 1,371.2920 Fixed Operation and Maintenance Fee PhP/kW-month 383.8079 Total Capacity Fee 1,755.0999 Energy Fee Variable Operation and Maintenance Fee PhP/kWh 0.2831 Fuel Fee (pass through) PhP/kWh 1.6566 Total Energy Fee 1.9397 7.5 Other Charges. The Buyer shall bear all other costs and charges including but not limited to transmission line losses, any interconnection charges, and site specific toss adjustments, among others; 7.6 Adjustment Formula. The Contract Charges are adjusted on a monthly basis in accordance with the following Adjustment Formula (Annex li-B of the PSC): MONTHLY CONTRACT CHARGES = Capacity Charges month + Energy Chargesmoflth Where: Capacity Charges = Capita! Recovery Fee (CRF) + Fixed Operation
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