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econd Electric Cooperative, Inc. (BUSECO) towards a World Class Organization

Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City

,.. ,-- 0 'L- R A' L. r . .:-...- i-1..... /• ' c:-.- --.- . -7 IN THE MATTER OF THE lc /.. .. ,--/ - qr S.> ,-, C —. ' APPLICATION FOR THE •-4/ 1.*.a"."... ,. - t . ...• ‘A.A . APPROVAL OF CONTINGENCY CAPITAL EXPENDITURE PROJECT

ERC Case No. 2018-028 RC

BUKIDNON SECOND ELECTRIC COOPERATIVE, INC., (BUSECO), Applicant, MAY 2 4 2019

ORDER

On 26 April 2018, Bukidnon Second Electric Cooperative, Inc. (BUSECO) filed an Application dated 23 April 2018, seeking the approval of its contingency capital expenditure project.

In its Application, BUSECO alleged, among others, the following:

1. That the Applicant is an electric cooperative existing pursuant to law (P.D. 269) with postal address at Tankulan, Manolo Fortich, Bukidnon, which may be served by the processes of this Honorable Commission through its OIC- General Manager, Melchie R. Nacalaban, LLB, whose authority is attached in the Application and made an integral part of this Application. That Applicant's franchise area includes nine (9) municipalities in the province of Bukidnon, namely: Baungon, Malitbog, Libona, Manolo Fortich, Sumilao, Impasug-ong, Lantapan, Cabanglasan and Talakag; Malaybalay City and Barangay Lilingayon in the City of Valencia;

2. That the Applicant, pursuant to ERC Resolution No. 26, series of 2009, seeks the consideration and approval of the Honorable Commission of BUSECO's proposed contingency capital expenditure project, the construction of the Northern Mindanao Wellness and Reintegration Center 13.8 kV 3 Phase Line;

0 0 3 4 4 6 ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 2 of 10 CAUSE OF ACTION

3. BUSECO received a letter addressed to the OIC-General Manager, dated January 27, 2018, formally requesting for an immediate supply of a 3 phase power for the Northern Mindanao Wellness and Reintegration Center. It is a joint endeavor of the Philippine government and funded by its partners from UAA Kinming Group (Friends of the Philippines Foundation), a private developer and a philanthropic institution, to be turned over to the Department of Health (DOH) upon completion of the construction.

PROJECT TITLE

4. Northern Mindanao Wellness and Reintegration Center Contingency CAPEX;

PROJECT DESCRIPTION

5. Construction of 2.93 km 13.8 kV 3 Phase line from Sumpong, Malaybalay City to Northern Mindanao Wellness and Reintegration Center, Purok 17, Brgy. Casisang, Malaybalay City

JUSTIFICATION OR BENEFITS TO BE DELIVERED

6. The implementation of the project shall give way for the provision of a reliable and viable electric service for the day- to-day requirements of the said government facility, which will be beneficial for the people of the Province of Bukidnon and its neighboring provinces.

ESTIMATED PROJECT COST

7. The estimated project cost of the project is Five Million Five Hundred Forty-Six Thousand Two Hundred Eighty-Five Pesos and Seventy-Four Centavos (Php 5,546,285.74);

PROJECT SCHEDULE

8. The project implementation started last February 27, 2018 and was successfully completed last March 22, 2018;

PROJECT FINANCING

9. The funding for the project was sourced though the Reinvestment Fund for Sustainable CAPEX (RFSC) in the amount of Five Million Five Hundred Forty-Six Thousand Two Hundred Eighty-Five Pesos and Seventy-Four Centavos (Php 5,546,285.74);

003!. ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 3 of 10

RATE IMPACT

io. The implementation of the proposed Contingency Capital Expenditure Project shall bring forth an indicative rate impact as follows;

2018 2019 2020 2021 2022 TOTAL

Forecasted energy 168,055,903.61 174,519,592.21 180,983,280.81 187,446,969.41 193,910,658.01 1,066,508,619.07 sales, kWh

Cash balance beginning, PhP, 30,681,326.91 18,813,658.62 (9,121,064.92) (66,051,214.71) (109,228,522.76) (18,634,014.20) excess/(shortfall)

CASH INFLOWS current year 150,146,185.96 155,921,039.27 161,695,892.58 167,470,745.88 173,245,599.19 956,656,149.28 collection

50% of income on 399,218.50 399,218.50 399,218.50 399,218.50 399,218.50 2,395,311.00 leased properties loan proceeds 1,031,062,378.06 from financial 530,936,593.51 240,921,676.96 259,204,107.59 - - institutions, PhP

Total Cash 1,934.73 421,299,218.67 167,869,964.38 173,644,817.69 1,990,113,838.34 Inflows, PhP 681,481,997.97 397,24

Available cash for 712,163,324.88 416,055,593.35 412,178,153.74 101,818,749.67 64,416,294.92 1,971,479,824.14 disbursement CASH OUTFLOWS

CAPEX requirement 525,390,307.77 240,921,676.96 259,204,107.59 - - 1,189,580,919.53 (Regular CAPEX) CAPEX requirement - - - - 5,546,285.74 (Contingency 5,546,285.74 CAPEX) new amortization (new CAPEX), 85,094,763.16 118,926,508.75 155,325,588.88 155,325,588.88 155,325,588.88 669,998,038.54 PhP amortization of approved CAPEX, 69,060,807.92 65,328,472.56 63,699,671.99 55,721,683.56 40,959,176.04 364,871,365.52 PhP amortization of ______old debts ERC Permit Fee, 8,257,501.67 - - - - 8,257,501.67 PhP Total Cash 693,349,666.26 425,176,658.27 478,229,368.46 211,047,272.43 196,284,764.92 2,238,254,111.00 Outflows, PhP

Cash balance ending, PhP, 18,813,658.62 (9,121,064.92) (66,051,214.71) (109,228,522.76) (131,868,469.99) (266,774,286.86) excess/(shortfall)

0 0 3 4 4 6 ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 4 of 10

Excess/(shortfall) (0.6800) (0.2501) on RFSC, 0.1119 (0.0523) (0.3650) (0.5827) PhP/kWh

COMPLIANCE WITH THE PRE-FILING REQUIREMENTS

it In compliance with Section 2, Rule 6 of the ERC Rules of Practice and Procedure and other documentary requirements of the instant application, the Applicant made integral parts herewith the following documents and its proper markings;

Annex Document

"A" Verification and Non Forum Shopping Certificates

BUSECO Board Resolution approving the implementation of the construction of the Northern "B" Mindanao Wellness and Reintegration Center 3-phase line project as Contingency Capital Expenditure of Bukidnon Second Electric Cooperative, Inc. (BUSECO)

BUSECO Board Resolution authorizing the board president, Fr. Danilo T. Paciente and/or the OIC- General Manager, Melchie R. Nacalaban to stand as representative to file application for approval of the implementation of the construction of the Northern Mindanao Wellness and Reintegration Center 3-phase "C" line project as Contingency Capital Expenditure of Bukidnon Second Electric Cooperative, Inc. (BUSECO) with the Energy Regulatory Commission (ERC) and to sign Verification And Non-Forum Shopping portion of the application and to sign and execute pertinent documents thereof BUSECO Board Resolution authorizing BUSECO Legal Counsel Atty. Eleuterio F. Diao IV, to represent BUSECO in the filing of application, expository presentation, jurisdictional and evidentiary hearing, public consultations and other proceedings relative "D" with the BUSECO application for the implementation of the construction of the Northern Mindanao Wellness and Reintegration Center 3-Phase line project as Contingency Capital Expenditure of Bukidnon Second Electric Cooperative, Inc. (BUSECO) with the Energy Regulatory Commission (ERC) Proof of furnishing the legislative bodies of Bukidnon where BUSECO operates with the copies of the "E" Application together with all its annexes and accompanying documents Proof of posting a copy of the Application within the "F" premises of BUSECO

003446 ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 5 of 10

Affidavit of Publication together with a copy of the "G" Mindanao Gold Star Daily April 25, 2018 issue, where the Application was published for general information

"H" Project Summary

PRAYER

WHEREFORE, foregoing premises considered, it is most respectfully prayed before the Honorable Commission, after due notice and hearing, to approve the aforementioned contingency capital expenditure project of the Applicant.

On 06 July 2018, the Commission issued an Order and a Notice of Public Hearing, both dated 04 July 2018, setting the Application for determination of compliance with the jurisdictional requirements, expository presentation, pre-trial conference, and presentation of evidence on 02 August 2018.

On 3o July 2018, BUSECO filed a Motion for Resetting, praying that the hearing scheduled on 02 August 2018 be cancelled and moved to next available calendar of the Commission for BUSECO to comply with the publication requirements.

In view thereof, the instant Application is hereby set anew for determination of compliance with the jurisdictional requirements, expository presentation, Pre-Trial conference, and presentation of evidence on 11 July 2019 (Thursday) at one o'clock in the afternoon (i:oo P.M.) at BUSECO's Principal Office, Tankulan, Manolo Fortich, Bukidnon.

BUSECO is hereby directed to:

1) Cause the publication of the attached Notice of Public Hearing in two (2) newspapers of nationwide circulation in the Philippines at its own expense, twice (2x) within two (2) successive weeks, the dates of publication not being less than seven (7) days apart, and the date of the last publication to be made not later than ten (10) days before the date of the scheduled initial hearing;

0 0 3 4 4 6 ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 6 of 10 2) Furnish with copies of this Order and the attached Notice of Public Hearing the Offices of the Provincial Governor, the City and Municipal Mayors, and the Local Government Unit (LGU) legislative bodies within BUSECO's franchise area for the appropriate posting thereof on their respective bulletin boards;

3) Inform the consumers within BUSECO's franchise area of the filing of the Application, its reasons therefor, and of the scheduled hearing thereon, by any other means available and appropriate;

4) Furnish with copies of this Order and the attached Notice of Public Hearing the Office of the Solicitor General (OSG), the Commission on Audit (COA), and the Committees on Energy of both Houses of Congress. They are hereby requested, if they so desire, to send their duly authorized representatives at the scheduled hearing; and

5) Furnish with copies of the Application and its attachments all those making requests therefor, subject to reimbursement of reasonable photocopying costs.

On the date of the initial hearing, BUSECO must submit to the Commission its written compliance with the aforementioned jurisdictional requirements attaching therewith, methodically arranged and duly marked the following:

1) The evidence of publication of the attached Notice of Public Hearing consisting of affidavits of the Editors or Business Managers of the newspapers where the said Notice of Public Hearing were published, and the complete issues of the said newspapers;

2) The evidence of actual posting of this Order and the attached Notice of Public Hearing consisting of certifications issued to that effect, signed by the aforementioned Governor, Mayors, LGU legislative body, or their duly authorized representatives, bearing the seals of their offices;

00 ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 7 of io 3) The evidence of other means employed by BUSECO to inform the consumers within its franchise area of the filing of the Application, its reasons therefor, and of the scheduled hearing thereon;

4) The evidence of receipt of copies of this Order and the attached Notice of Public Hearing by the OSG, COA, and the Committees on Energy of both Houses of Congress;

5) The evidence of receipt of copies of the Application and its attachments by all those making requests therefor, if any; and

6) Such other proof of compliance with the requirements of the Commission.

BUSECO and all interested parties are also required to submit, at least five (5) days before the date of the initial hearing and Pre- Trial Conference, their respective Pre-Trial Briefs containing, among others:

1) A summary of admitted facts and proposed stipulation of facts;

2) The issues to be tried or resolved;

3) The documents or exhibits to be presented, stating the purposes and proposed markings therefor; and

4) The number and names of the witnesses, with their written testimonies in a Judicial Affidavit form attached to the Pre- trial Brief.

Failure of BUSECO to comply with the above requirements within the prescribed period shall be a ground for cancellation of the scheduled hearing, and the resetting of which shall be six (6) months from the said date of cancellation.

0034 4 6 ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 8 of 10 BUSECO must also be prepared to make an expository presentation of the instant Application, aided by whatever communication medium that it may deem appropriate for the purpose, in order to put in plain words and explain, for the benefit of the consumers and other concerned parties, the nature of the Application with relevant information and pertinent details substantiating the reasons and justifications being cited in support thereof.

SO ORDERED.

Pasig City, 21 May 2019.

FOR AND BY AUTHORITY OF THE COMMISSION:

JOSEFINA PATRICIA GPALE-ASIRIT Corn 1zs nerd,

U IS:( ord.20i8-o28RC BUSECO CONTINGENCY CAPEX

0 0 3 4 4 6 ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 9 of 10

Copy Furnished:

1. Atty. Eleuterio F. Diao IV Counsel for the Applicant 1906 Bontong, Camaman-an Cagayan de Oro City

2. Bukidnon Second Electric Cooperative, Inc. (BUSECO) Manolo Fortich, Bukidnon

3. Office of the Solicitor General (OSG) 134 Amorsolo Street, Legaspi Village, City of Makati 1229

4. Commission on Audit (COA) Commonwealth Avenue, Quezon City 1121

5. Senate Committee on Energy GSIS Building, Roxas Boulevard, Pasay City 1300

6. House of Representatives Committee on Energy Batasan Hills, Quezon City 1126

7. Office of the City Mayor Malaybalay, Bukidnon

8. Office of the Sangguniang Panglungsod Malaybalay, Bukidnon

9. Office of the Municipal Mayor Manolo Fortich, Bukidnon

io. Office of the Sangguniang Bayan Manolo Fortich, Bukidnon

11. Office of the Municipal Mayor Libona, Bukidnon

12. Office of the Sangguniang Bayan Libona, Bukidnon

13. Office of the Municipal Mayor Sumilao, Bukidnon

14. Office of the Sangguniang Bayan Sumilao, Bukidnon

15. Office of the Municipal Mayor Cabanglasan, Bukidnon

16. Office of the Sangguniang Bayan Cabanglasan, Bukidnon

17. Office of the Municipal Mayor Malitbog, Bukidnon

18. Office of the Sangguniang Bayan Malitbog, Bukidnon

19. Office of the Municipal Mayor Baungon, Bukidnon

20. Office of the Sangguniang Bayan Baungon, Bukidnon

0 t ERC CASE NO. 2018-028 RC ORDER/21 May 2019 Page 10 of io

21. Office of the Municipal Mayor Impasug-Ong, Bukidnon

22. Office of the Sangguniang Bayan Impasug-Ong, Bukidnon

23. Office of the Municipal Mayor Talakag, Bukidnon

24. Office of the Sangguniang Bayan Talakag, Bukidnon

25. Office of the Municipal Mayor Lantapan, Bukidnon

26. Office of the Sangguniang Bayan Lantapan, Bukidnon

27. Office of the City Mayor Valencia City

28. Office of the Sangguniang Panglungsod Valencia City

29. Office of the Provincial Governor Province of Bukidnon

3o. Office of the Sangguniang Panlalawigan Province of Bukidnon

31. Philippine Chamber of Commerce and Industry (PCCI) 3rd Floor, Chamber and Industry Plaza (CIP), 1030 Campus Avenue corner Park Avenue, McKinley Town Center, Fort Bonifacio, Taguig City

32. ERC- Regulatory Operations Service 17th Floor, Pacific Center Bldg. San Miguel Ave., Pasig City

0 0 3 4 4 6 Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City

IN THE MATTER OF THE APPLICATION FOR THE APPROVAL OF CONTINGENCY CAPITAL EXPENDITURE PROJECT

ERC Case No. 2018-028 RC

BUKIDNON SECOND ELECTRIC COOPERATIVE, INC., (BUSECO), Applicant, MAY 2 4 2019 x x

NOTICE OF PUBLIC HEARING

TO ALL INTERESTED PARTIES:

Notice is hereby given that on 26 April 2018, Bukidnon Second Electric Cooperative, Inc. (BUSECO) filed an Application dated 23 April 2018, seeking the approval of its contingency capital expenditure project.

In its Application, BUSECO alleged, among others, the following:

0 0 3 4 4 6 ERC CASE NO. 2018-028 RC NOTICE OF PUBLIC HEARING/21 May 2019 Page 2 of 6

CAUSE OF ACTION

PROJECT TITLE

4. Northern Mindanao Wellness and Reintegration Center Contingency CAPEX;

PROJECT DESCRIPTION

5. Construction of 2.93 km 13.8 kV 3 Phase line from Sumpong, Malaybalay City to Northern Mindanao Wellness and Reintegration Center, Purok 17, Brgy. Casisang, Malaybalay City

JUSTIFICATION OR BENEFITS TO BE DELIVERED

ESTIMATED PROJECT COST

7. The estimated project cost of the project is Five Million Five Hundred Forty-Six Thousand Two Hundred Eighty-Five Pesos and Seventy-Four Centavos (Php 5,546,285.74);

PROJECT SCHEDULE

8. The project implementation started last February 27, 2018 and was successfully completed last March 22, 2018;

003446 ERC CASE NO. 2018-028 RC NOTICE OF PUBLIC HEARING/21 May 2019 Page 3 of 6

PROJECT FINANCING

RATE IMPACT

10. The implementation of the proposed Contingency Capital Expenditure Project shall bring forth an indicative rate impact as follows;

2018 2019 2020 2021 2022 TOTAL

Forecasted energy 168,055,903.61 174,519,592.21 180,983,280.81 187,446,969.41 193,910,658.01 1,066,508,619.07 sales, kWh

Cash balance beginning, PhP, 30,681,326.91 18,813,658.62 (9,121,064.92) (66,051,214.71) (109,228,522.76) (18,634,014.20) excess/(shortfall)

CASH INFLOWS

current year 150,146,185.96 155,921,039.27 161,695,892.58 167,470,745.88 173,245,599.19 956,656,149.28 collection

5o% of income on 399,218.50 399,218.50 399,218.50 399,218.50 399,218.50 2,395,311.00 leased properties

loan proceeds from financial institutions, 530,936,593.51 240,921,676.96 259,204,107.59 - - 1,031,062,378.06 PhP

Total Cash Inflows, 681,481,997.97 421,299,218.67 167,869,964.38 173,644,817.69 1,990,113,838.34 PhP 397,241,934.73

Available cash for 712,163,324.88 412,178,1 101,818,749.67 64,416,294.92 1,971,479,824.14 disbursement 416,055,593.35 53-74

CASH OUTFLOWS

CAPEX requirement 525,390,307.77 240,921,676.96 259,204,107.59 - - 1,189,580,919.53 (Regular CAPEX)

CAPEX requirement _ - _ _ 5,546,285.74 (Contingency CAPEX) 5,546,285.74

new amortization 85,094,763.16 118,926,508.75 155,325,588.88 155,325,588.88 155,325,588.88 669,998,038.54 (new CAPEX), PhP

amortization of approved CAPEX, 69,060,807.92 65,328,472.56 63,699,671.99 55,721,683.56 40,959,176.04 364,871,365.52 PhP

amortization of old debts

0 0“ 4 6 ERC CASE NO. 2018-028 RC NOTICE OF PUBLIC HEARING/21 May 2019 Page 4 of 6

- - 8,257,501.67 ERC Permit Fee, PhP 8,257,501.67 _ -

Total Cash Outflows, 693,349,666.26 425,176,658.27 478,229,368.46 211,047,272.43 196,284,764.92 2,238,254,111.00 PhP

Cash balance ending, PhP, excess/ 18,813,658.62 (9,121,064.92) (66,051,214.71) (109,228,522.76) (131,868,469.99) (266,774,286.86) (shortfall)

Excess/(shortfall) on RFSC, 0.1119 (0.0523) (0.3650) (0.5827) (0.6800) (0.2501) PhP/kWh

COMPLIANCE WITH THE PRE-FILING REQUIREMENTS

In compliance with Section 2, Rule 6 of the ERC Rules of Practice and Procedure and other documentary requirements of the instant application, the Applicant made integral parts herewith the following documents and its proper markings;

Annex Document

"A" Verification and Non Forum Shopping Certificates

00"1-6 ERC CASE NO. 24318-028 RC NOTICE OF PUBLIC HEARING/21 May 2019 Page 5 of 6

with the Energy Regulatory Commission (ERC)

Proof of furnishing the legislative bodies of Bukidnon where BUSECO operates with the copies of the "E" Application together with all its annexes and accompanying documents Proof of posting a copy of the Application within the "F" premises of BUSECO Affidavit of Publication together with a copy of the "G" Mindanao Gold Star Daily April 25, 2018 issue, where the Application was published for general information

Project Summary

PRAYER

In view thereof, the Commission has set the Application anew for determination of compliance with the jurisdictional requirements, expository presentation, Pre-trial Conference, and presentation of evidence on 11 July 2019 (Thursday) at one o'clock in the afternoon (voo P.M.) at BUSECO's Principal Office, Tankulan, Manolo Fortich, Bukidnon.

All persons who have an interest in the subject matter of the instant case may become a party by filing with the Commission a verified Petition to Intervene at least five (5) days prior to the initial 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:

0 0 3 6 ERC CASE NO. 2018-028 RC NOTICE OF PUBLIC HEARING/21 May 2019 Page 6 of 6 1) The petitioner's name and 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.

All other persons who may want their views known to the Commission with respect to the subject matter of the case may file their Opposition or Comment thereon at any stage of the proceeding before Applicant rests its case, 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 and 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 Application may request from the Applicant that they be furnished with the same, prior to the date of the initial hearing. Applicant is hereby directed to furnish all those making such request with copies of the Application and its attachments, subject to the reimbursement of reasonable photocopying costs. Any such person may likewise examine the Application and other pertinent records filed with the Commission during the standard office hours.

WITNESS, the Honorable Chairperson and CEO, AGNES VST DEVANEDARA, and the Honorable Commissioners ALEXIS M. LUMBATAN, CATHERINE P. MACEDA and PAUL CHRISTIAN M. CERVANTES, Energy Regulatory Commission, this 21st day of May 2019 in Pasig City.

JOSEFINA PATRIC GPALE-ASIRIT Oversight missioner for Legal, .;\ LS: ord.2o18-o28 RC BUSECO CAPEX

003446