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

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Fapprovej for Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City U fApprovej for Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City IN THE MATTER OF THE APPLICATION FOR THE APPROVAL OF CAPITAL EXPENDITURES PROGRAM FOR THE YEARS 2010 TO 2012, WITH PRAYERS FOR AUTHORITY TO SECURE LOANS AND PROVISIONAL AUTHORITY ERC CASE NO. 2011-1 23 RC ILOCOS SUR ELECTRIC COOPERATIVE, INC. (ISECO), Applicant. O 0 C K 1 T E x----------------------- x D;;C..IJUL7 _1*:__fl DECISION Before the Commission for resolution is the application filed on August 25, 2011 by Ilocos Sur Electric Cooperative, Inc. (ISECO) for approval of its capital expenditures (CAPEX) program for the years 2010 to 2012, with prayers for authority to secure loans and provisional authority. Having found said application sufficient in form and in substance with the required fees having been paid, an Order and a Notice of Public Hearing, both dated September 14, 2011, were issued setting the case for initial hearing on October 26, 2011. In the same Order, ISECO was directed to cause the publication of the Notice of Public Hearing, at its own expense, twice (2x) for two (2) successive weeks in two (2) newspapers of general circulation in the Philippines, with the date of the last publication to be made not later than ten (10) days before the date of the scheduled initial hearing. It was also directed to inform the consumers within its franchise area, by any other çnpans available and appropriate, of the filing of the instant applic~tkfri, its reasons therefor and of the scheduled hearing thereon. / J . ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe2 of 62 The Office of the Solicitor General (OSG), the Commission on Audit (COA) and the Committees on Energy of both Houses of Congress were furnished with copies of the Order and the Notice of Public Hearing and were requested to have their respective duly authorized representatives present at the initial hearing. Likewise, the Offices of the Provincial Governor and the Mayors of the Cities and Municipalities within ISECO's franchise area were furnished with copies of the Order and Notice of Public Hearing for the appropriate posting thereof on their respective bulletin boards. On October 21, 2011, ISECO filed its "Pre-Trial Brief'. During the October 26, 2011 initial hearing, only ISECO appeared. No intervenor/oppositor appeared nor was there any intervention/opposition registered. At the said hearing, ISECO presented proofs of its compliance with the Commission's posting and publication of notice requirements which were duly marked as Exhibits "I" to "Q-1", inclusive. Thereafter, it conducted an expository presentation of its application. At the termination of the expository presentation, ISECO presented the following witnesses: 1) Engr. Fred R. Jacob, its Technical Services Department Manager, who testified, among others, on the following: a) his duties and responsibilities; b) his awareness on the instant application; c) the supporting documents he submitted; d) the descriptions of the proposed projects; and e) the performance of ISECO's distribution system and load forecasting, its Distribution Development Plan (DDP), and system modeling analysis and evaluation he conducted; and 2) Ms. Blesida S. Dalit, its Finance Manager, who testified, among others, on the following: a) her duties and responsibilities; b) her familiarity with the instant application; c) the supporting data she submitted in support of the instant application; d) the capital project cost, financial evaluation and cash flow analysis she conducted; e) previous indebtedness and amortizations; and f) the projects' rate impact. A ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paoe 3 of 62 In the course of their direct examinations, additional documents were presented and duly marked as exhibits. The direct examinations having been terminated, the Commission propounded clarificatory questions on the said witnesses. ISECO was, then, directed to file its formal offer of evidence. On November 4, 2011, ISECO filed its "Formal Offer of Evidence". On November 8, 2011, ISECO filed its "Urgent Motion for Issuance of Provisional Authorit/'. On November 5, 2012, the Commission issued an Order admitting ISECO's "Formal Offer of Evidence" and declaring the case submitted for resolution. DISCUSSION ISECO sought the Commission's approval of the following projects: Projects for 2010 I. Construction of a Substation and 69 kV Subtransmission Line a. Project Description: • Construction of New Santa Cruz Substation and 69 kV subtransmission line from Candon to Santa Cruz b. Rationale of the Project: • To avoid thfr Jimpending capacity problem and power quality prot3lejn of the Candon Substation which will be overloaddI)flie year 2014 • 0 C ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe4 of 62 c. Project Cost: PhP33,091 ,643.50 2. Installation of Line Recloser for Three (3) Feeders a. Project Description: . Installation of line recloser for three (3) feeders b. Rationale of the Project: • To provide back-up protection in the occurrence of minimum faults c. Project Cost: PhP2,21 2,809.48 3. Reconfiguration/Splitting of Two (2) Feeders a. Project Description: • The project consist in the reconfiguration and splitting of the Candon Feeder into two (2) feeders and reconfiguration and splitting of the Bantay Feeder into two (2) feeders b. Rationale of the Project: • To address load growth and improve power quality and reliability c. Project Cos#J PhP4,857,411.18 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pacie 5 of 62 4. Installation of Distribution Transformers (DTs) a. Project Description: • Installation of DTs of various sizes and capacities, namely: 1) twenty-two (22) units of 10 kVA; 2) twenty- two (22) units of 15 kVA; 3) seventeen (17) units of 25 kVA; 4) seventeen (17) units of 37.5 kVA; 5) four (4) units of 50 kVA;, 6) four (4) units of 75 kVA; 7) eighty- seven (87) units of Fuse Cut-out, 15 kV; 8) eighty- seven (87) units of Lightning Arresters, 15 kV; and 9) one (1) set of accessories b. Rationale of the Project: • To address load growth and improve power quality and reliability c. Project Cost: PhP7,61 6,126.42 5. Construction of Additional Distribution Lines a. Project Description: • The project consist in the installation of the following: 1) one hundred ninety eight (198) units of 25 footer wooden poles; 2) one hundred seven (107) units of 3 footer anchor log wooden poles: 3) four thousand five hundred eighty one (4,581) meters of #2 duplex conductor; three thousand six hundred sixty five (3,665) meters of #1/0 duplex conductor; nine hundred sixteen (916) meters of #2/0 duplex conductor; six thousand one hundred eight (6,108) meters of #2 poly- insulated conductor; four thousand eight hundred eighty six (4,886) meters of #1/0 poly-insulated conductor; one thousand two hundred twenty two (1,222) meters of #2/0 poly-insulated conductor; and 4) one (1)set accessories I ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 6 of 62 b. Rationale of the Project: • To address load growth and improve power quality and reliability c. Project Cost: PhP3,477,367i I 6. Installation of Kilowatt-Hour (kWh) Meters a. Project Description: • The project consist in the installation of the following: 1) six thousand six hundred sixty seven (6,667) units of I phase 10 (60) A bottom connected electric kWh meters; 2) eight hundred one (801) units of I phase, 15 A, 2-wire, socket type electric kWh meters; and 3) one (1) set accessories b. Rationale of the Project: • To address load growth and improve power quality and reliability c. Project Cost: PhP9,991 ,983.32 7. Replacement of Old and Inaccurate kWh Meters a. Project Description: • The project consist in the replacement of old and inaccurate kWh meters with the following: 1) three thousand four hundred (3,400) units of ENERTEK meters; 2) three thousand four hundred (3,400) units of ACCURA meters; and 3) twenty thousand four hundred 1units of woodscrews ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 7of62 b. Rationale of the Project: To mitigate systems losses c. Project Cost: PhP6,660,600.00 8. Construction of Distribution Lines for Rural Electrification a. Project Description: • Construction of an 8.85 kilometers (km.) 1 phase distribution line of 3.41 open secondary and 1.87 underbuilt configuration b. Rationale of the Project: • To address load growth and for missionary electrification c. Project Cost: Ph P5,095,71 8.58 9. Acquisition of New Meter Reading and Billing Devices a. Project Description: • Acquisition of twenty (20) units of new meter reading and billing devices which are Ingress Protection (IP) rated, Windows Compact Edition (CE) based hand held computer wireless printing capability,psing Bluetooth technology 4 -s ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe 8 of 62 b. Rationale of the Project: To improve consumer service c. Project Cost: PhPI ,233,375.36 10. Acquisition of Linemen's Tools and Safety Apparels a. Project Description: • Acquisition of Linemen's Tools and Safety Apparels b. Rationale of the Project: • To address load growth and improve power quality and reliability c. Project Cost: PhP625,068.50 11. Procurement of Service Vehicles a. Project Description: • Procurement of two (2) units of XRM 125 Dual Sport Motorcycles b. Rationale of the Project: • To improve efficiency in operation c. Project PhPI 25,667.86 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 9 of 62 12. Procurement of Boom Trucks a. Project Description: • Procurement of two (2) units of second (2') hand boom trucks b. Rationale of the Project: To improve efficiency in operation c. Project Cost: PhPI,398,200.00 13.
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