In the Matter of the Application for The
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Republic of the Philippines ENERGY REGULATORY COMMISION San Miguel Avenue, Pasig City IN THE MATTER OF THE APPLICATION FOR THE APPROVAL OF THE PROPOSED CAPITAL EXPENDITURE PROJECTS FOR THE YEARS 2019 – 2021 WITH APPLICATION FOR AUTHORITY TO SECURE LOAN FROM THE NATIONAL ELECTRIFICATION ADMINISTRATION (NEA) AND/OR PRIVATE FINANCIAL INSTITUTION ERC CASE NO. 2021 - 050___ RC July 08, 2021 ZAMBOANGA CITY ELECTRIC COOPERATIVE, INC. (ZAMCELCO), Applicant. x- - - - - - - - - - - - - - - - - - - - - - - - - - - / APPLICATION APPLICANT, Zamboanga City Electric Cooperative, Inc. (ZAMCELCO for brevity), by counsel and unto this Honorable Commission, most respectfully states: THE APPLICANT 1. Applicant ZAMCELCO is an Electric Cooperative created and existing pursuant to the provisions of Presidential Decree No. 269 as amended, with principal office located at MCLL Highway, Putik, Zamboanga City, Philippines, represented herein by its General Manager, Engr. Gannymede B. Tiu, duly authorized by virtue of Board Resolution No. 161B, series of 2020 dated 20 November 2020, of the Board of Directors, copy of which is attached hereto as Annex “A” and made an integral part hereof. 1 The filing of the instant Application is likewise authorized under the afore-mentioned Resolution; 2. Applicant has been granted by the National Electrification Administration (NEA) an authority to operate and distribute electric light and power in the City of Zamboanga. Currently however, ZAMCELCO’s management and operation is undertaken by an Investor-Manager, the JOINT VENTURE OF CROWN INVESTMENT HOLDINGS, INC. AND DESCO, INC., by virtue of an Investment Management Contract (IMC) entered into by and between ZAMCELCO and the said Joint venture corporation on August 29, 2018. THE APPLICATION AND ITS PURPOSE 3. This Application is filed in compliance with ERC Resolution No. 26, Series of 2009 (A Resolution Amending the Rules for Approval of Regulated Entities’ Capital Expenditure Projects)” adopted pursuant to the mandate of Section 43 of Republic Act No. 9136 otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA) and its implementing Rules and Regulations, which categorically provides that all capital expenditure projects (CAPEX) shall be submitted to and for the approval of the Commission prior to its implementation, in relation to ERC Resolution No. 20, Series of 2011 which sets the timelines for the filing of the instant application; 4. The aforecited amended rules was issued by the Honorable Commission to ensure that the projects are timely, appropriate, necessary and cost efficient; to ensure that the proposed capital projects are consistent with the Distribution Development Plan (DDP), the Philippine Grid Code (PGC), the Philippines Distribution Code (PDC), and other relevant government issuances; and to ensure that the procurement of equipment, materials and services are transparent, competitive and compliant with the applicable laws and regulations. 5. In accordance with the Amended CAPEX Rules, consistent with the Distribution Development Plan and the Philippine Distribution Code, Applicant shall acquire, construct and implement the following capital expenditure projects for the years 2019-2021, with a total approximate cost of ONE BILLION THIRTY-SIX MILLION TWO-HUNDRED AND NINETY-FOUR THOUSAND EIGHT-HUNDRED NINETY-SIX PESOS AND 35/100 (PhP 1,036,294,896.35). 2 THE PROPOSED CAPITAL EXPENDITURE PROJECTS 5.a. Description of the Projects: 5.a.1 Network CAPEX Projects PROJECT PROJECT PROJECT TITLE PROJECT JUSTIFICATION COST No. (P '000 ) Construction of a New 69-kV Sub- The existing distribution lines in the area transmission Line cannot accommodate the entry of a ZC2019- from M7 significant big load customer and the 14,824.99 NAP008 Camanchille forecasted increase of demand, thus the Substation to KCC need to increase the capacity and Mall de reliability of the distribution lines is Zamboanga’s 10- necessary and imminent. MVA Substation In order to address the existing capacity problem coupled with the growing Up-rating of the 10- demand of its industrial customers ZC2019- MVA Power located in Barangay Ayala, ZAMCELCO 56,238.57 NAP009 Transformer at finds it imperative to uprate the existing Ayala Substation to 10-MVA Ayala Substation to 20-MVA to 20-MVA cater the needs of its consumers and to further encourage economic progress in the area. Previously, the San Jose Gusu substation installed capacity consists of one (1) 20MVA and one (1) 10MVA Up-rating of the 20- power transformer. On January 20, MVA San Jose 2020, the 10MVA power transformer was ZC2019- Gusu Substation to transferred to address the overloading 40-MVA by Adding 75,279.73 NAP010 capacity of the Recodo Substation. One (1) Unit of 20- However, with the increasing load of the MVA Power San Jose Gusu substation, ZAMCELCO Transformer finds it necessary to uprate the existing 20MVA by adding an additional 20MVA power transformer. Uprating of the 10- The existing capacity of the 10MVA MVA Cabatangan Cabatangan Substation has already ZC2019- Substation to 20- exceeded the maximum rated capacity, 43,414.09 NAP011 MVA by adding One thus the need to urgently uprate the (1) Unit of 10-MVA same to 20MVA in order to address the Power Transformer overloading of the substation and 3 with Construction of prevent imminent failure of the power Two (2) Feeders transformers. The significant development in the area Construction of New necessitated ZAMCELCO to construct a 20-MVA Substation new substation in order to address the with Four (4) ZC2019- capacity problem currently experienced Feeder Take-off by the Putik and Sangali substations. 83,665.10 NAP012 and Feeder The new 20MVA substation with four (4) Distribution lines at feeders will allow the transfer of existing Barangay loads and further cater the additional Pasobolong forecasted demand in the area. The 10MVA Recodo substation is currently at 70% loading capacity and is Rehabilitation and expected to increase annually exceeding Uprating of the 10- the required limit set by the distribution ZC2019- MVA Recodo utility planning manual. In order to Substation to 25- 61,117.29 NAP013 address the capacity problem of the MVA by adding One Recodo Substation, the most (1) 15-MVA Power economical alternative solution is the Transformer rehabilitation and uprating of the current 10MVA to 25MVA. The Guardia Nacional Feeder was previously served by the 10MVA Power Transformer of the San Jose Gusu Substation. With the transfer of the Construction of One ZC2019- 10MVA Power Transformer to Recodo Feeder at substation to address the capacity 967.18 NAP014 Camanchille problem in the area, ZAMCELCO deems Substation it rational and beneficial to construct an additional feeder at the Camanchille Substation in order to transfer and serve the Guardia Nacional Feeder. Construction of To provide adequate capacity for the on- Dedicated Feeder going expansions of large load Distribution Line for customers and to ensure quality and ZC2019- Camanchille reliable supply of electricity, ZAMCELCO 2,398.10 NAP015 Substation under constructed a dedicated feeder line to the 25-MVA Power accommodate the large load customer Transformer to and in order not affect the quality and cater SM City capacity of the other feeders connected Mindpro to the Camanchille substation. The antiquated and deteriorating distribution lines of the Recodo, Sinunuc, ZC2019- Rehabilitation of Mercedes, Labuan, Curuan, Talisayan, 74,499.85 NAP004 Distribution Lines and Baliwasan Feeders necessitates ZAMCELCO to rehabilitate these existing lines in order not to compromise 4 the safety of its employees and the public. PROJECT COST (P '000 ) 412,404.90 5.a.2 Other Network CAPEX Projects PROJECT PROJECT PROJECT TITLE PROJECT JUSTIFICATION COST No. (P '000 ) The old and outdated feeder metering facility can be more vulnerable to system disturbance and provide a lower ZC2019- Replacement of Old level of accuracy. With the new and 4,227.27 NAP019 Feeder Metering advance metering facility, the Facilities cooperative will be able to collect more reliable and accurate data thereby increasing efficiency and reduce system losses. One of the reasons for high system loss ZC2019- Replacement of are the defective and faulty kilowatt-hour 56,232.99 NAP016 Defective Kilowatt- meters. The replacement of these hour Meters meters will greatly reduce system loss and provide more accurate readings. Replacement of defective, old and rotten ZC2019- Replacement of poles is urgent and necessary in order 8,484.00 NAP001 Defective/Rotten not to compromise the safety of the Poles employees of the cooperative and most importantly, the public. In order to attain efficiency and reduced system loss below the system loss cap Replacement of in accordance with the Rules for Setting ZC2019- Overloaded the Distribution System Loss Cap, it is 16,713.50 NAP007 Distribution necessary to replace the existing Transformers overloaded distribution transformers with a higher rating distribution transformers. One of the contributing factors for high system loss is the pilferage of electricity Relocation and despite the cooperative’s intensified ZC2019- Clustering of kWh anti-pilferage campaign in the area. In Meters of Recodo 21,822.64 NAP017 order to significantly minimize the cases and Sinunuc of unaccounted use of electricity, Feeders elevating and clustering of kWh meters is considered as the best way to address 5 the unauthorized access of metering facilities. Procurement of Procurement of additional Distribution ZC2019- Distribution