Republic of the Philippines ENERGY REGULATORY COMMISSION Pasig City
IN THE MATTER OF THE APPLICATION FOR APPROVAL OF THE POWER SUPPLY AGREEMENT (PSA) BETWEEN CAMOTES ELECTRIC COOPERATIVE, INC. (CELCO) AND CAMOTES ISLAND POWER GENERATION CORPORATION (CAMPCOR), WITH PRAYER FOR PROVISIONAL AUTHORITY OR INTERIM RELIEF
ERC Case No. 2020-012 RC
CAMOTES ELECTRIC COOPERATIVE, INC. (CELCO) AND CAMOTES ISLAND POWER GENERATION CORPORATION (CAMPCOR), Applicants. x------x
NOTICE OF VIRTUAL HEARING
TO ALL INTERESTED PARTIES:
Notice is hereby given that on 16 March 2020, Camotes Electric Cooperative, Inc. (CELCO) and Camotes Island Power Generation Corporation (CAMPCOR) filed a Joint Application dated 23 January 2020, seeking the approval of their Power Supply Agreement (PSA), with prayer for the issuance of provisional authority or interim relief.
The pertinent portions of the said Joint Application are hereunder quoted as follows:
1. CELCO is the lone Distribution Utility in the Camotes Islands, Province of Cebu. It is a non-stock, non-profit membership electric cooperative, duly organized and existing under Philippine laws, with principal address at Tamban, Western Poblacion, Poro, Camotes, Province of Cebu. It operates an ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 2 of 21
electric light and power service in the municipalities of Camotes, Poro, San Francisco and Tudela (the “Franchise Area”);
Copies of the relevant documents as to its registration and incorporation as an electric cooperative are hereto attached to form as integral parts of this Application:
ANNEX DOCUMENT “A” Certificate of Franchise “B” Articles of Incorporation “C” By-Laws “D” List of Incumbent Board of Directors
2. CAMPCOR is a corporation duly organized and existing under Philippine laws with principal office at UGF Worldwide Corporate Center, Brgy. Highway Hills, Shaw Blvd., Mandaluyong City, Metro Manila. It is primarily organized to buy, acquire, lease, construct, maintain, and operate plants, work systems, poles, etc. for the production, supply, distribution and sale of electricity for light and power and any other use to which electricity may be applied.
Copies of relevant documents as to its due incorporation are hereto attached to form as integral parts of this Application:
ANNEX DOCUMENT “E” SEC Certificate of Incorporation “F” Certified True Copy of Articles of Incorporation & By- Laws “G” General Information Sheet for the Year 2019 “H” Organizational Chart of Affiliated Corporations showing that CAMPCOR is owned by SIPCOR and PRIMEWATER
3. Applicants CELCO and CAMPCOR may be served with orders, notices and other issuances by the Honorable Commission through their respective counsels at the addresses indicated below;
4. After a Competitive Selection Process (CSP), herein Applicants executed a 15-year Power Supply Agreement (PSA) dated 18 September 2019 wherein CAMPCOR will supply CELCO a minimum of 4.0 MW to a maximum of 5.6 MW capacity for Camotes Island Grid and a minimum of 0.6 MW to a maximum of 0.9 MW for Pilar Grid;
5. Pursuant to Sections 25, 43 (f), and 45 (b) of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), its Implementing Rules and Regulations, and other applicable rules and guidelines, CELCO and CAMPCOR respectfully submit the instant Application to the Honorable Commission for its due consideration and approval of their PSA.
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I. STATEMENTS OF FACTS
6. Presently, the National Power Corporation (NPC) is the sole power provider of CELCO through a 4MW power supply agreement. However, this agreement will expire in December 2020;
7. NPC’s diesel power plants in Camotes Main Grid and Pilar Grid are incapable of producing enough supply to CELCO’s distribution system due primarily to inadequacy of fuel supply and breakdown of aging generating sets. Thus, over time, the capacity from NPC’s plants has become insufficient to meet CELCO’s growing power demand;
Based on its Forecasted Supply-Demand Scenario until 2023, CELCO’s projected demand for 2020 is about 4.113 MW and with a steady increase in demand requirements, is expected to be around 5 MW in 2023. With the termination of supply from the NPC this December 2020, CELCO must secure a new power provider. Copies of relevant documents as to CELCO’s Demand and Supply Scenario are hereto attached to form as integral parts of this Application:
ANNEX DOCUMENT “I” Distribution Development Plan of CELCO “I-1” Yearly Historical Data from 2001-2016 and Monthly Historical Data from 2017-2018 “I-2” Camotes Island and Pilar Yearly Forecasted Supply Demand Scenario from 2019 to 2023 “J” Average Daily Load Curve “K” List of Demand to be Energized in 2020 and 2021
8. The pressing need for a New Power Provider should not be taken lightly for CELCO’s member-consumers had long suffered several recurring black outs caused by NPC’s alternate generator sets failure. It is only through the procurement of a New Power Provider that the power crisis in CELCO’s franchise area will be alleviated;
9. Sometime in November 2014, Primewater Infrastructure Corp. (PRIMEWATER) presented and submitted to CELCO an Unsolicited Proposal to supply power in Camotes Island;
10. In June 2015, CELCO received an Updated Tariff Structure and Rates and Company Profile for Unsolicited Proposal for Power Generation Project in Camotes Island from PRIMEWATER and its affiliate, S.I. Power Corporation (SIPCOR);
11. On 14 November 2015, after going through a series of negotiations, CELCO and PRIMEWATER/SIPCOR agreed on the terms and conditions of the final proposal. On even date, CELCO issued a Certification recognizing PRIMEWATER/SIPCOR as the Original Proponent. Thereafter, CELCO conducted a Competitive Selection Process (CSP) through Swiss Challenge, as follows: ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 4 of 21
11.1. After the National Electrification Administration’s (NEA) approval of CELCO’s Terms of Reference, an “Invitation to Participate and Submit Comparative Proposal in the CSP” with Terms of Reference was published in the Philippine Daily Inquirer on 1 and 8 March 2018. Subsequently, an Erratum was published on 16 May 2018 in order to correct the Type of Equipment/Technology;
11.2. In March 2018, CELCO received letters of interest from Bantayan Island Power Corporation (BIPCOR), DMCI Power Corporation (DPC) and FP Island Energy Corporation (FPIEC);
11.3. Meanwhile, Department of Energy (DOE) Circular No. 2018-02-0003 that requires the conduct of CSP took effect. CELCO deferred the bidding activities and, instead, proceeded to select its Third Party Bids and Awards Committee (TPBAC) in compliance with the said DOE Circular. The TPBAC was duly approved by the DOE;
11.4. CELCO requested the Energy Regulatory Commission’s (ERC) guidance on the conduct of CSP through Swiss Challenge. The Honorable Commission replied on 17 January 2019 that CELCO may proceed with the conduct of CSP, citing a DOE letter it received on 29 November 2018 allowing Swiss Challenge as it is not excluded in the CSP Policy;
11.5. In view of the ERC’s assurance, CELCO resumed the conduct of CSP through Swiss Challenge. During Pre-bid Conference, eligible bidders DPC and BIPCOR attended. However, both failed to submit their respective proposals on the scheduled date of submission and opening of comparative proposals;
11.6. The bidding documents, particularly, “Instruction to Bidders (ITB) 21 - Evaluation of Comparative Proposal” provide that should there be no Proponent whose First Envelope was rated passed, the TPBAC shall proceed with the awarding of the project to the Original Proponent;
11.7. Accordingly, PRIMEWATER/SIPCOR was given the Notice of Award.
A detailed narrative of CELCO’s conduct of CSP is provided in the sworn Affidavit of the TPBAC’s Vice Chairman, Angelito P. Cuizon, an original copy of which is herewith attached as Annex “L” and supported by the following documents:
ANNEX DOCUMENT “M” Copy of PRIMEWATER’s Unsolicited Proposal dated November 2014 ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 5 of 21
“M-1” Copy of PRIMEWATER/SIPCOR’s Updated Tariff Structure and Rates and Company Profile dated 30 June 2015 “N” CELCO’s Certification that PRIMEWATER is the recognized Original Proponent “O” NEA Letter to CELCO dated 15 January 2018 finding the revised Terms of Reference in order and allowing publication of Invitation to Bid and CSP to proceed “P” Affidavit of Publication dated 08 March 2018 issued by the Philippine Daily Inquirer “P-1” Affidavit of Publication dated 25 May 2018 issued by the Philippine Daily Inquirer “Q”– “Q2” Letters of Interest from BIPCOR, DPC and FPIEC “R”– “R2” Evaluation Sheet/ Abstract of Eligibility/ Prequalification Requirements of BIPCOR, DPC and FPIEC “S” DOE letter approving CELCO’s TPBAC Selection Process “T” CELCO Resolution No. 56, Series of 2018 on the Approval and Confirmation of the Members of CELCO’s TPBAC, Technical Working Group (TWG) and TPBAC Secretariat “U” CELCO Resolution No. 69, Series of 2018 on the Continuation of the Conduct of CSP through Swiss Challenge and to let the TPBAC do its task “V” ERC Letter dated 17 January 2019 that CELCO may proceed with the conduct of CSP in procuring its supply requirements, citing DOE Letter that Swiss Challenge is not excluded in the CSP Policy “W”- “W3” CELCO letters to NEA, DOE, NPC and ERC all dated 11 February 2019 inviting and informing the addressees of the scheduled CSP activities “X” Minutes of Pre-Bid Conference “Y” Minutes of Bid Opening “Z” TPBAC Resolution No. 01, Series of 2019 recommending the award of the 15-year PSA to PRIMEWATER/SIPCOR “AA” ERC Letter dated 03 May 2019 reiterating its earlier communication to CELCO through its letter dated 17 January 2019 “BB” CELCO Resolution No. 25, Series of 2019 on accepting and confirming the recommendation of the TPBAC to award the 15- year PSA to PRIMEWATER/SIPCOR “CC” Notice of Award dated 24 July 2019
12. Per PRIMEWATER/SIPCOR’s Updated Proposal to CELCO1, they will create a wholly owned and operated Project Company2 to implement the power generating facilities in the Camotes Island. CAMPCOR was, thus, created to undertake the supply of power to CELCO;
13. Accordingly, CELCO and CAMPCOR signed the subject PSA dated 18 September 2019 that shall govern the terms and conditions of CAMPCOR’s provision of power supply to CELCO’s franchise area. A copy of the said PSA is herewith attached as Annex “DD” and to form as an integral part of this Application;
1 See Annex “M-1” hereof 2 See Annex “G” hereof showing that CAMPCOR is 70% owned by SIPCOR and 30% owned by PRIMEWATER ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 6 of 21
II. SALIENT FEATURES OF THE PSA AND OTHER RELATED INFORMATION
14. The following are the salient features of the PSA:
14.1. Target Completion Date. The date within six (6) months from ERC approval of the PSA upon which CAMPCOR certifies that the Power Station is capable of operating the power station3.
14.2. Cooperation Period. Commencing on the “Commercial Operation Date” (COD) or the date when CAMPCOR commences delivery of power on the 1st day of the seventh (7th) month after the ERC approval of the PSA, unless otherwise changed or modified, and ending on the 15th anniversary thereafter.4
14.3. Conditions Precedent to COD. On or before the target COD, the following shall be accomplished5:
a. ERC approval of the TCGR, provided that a provisional authority granted by the Honorable Commission shall be considered satisfaction of this condition;
b. Subsidy Agreement among CAMPCOR, CELCO and NPC-SPUG;
c. Operations Security to secure performance of CAMPCOR’s obligations under the PSA; and
d. Power Delivery Agreement executed for CAMPCOR’s use of CELCO’s 13.8kV transmission system/distribution line.
14.4. Guaranteed Dependable Capacity and Contracted Capacity. CAMPCOR shall maintain and make available the Guaranteed Dependable Capacity6 (GDC) of 4.0 MW up to the Contracted Capacity7 (CC) of 5.6 MW for Camotes Main Grid, and GDC of 0.60 MW up to CC of 0.90 MW for Pilar Grid, baseload, peaking power, spinning, standby or reserve power, and black start capability on sustained basis for the entire Cooperation Period for CELCO’s Franchise Area.
CAMPCOR’s power plants shall provide for CELCO’s active and reactive power requirements while CELCO shall only pay for actual energy delivered and received8.
3 Section 1.1, Definition of Terms, PSA 4 Ibid. 5 Section 5.4, Conditions Precedent to COD, PSA 6 Section 1.1, Definition of Terms, PSA 7 Ibid. 8 Section 2.1, General, PSA ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 7 of 21
The power stations shall meet at all times the GDC and able to make available for dispatch the CC. The GDC and CC shall always be made available at all times even after CAMPCOR has availed of the allowable downtime and unexpected outage of the largest or any generating units.9
CAMPCOR generating units10:
Camotes Main Grid Pilar Grid Type of Technology and 5 units Modular/ 4 units Modular/ Number of Units Containerized, Brand containerized New Bunker C-fired Diesel Engines Total Installed Capacity 6,984 kW 1,280 kW Net Dependable Capacity 6,285.6 kW 1,152 kW Station Use 595.3 kW 64 kW
Guaranteed Dependable 4,159.4 kW 800 kW Capacity Guaranteed Availability 8,500 Hrs. per year 8,500 Hrs. per year Per Unit
14.5. Replacement of Power. When CAMPCOR’s power station is not able to provide the capacity contracted, CAMPCOR or CELCO may source-out capacity or replacement power from the NPC, other available resources, or from the firm renewable energy technology provider, subject to the following conditions.11
i. CELCO shall pay only the approved tariff provided in the PSA;
ii. No assignment of CAMPCOR’s rights and obligations under the PSA is made;
iii. CAMPCOR’S obligations in the PSA are not suspended and subject to applicable penalty for CAMPCOR’s default;
iv. If CELCO sourced out the replacement, CAMPCOR shall provide the purchase and incidental costs, and any difference in excess of the approved tariff shall be at CAMPCOR’s account.
14.6. Allowable Downtime. Any period of time during which CAMPCOR shall undertake inspection, maintenance, repair or overhaul of the power station or generating unit, including unscheduled outages but should not diminish the Guaranteed Dependable and Contracted Capacities.12
9 Based on Item 1.5, Schedule A – Power Stations Specifications, PSA 10 Based on Item 1.3, Schedule A – Power Stations Specifications, PSA 11 Section 6.7 Replacement of Power, PSA 12 Section 1.1, Definitions, PSA ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 8 of 21
Each generating unit is allowed a maximum of 260 hours of maintenance per year. Any excess maintenance time should not be carried over in the succeeding year. No preventive maintenance shall be conducted in April, May and December.13
14.7. Delivery Point. The metering point defined in Schedule E; “any point within the first nearest three-phase distribution line to the power station”14. It shall also be the “Point of Common Coupling” (PCC) between CELCO’s Distribution System and CAMPCOR.15
CAMPCOR shall generate electricity and deliver the same to CELCO through a CELCO-owned 13.8 kV distribution/transmission line and CELCO shall take such electricity delivered as requested in accordance with Section 1.9 (Daily Operating Report) and Schedule D (Loading/Dispatch Procedures) of the PSA.16
14.8. Fuel Supply. Throughout the term of the PSA, CAMPCOR shall be responsible for the supply, delivery, storage and security of fuel necessary for the operation of the Power Station. 17
14.9. Prompt/ Early Payment Discount. CELCO shall be entitled to a 3% discount of the amount paid within ten (10) calendar days from receipt of CAMPCOR’s invoice18, computed based on the formula provided in Item (IV) 3 of Schedule F of the PSA.
14.10. CAMPCOR’s Levelized Blended Tariff Fee or True Cost Generation Rate shall be PhP14.0189 /kWh as:
Capacity Fee Rate 4.6378 PhP/kW Fixed O & M Fee Rate 1.3682 PhP/kW Variable O&M 1 (Spare parts) 0.2506 PhP/kWh Variable O&M 1 (Consumables) 0.3079 PhP/kWh Fuel Fee 7.4544 Php/kWh
14.11. Computation of Total Fee. 19
I. Tariff Components
The tariff computation is based on the projected energy off- take of the first year of operation (2019) of 16,602,435.30 kWh
The project tariff structure has the following components:
13 Section 1.5 of Schedule A - Power Stations Specifications, PSA 14 Section A of Schedule E – Annex 1 15 Section 1.1, Definitions, PSA 16 Section 2.1, Delivered Energy of Schedule C – Operating and Delivery Procedures, PSA 17 Section 7. Fuel Supply, PSA 18 Section 9.4.3, Prompt/Early Payment Discount, PSA 19 Schedule F, PSA ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 9 of 21
Capital Recovery Fee. A capital related component to recover investment cost over the life of the plant plus a reasonable rate of return.
Operation and Maintenance Fees. i. Fixed Component to recover fixed operating and maintenance costs ii. Variable Component to recover variable operating and maintenance costs and spare parts
Fuel Recovery Fee. A component to recover fuel cost.
Given the foregoing, the Total Tariff Formula, which is the Monthly Electricity Fee (MEF), is as follows:
Monthly Electricity Fee (MEF) = Capital Recovery Fee (CRF) + Operation & Maintenance Fee-Fixed (FOMF) + Operation & Maintenance Fee-Variable, Spare Parts (VOMF1) + Operation and Maintenance Fee-Variable, Consumables (VOMF2) + Fuel Recovery Fee
Capital Recovery Fee (CRF) Formula
Capital Recovery Fee (CRF) = CC x CRFR
where:
CC = Contracted Capacity = 5.6 MW for Camotes Main Grid and 0.9 MW for Pilar
CRFR = Capital Recovery Fee Adjustment factor = 1,540 for Camotes Main Grid and 1,230 for Pilar Grid, PhP/kW-month
Operation and Maintenance Fee Formula
Fixed Operation & Maintenance Fee (FOMF) = CC x FOMFR x LCA
where:
CC = Contracted Capacity = 5.6 MW for Camotes Main Grid and 0.9 for Pilar
FOMFR = Fixed O&M Fee Rate = 381.59 for Camotes Main Grid and 821.59 for Pilar Grid PhP/kW-month
LCA = Local Cost Adjustment Factor
LCA = CP2/CP1
CP1 = CPI based on PSA (Philippine Statistics Office) on date of signing of the Contract
ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 10 of 21
CP2 = CPI based on PSA (Philippine Statistics Office) on the applicable billing month
Formula for Operation and Maintenance Fee-Foreign Variable Cost, Spare Parts Variable1 Operation & Maintenance Fee 1(VOMF1) = (ED x VOMFR1 x [(20%LCA) + (80%FXA x USCPI)]
where:
ED = Energy Delivered to Client in kWh, as delivered and metered
VOMFR1 = Variable1 O&M Fee Rate = 0.2611 for Camotes Main Grid and 0.1763 for Pilar Grid, PhP/kWh
LCA = Local Cost Adjustment Factor
LCA = CPI2 / CPI1
CP1 = CPI based on PSA (Philippine Statistics Office) on date of signing of the Contract
CP2 = CPI based on PSA (Philippine Statistics Office) on the applicable billing month
FXA = Foreign Exchange Adjustment Factor
FXA = (PhP-USD FX2) / (PhP-USD FX1)
PHP-USD FX1 = 45
PHP-USD FX2 = Philippine to USD Foreign Exchange on the applicable billing month
USCPI = USCP2 ÷ USCP1
USCPI1 = US Consumer Price Index as of signing date of the contract
USCPI2 = US Consumer Price Index on the applicable billing month
Formula for Operation and Maintenance Fee – Variable Local Cost
Variable2 Operation & Maintenance Fee 2 (VOMF2) = (ED x VOMFR2 x [(80%LCA) + (20%FXA x USCPI)]
where:
ED = Energy Delivered to Client in kWh, as delivered and metered
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VOMFR2 = Variable2 O&M Fee Rate = 0.3036 for Camotes Main Grid and 0.3380 for Pilar Grid, PhP/kWh
LCA = Local Cost Adjustment Factor
LCA = CP2 / CP1
CP1 = CPI based on PSA (Philippine Statistics Office) on date of signing of the contract
CP2 = CPI based on PSA (Philippine Statistics Office) on the applicable billing month
FXA = Foreign Exchange Adjustment Factor
FXA = (PhP-USD FX2) / (PhP-USD FX1)
PHP-USD FX1 = 45
PHP-USD FX2 = Philippine to USD Foreign Exchange on the applicable billing month
USCPI = USCP2 ÷ USCP1
USCPI1 = US Consumer Price Index as of signing date of the contract
USCPI2 = US Consumer Price Index on the applicable billing month
Fuel Recovery Fee Formula
Fuel Fee (FF) = ED X SFOC X HFO/LFO/lube
where:
ED = Energy Delivered to Client in kWh, as delivered and metered
SFOC (Specific Fuel Oil Consumption) Rate = actual consumption subject to cap to be provided by each individual bidder
HFO = Heavy Fuel Oil
LFO = Light Fuel Oil
II. True Cost Generation Rate
The True Cost Generation Rate (TCGR) for each Billing Month shall be calculated using the following formula:
TCGRt = TFt / EDt
where: ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 12 of 21
t = Billing Month
TCGRt = True Cost Generation Rate for Billing Month t expressed in PhP/kWh
TFt = Total Fee for the Billing Month t expressed in Pesos
EDt = Energy delivered by SUPPLIER to OFFTAKER as indicated in the Billing Meters during each Billing Month t expressed in kWh
III. Subsidized / Approved Generation Rate
The Subsidized / Approved Generation Rate (SAGR) for each Billing Month shall be that approved by the ERC for the Camotes Main Grid expressed in PhP/kWh.
IV. Offtaker Fee
CELCO shall pay CAMPCOR an Offtaker Fee (OF) for each Billing Month t determined according to the following formula:
1. In the event that the TCGRt is GREATER than SAGRt for each Billing Month t:
OFt = SAGRt x EDt
where:
t = Billing Month OFt = Offtaker Fee for Billing Month t expressed in Pesos SAGRt = Subsidized / Approved Generation Rate for the Billing Month t as defined in Section 3 above expressed in PhP/kWh EDt = Energy delivered by Supplier to CELCO as indicated in the Billing Meters during each Billing Month t expressed in kWh:
2. In the event that the TCGRt is LESS than or EQUAL to SAGRt for each Billing Month t:
OFt = TFt
where:
t = Billing Month t OFt = Offtaker Fee for Billing Month t expressed in Pesos TFt = Total Fee for the Billing Month t expressed in Pesos
ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 13 of 21
III. COMMERCIAL ADVANTAGE OF THE GENERATION RATE AND IMPACT ON CELCO'S RETAIL RATES
15. CELCO, being the lone Distribution Utility in Camotes Island, Province of Cebu, is responsible in ensuring that there is sufficient power within its franchise area. Thus, in view of the expiration of its current supply agreement with the NPC come December 2020, it is incumbent upon CELCO to procure adequate supply from a New Power Provider;
16. The competitive selection of CAMPCOR as a New Power Provider ensures provision of the needed capacity that will contribute to the stabilization of power supply within CELCO’s franchise area. Electricity fees under the subject PSA will have no direct impact to the existing generation rate that CELCO bills to its member- consumers considering that they will still be charged the ERC- approved SAGR of PhP5.6404/kWh for Pilar Island and PhP6.2553/kWh for Poro Island, which may even be reduced when the Prompt/Early Payment Discount is applied, subject to appropriate conditions;
17. On the other hand, there will be a reduction in the government’s missionary subsidy due to savings in generation costs given CAMPCOR’s lower True Cost of Generation Rate under the subject PSA. The proposed TCGR is at PhP14.0189 /kWh, which is lower than NPC’s rate at PhP21.2073/kWh for Pilar Island and PhP17.5256/kWh for Poro Island. This translates to an estimated decrease in UC-ME subsidy of PhP7.1884/kWh for Pilar Island and PhP3.5067/kWh for Poro Island, as shown in the rate impact simulation below using projected CY2021 sales for entire Camotes Island per DOE’s Power Development Plan 2009- 2030: TCGR CELCO’s Subsidy Energy Total Required PhP/kWh SAGR, Rate, Generation, Subsidy, PhP (a) PhP/kWh PhP/kWh kWh (e=c*d) (b) (c=a-b) (d) Pilar Island If sourced from 21.2073 5.6404 15.5669 2,371,402.10 36,915,379.35 NPC If sourced from 14.0189 5.6404 8.3785 2,371,402.10 19,868,791.66 CAMPCOR Decrease in Subsidy Requirement by Sourcing From CAMPCOR 17,046,587.69 Philippine Sales mWh (Projected CY2021 sales for Camotes Island) 2,228,590.00 Rate Impact on UC-ME Rate, PhP/kWh 7.1884 Poro Island If sourced from 17.5256 6.2553 11.2703 19,275,790.0 217,243,936.07 NPC If sourced from 14.0189 6.2553 7.7636 19,275,790.0 149,649,523.24 CAMPCOR Decrease in Subsidy Requirement by Sourcing From CAMPCOR 67,594,412.83 Philippine Sales, mWh (Projected CY2021 sales for Camotes Island) 17,731,410.00 Rate Impact on UC-ME Rate, PhP/kWh 3.5067
ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 14 of 21
A rate impact analysis is herewith attached to form as an integral part of this Application as Annex “EE”;
18. Meanwhile, in compliance with Rule 20 of the ERC Rules of Practice and Procedure relative to the submission of supporting documents and information for the approval of the PSA and the rate structure embodied therein, Applicants CELCO and CAMPCOR hereby submit the following documents for the Honorable Commission’s consideration:
ANNEX DOCUMENT “FF” CAMPCOR Letter dated 10 October 2019 to the Board of Investments (BOI) relative to its application for entitlement to incentives “FF-1” BOI Letter dated 17 October 2019 to CAMPCOR “GG” Status of CAMPCOR’s application with the DENR for Environmental Compliance Certificate (ECC) “HH” DOE Letter dated 05 December 2019 relative to CAMPCOR’s Request for Certificate of Endorsement and Request for Exemption on Certificate of Registration, Plant Operating Contract or Service Contract for Feed-in Tariff, etc. “II” Executive Summary of PSA “JJ” Debt/Equity Ratio “KK” Project Cost Breakdown “LL” Computation of Return of Investment/WACC and Life Asset versus Term of Loan “MM” Financial Model “NN” Breakdown of the Base Prices, Capital Recovery Fee, Fixed and Variable (O & M), and Fuel Fee “OO” Breakdown of Operations and Maintenance (O&M) Cost “PP” Sample Computation of Power Rates “QQ” Basis/Rationale of Indexation “RR” Cash Flow Specifying Initial Costs “SS” Cash Flow Specifying Breakdown of O&M Expenses “TT” Technical and Economic Characteristics of the Generation Capacity “UU” Sworn Statement Detailing the Competitive Procurement of Fuel Supply with attached Notice of Award to Chemfour Incorporated for CAMPCOR’s diesel and bunker requirements “VV” CAMPCOR’s Request for Proposal for Fuel Supply “WW”- Certificate of Plant Specific Fuel Oil Consumption from Summit “WW1” Power Industrial Co., LTD and Hyundai Heavy Industries CO., LTD “XX” Simulation of the Number of Operating Units “YY” Status of EPC Contract Original Copy of China Bank Certification stating its interest and “ZZ” willingness to provide credit facility for CAMPCOR’s project to supply power in Camotes Islands Explanation of Non-availability of Bank Certification of Long- “AAA” Terms Loans Write-ups on Non-applicability of: Shareholders’ Agreement, Renewable Energy Service/Operating Contract from the DOE, “BBB” Certificate of Registration or Certificate of Commerciality, Basis/Rationale/Derivation of Other Charges, Generation Rate as ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 15 of 21
to the Equivalent PhP/kWh with Assumptions for Foreign Denominated Rate, Latest Audited Financial Statements and Potential Cost Certification on Non-Applicability of Alternative Demand Side “CCC” Management Program Non-Applicability of NPC Certification whether Transition Supply “DDD” Contract (TSC) capacity and energy is expected to be available during the contractual period. “DDD-1” Write-up on Non-Applicability of Transmission Agreement Original Copy of Secretary’s Certificate on CAMPCOR’s resolution authorizing the execution of the PSA with CELCO and “EEE” designating its President as authorized signatory thereto, the filing of an Application with the ERC and designating its President as authorized representative to such filing Original Copy of Special Power of Attorney from CAMPCOR’s “FFF” President in favor of Diccion Law Firm to be CAMPCOR’s counsel in the proceedings before the ERC Original Copy of CELCO Resolution No. 45 authorizing CELCO’s “GGG” President to sign the PSA with the consortium of PRIMEWATER and SIPCOR or its registered Project Company Original Copy of CELCO Resolution No. 57 authorizing the filing of the PSA application before the ERC, engaging Dechavez Lerios- Amboy and Evangelista Law Offices to represent CELCO in the “HHH” application, authorizing CELCO Board President/or General Manager to execute Verification and Certification Against Forum Shopping and to perform on behalf of CELCO any act and deed relating to the application
IV. COMPLIANCE WITH PRE-FILING REQUIREMENTS
19. Applicants manifest compliance with the pre-filing requirements mandated under the Implementing Rules and Regulations of the EPIRA and Rule 6 of the ERC Rules of Practice and Procedure, to be established by the following:
19.1. Certifications acknowledging receipt of the Application with annexes to be issued by the Legislative Bodies of the City of Mandaluyong, Municipalities of Poro and Pilar, and the Province of Cebu, to be appended as Annexes “III”, “JJJ”, “KKK” and “LLL”, respectively;
19.2. Notarized Affidavit of Publication stating that the Application was published in a newspaper of general circulation within CELCO’s Franchise Area, to be appended herein as Annex “MMM”; and
19.3. Complete newspaper issue where the Application was published, to be appended herein as Annex “NNN”, and the relevant page thereof where the Application appears, as Annex “OOO”.
V. MOTION FOR CONFIDENTIAL TREATMENT OF ANNEXES “JJ”, “KK”, “LL”, “MM”, “OO”, “QQ”, “RR”, “SS” and “ZZ”
21. Pursuant to Rule 4 of the ERC Rules of Practice and Procedure, Applicant CAMPCOR most respectfully moves for the confidential treatment of the following documents: ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 16 of 21
ANNEX DOCUMENT “JJ” Debt/Equity Ratio “KK” Project Cost Breakdown “LL” Computation of Return of Investment/WACC and Life Asset versus Term of Loan “MM” Financial Model “OO” Breakdown of Operations and Maintenance (O&M) Cost “QQ” Basis/Rationale of Indexation “RR” Cash Flow Specifying Initial Costs “SS” Cash Flow Specifying Breakdown of O&M Expenses “ZZ” Original Copy of China Bank Certification stating its interest and willingness to provide credit facility for CAMPCOR’s project to supply power in Camotes Islands
22. Annexes “JJ”, “KK”, “LL”, “MM”,”OO”, “QQ”, “RR”, and “SS” are exclusively owned and prepared by Applicant CAMPCOR. These contain confidential information critical to CAMPCOR’s business operations, including trade secrets and financial calculations, assumptions and projections. As such, CAMPCOR has sole and actual proprietary interest thereon that must be protected and not disclosed to the public;
23. Annex “ZZ”, on the other hand, contains the lender’s sensitive commercial and financial terms specific for CAMPCOR’s project, which the latter used in its financial simulations and calculations;
24. The numbers, formula used, methodology, calculations and other sensitive commercial and financial information contained in Annexes “JJ”, “KK”, “LL”, “MM, “OO”, “QQ”, “RR”,“SS” and “ZZ” constitute “trade secrets” for which CAMPCOR has actual and valuable proprietary interest. As explained by the Supreme Court in Air Philippines Corporation vs. Pennswell Inc.20, a trade secret may consist of any formula, pattern, device, or compilation of information that is used in one’s business and gives him an opportunity to obtain an advantage over competitors who do not possess the information. It is indubitable that trade secrets constitute proprietary rights and jurisprudence has consistently acknowledged the private character of trade secrets21. Further, as ruled in Garcia vs. Board of Investments, trade secrets and confidential, commercial and financial information are exempt from public scrutiny22;
25. Meanwhile, the public disclosure of Annexes “JJ”, “KK”, “LL”, “MM, “OO”, “QQ”, “RR”, “SS”, and “ZZ” would unduly prejudice Applicant CAMPCOR in the conduct of its business. Other players in the electric power industry, such as, but not limited to CAMPCOR’s competitors and prospective customers, may utilize to their own benefit information in said documents, thereby diminishing CAMPCOR’s commercial and bargaining advantage and proprietary interest thereon;
20 G.R. No. 172835, December 13, 2007.; 21 Ibid.; 22 Ibid.; ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 17 of 21
26. Finally, the information contained in Annexes “JJ”, “KK”, “LL”, “MM, “OO”, “QQ”, “RR”, “SS”, and “ZZ”, at the time of herein request, are neither generally available to the public nor available to or already in the possession of the Honorable Commission on a non-confidential basis;
27. In view thereof, the kind indulgence of the Honorable Commission is respectfully sought to accord confidential treatment to Annexes “JJ”, “KK”, “LL”, “MM, “OO”, “QQ”, “RR”, “SS” and “ZZ”. As such, they are to be seen and used exclusively by the Honorable Commission and for the sole purpose of evaluating the instant Application, thereby protecting information therein from unnecessary public disclosure;
28. In accordance with Section 1(b), Rule 4 of the ERC Rules of Practice and Procedure, Applicant CAMPCOR hereby submits one (1) copy each of Annexes “JJ”, “KK”, “LL”, “MM, “OO”, “QQ”, “RR”, “SS” and “ZZ” in a sealed envelope, with the envelope and each page of the documents stamped with the word “Confidential”. Excel files of Annexes “JJ”, “KK”, “LL”, “MM, “OO”, “QQ”, “RR” and “SS”, contained in one (1) password- protected USB flash drive, are also submitted in the same sealed envelope.
VI. PRAYER FOR PROVISIONAL AUTHORITY OR INTERIM RELIEF
29. All the foregoing allegations are re-pleaded by reference in support of herein Prayer for the issuance of Provisional Authority or Interim Relief to implement the subject PSA;
30. CELCO and CAMPCOR pray for the issuance of a Provisional Authority or Interim Relief prior to final decision pursuant to Rule 15 of the ERC Rules of Practice and Procedure, to wit:
“Section 3. Action on the Motion. – Motions for provisional authority or interim relief may be acted upon with or without hearing. The Commission shall act on the motion on the basis of the allegations of the application or petition and supporting documents and other evidences that applicant or petitioner has submitted and the comments or opposition filed by any interested person, if there be any.”
31. The Honorable Commission’s approval, even on a provisional or interim basis, is URGENTLY NEEDED for the occurrence of the Commercial Operation Date when CAMPCOR shall commence to deliver power to CELCO. Under Section 5 of the PSA, the COD shall be the first day of the 7th month from the issuance of provisional approval by the ERC23. Hence, the Honorable Commission’s immediate approval of the PSA is indispensible to enable CAMPCOR to begin supplying electricity to CELCO’s franchise area;
23 Subsection 5.1 ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 18 of 21
32. It must be emphasized that CELCO’s member-consumers have long been plagued with persistent power interruptions and recurring brownouts whenever NPC’s diesel plants would breakdown due to aging generating units and insufficient fuel supply. It is seen to worsen with the expiration of the NPC’s PSA in December 2020, being CELCO’s lone power provider. Thus, it is imperative that CELCO is allowed to source power from CAMPCOR when the NPC phases out from its franchise area. Without supply from the subject PSA, it is impossible for CELCO to meet its forecasted demand of 4.41 MW in 2021;
33. Accordingly, for CAMPCOR to start delivering power as soon as the NPC terminates its supply in the area by December 2020, the PSA must have been provisionally approved no later than April of this year;
34. Otherwise stated, even if CAMPCOR’s generating sets are ready and available to supply CELCO’s growing demand for electricity, without the approval of the Honorable Commission, CAMPCOR cannot begin delivering power that would have ensured continuous and uninterrupted power supply to CELCO’s franchise area;
35. In light of the foregoing and in recognition of the fact that a substantial amount of time is customarily needed to evaluate the documents submitted to support the approval of herein Application, Applicants CELCO and CAMPCOR seek the kind consideration of the Honorable Commission to approve the instant Application, immediately, albeit, provisionally, at the soonest opportune time.
PRAYER
WHEREFORE, premises considered, the following are most respectfully prayed for of the Honorable Commission:
(a) DULY GRANT Applicant CAMPCOR’s Motion for Confidential Treatment of ANNEXES “JJ”, “KK”, “LL”, “MM”, “OO”, “QQ”, “RR”, “SS” and “ZZ”;
(b) Pending hearing on the merits, DULY ISSUE a Provisional Authority or Interim Relief authorizing the immediate implementation of the subject Power Supply Agreement, including the rate structure therein, as applied;
(c) After due notice and hearing, the instant Application, the Power Supply Agreement and the rate structure contained therein be DULY APPROVED. In the event that a Final Authority is issued after CAMPCOR starts actual delivery of power to CELCO under the terms of the subject PSA, the Final Authority be retroactively applied to the date when such actual delivery commenced.
Other reliefs as may be just and equitable under the premises are, likewise, most respectfully prayed for. ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 19 of 21
In the Order dated 03 July 2020, the Commission has set the instant Joint Application for the determination of compliance with the jurisdictional requirements, expository presentation, pre-trial conference, and presentation of evidence on 03 September 2020 at CELCO’s Principal Office.
On 03 August 2020, CELCO and CAMPCOR filed through electronic mail24 a Joint Motion to Conduct Virtual Hearing dated 24 July 2020 (Joint Motion), praying that the scheduled initial hearing be conducted virtually through videoconference.
In their Joint Motion, CELCO and CAMPCOR alleged, among others, that considering Cebu City remains to be the epicenter of the coronavirus disease 2019 (COVID-19) outbreak in Central Visayas, the conduct of physical hearing in Poro, Cebu would highly compromise the health and safety of the attendees.
ACCORDINGLY, the Commission hereby sets the instant Joint Application for the determination of compliance with the jurisdictional requirements, expository presentation, pre-trial conference, and presentation of evidence on 03 September 2020 (Thursday) at nine o’clock in the morning (9:00 A.M.), through a virtual hearing using the Zoom Application as the online platform for the conduct thereof.
RELATIVE THERETO, the Commission hereby directs CELCO and CAMPCOR to host at CELCO’s Main Office in Tamban, Western Poblacion, Poro, Camotes, Province of Cebu, as the designated venue of the virtual hearing, and ensure that the same is open to the public and the community quarantine guidelines are observed at all times. Moreover, CELCO and CAMPCOR shall guarantee that, during the conduct of the expository presentation, the participation of the public shall not be impaired.
Any interested stakeholder may submit its comments and/or clarifications at least one (1) calendar day prior to the scheduled virtual hearing, via e-mail at [email protected] and [email protected], copy furnish the Legal Service through [email protected]. The Commission shall give priority to the stakeholders who have duly submitted their respective comments and/or clarifications, to discuss the same and propound questions during the course of the expository presentation.
24 CELCO and CAMPCOR’s Joint Motion to Conduct Virtual Hearing was sent via electronic mail (email) to the official email address of the Commission’s Central Records Division (CRD) at [email protected] ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 20 of 21
Moreover, all persons who have an interest in the subject matter of the instant case may become a party by filing with the Commission via electronic mail (e-mail) at [email protected] and [email protected], copy furnish the Legal Service through [email protected], a verified Petition to Intervene at least five (5) calendar days prior to the date of the initial virtual hearing and subject to the requirements under Rule 9 of the 2006 ERC Rules of Practice and Procedure, indicating therein the docket number and title of the case and stating the following:
1) The petitioner’s name, mailing address, and e-mail address;
2) The nature of petitioner’s interest in the subject matter of the proceeding and the way and manner in which such interest is affected by the issues involved in the proceeding; and
3) A statement of the relief desired.
Likewise, all other persons who may want their views known to the Commission with respect to the subject matter of the case may likewise file through e-mail at [email protected] and [email protected], their Opposition or Comment thereon at least five (5) calendar days prior to the initial virtual hearing and subject to the requirements under Rule 9 of the 2006 ERC Rules of Practice and Procedure. No particular form of Opposition or Comment is required, but the document, letter, or writing should contain the following:
1) The name, mailing address, and e-mail address of such person;
2) A concise statement of the Opposition or Comment; and
3) The grounds relied upon.
All such persons who wish to have a copy of the Joint Application may request from Applicants that they be furnished with the same prior to the date of the initial hearing. Applicants are hereby directed to furnish all those making such request with copies of the Joint Application and its attachments, through any of the available modes of service, upon their agreement, subject to the reimbursement of reasonable photocopying costs. Any such person may likewise examine the Joint Application and other pertinent records filed with the Commission during the standard office hours. In the alternative, those ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 21 of 21 persons who wish to have an electronic copy of the Joint Application may request the Commission for the e-mail addresses of the Applicant by sending an e-mail to [email protected] and [email protected], copy furnish the Legal Service through [email protected]. Nonetheless, any person may also access the Joint Application as posted by the Commission in its official website at www.erc.gov.ph.
Finally, all interested persons may be allowed to join the scheduled initial virtual hearing by providing the Commission, thru [email protected], with their respective e- mail addresses and indicating therein the case number of the instant Application. The access link/s to the aforementioned hearing platform shall be sent by ERC within five (5) working days prior to the scheduled hearing.
WITNESS, the Honorable Commissioners ALEXIS M. LUMBATAN, CATHERINE P. MACEDA, FLORESINDA G. BALDO-DIGAL and MARKO ROMEO L. FUENTES, Energy Regulatory Commission, this 10th day of August 2020 in Pasig City.
AGNES VST DEVANADERA
Chairperson and CEO
LS: MVM/LSP/MCCG