Republic of the Philippines ENERGY REGULATORY COMMISSION Pasig City in the MATTER of the APPLICATION for APPROVAL of the POWER
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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. ERC CASE NO. 2020-012 RC NOTICE OF VIRTUAL HEARING/10 AUGUST 2020 PAGE 3 of 21 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.