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. Procurement of a Computer Server
a. Project Description:
• Procurement of an IBMx3500 M3 type main frame computer with licensed operating system and server class Uninterruptible Power Supply (UPS) for the Computerized Electric Billing and Collection System
b. Rationale of the Project:
To improve consumer service
c. Project Cost: PhP254,900.00
14. Acquisition of SynerGee Software Protection Module and SynerGee Software
a. Project Description:
• Acquisition of one (1) unit of SynerGee Protection Module ~\g' one,, (1) unit of Module System protectiorj 1A / .1 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe 10of62
b. Rationale of the Project:
To improve reliability of the distribution system
c. Project Cost: PhP324,003.00
Projects for 2011
15. Acquisition of 69 kV Subtransmission Lines
a. Project Description:
• Acquisition of 69 kV subtransmission lines, namely: 1) San Esteban-Candon 69 kV line; 2) New Bantay- Sto. Domingo 69 kV line; and 3) San Esteban- Narvacan 69 kV line (Tower 21 take-off)
b. Rationale of the Project:
To improve distribution system reliability
c. Project Cost: PhP24,409,329.52
16. Refurbishment of 69 kV Subtransmission Lines
a. Project Description:
• Refurbishment of 69 kV subtransmission lines, namely: 1) San Esteban-Candon 69 kV line; 2) New Bantay- Sto. Dominp 69 kV line; and 3) San Esteban- Narvacan 6q 14' line (Tower 21 take-off) • ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 11 of 62
b. Rationale of the Project:
To improve distribution system reliability
c. Project Cost: PhP5,342,01 8.59
17 Installation of Line Recloser for Two (2) Feeders
a. Project Description:
. Installation of line recloser for two (2) feeders
b. Rationale of the Project:
• To provide back-up protection in the occurrence of minimum faults
c. Project Cost: PhPI ,475,206.32
18. Installation of Power Capacitors
a. Project Description:
• Installation of the following: 1) six (6) units of 50 kVAR capacitors and four (4) units of 25 kVAR capacitors within the Santa Cruz Feeders; and 2) three (3) units of 25 kVAR capacitor within the Candon Feeder
b. Rationale of the Project:
r quality and reliability 4 t ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 12 of 62
c. Project Cost: PhP623,669.69
19. Installation of One (1) MVA Auto Voltage Regulator (AVR)
a. Project Description:
• Installation of one (1) MVA AVR for the San Juan Feeder
b. Rationale of the Project:
To improve power quality and reliability
c. Project Cost: PhPI,059,072.68
20. Conversion of Secondary Lines
a. Project Description:
• Conversion of secondary lines to underbuilt or open-secondary lines using #6 duplex wires to #2 or #4 duplex wires
b. Rationale of the Project:
• To promote safety and to comply with standard electrical practice
c. Project Cost: PhP989,280.61 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pacie 13 of 62
21. Construction of Additional Distribution Lines (Feeders)
a. Project Description:
• The project consists in the construction of additional distribution lines involving the following segments: 1) Sto. Domingo Feeder with two (2) primary line segments; 2) Narvacan Feeder with seven (7) primary line segments; 3) Caoayan Feeder with seven (7) primary line segments; and 4) Bantay Feeder with seventeen (17) primary line segments
b. Rationale of the Project:
• To address load growth and improve power quality and reliability
c. Project Cost: PhP3,081 ,932.1 4
22. Installation of Distribution Transformers (DT5)
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) eighteen (18) units of 25 kVA; 4) eighteen (18) units of 37.5 kVA; 5) four (4) units of 50 kVA; 6) four (4) units of 75 kVA; 7) eighty-nine (89) units of Fuse Cut-out, 15 kV; 8) eighty-nine (89) units of Lightning Arresters, 15 kV; and 9) one (1) set accessories
b. Rationale of the Project:
• To a growth and improve power quality and ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 14 of 62
c. Project Cost: PhP7,837,783.87
23. Construction of Additional Distribution Lines
a. Project Description:
• The project consist in the installation of the following: 1) two hundred eleven (211) units of 25 footer wooden poles; 2) one hundred fourteen (114) units of 3 footer anchor log wooden poles: 3) four thousand eight hundred seventy five (4,875) meters of #2 duplex conductor; three thousand nine hundred (3,900) meters of #1/0 duplex conductor; nine hundred seventy five (975) meters of #2/0 duplex conductor; six thousand five hundred (6,500) meters of #2 poly-insulated conductor; five thousand two hundred (5,200) meters of #1/0 poly- insulated conductor; one thousand three hundred (1,300) meters of #2/0 poly-insulated conductor; and 4) one (1) set accessories
b. Rationale of the Project:
• To address load growth and improve power quality and reliability
c. Project Cost: PhP3,700,875.1 5
24. Installation of Kilowatt-Hour (kWh) Meters
a. Project Description:
• The project consist in the installation of the following: lAseven thousand six hundred twenty five (7,625) uniftidi of I phase 10 (60) A bottom connected electric *11 meters; 2) seven hundred sixty five ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 15 of 62
(765) 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: PhPI 7,691,692.68
25. 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) four thousand five hundred (4,500) units of ENERTEK meters; 2) four thousand five hundred (4,500) units of ACCURA meters; and 3) twenty seven thousand (27,000) units of woodscrews
b. Rationale of the Project:
To mitigate systems losses
c. Project Cost: PhP8,81 5,500.00
26. Construction of Distribution Lines for Rural Electrification
a. Project Description:
• Con stru cti c of 50.26 kilometers (km.) 1 phase distribution e of 11.29 open secondary and 9.24 underbuilt figuration ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 16 of 62
b. Rationale of the Project:
• To address load growth and for missionary electrification
c. Project Cost: PhP22,778,869.42
27. Acquisition of New Meter Reading and Billing Devices
a. Project Description:
• Acquisition of twenty five (25) 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 using Bluetooth technology
b. Rationale of the Project:
To improve consumer service
c. Project Cost: PhPI ,760,91 3.50
28. Acquisition of Additional Calibrating Machine
a. Project Description:
• Acquisition of calibrating machines of PTS 2.3 CALPORT model ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pacie 17 of 62
b. Rationale of the Project:
• To address consumers' satisfaction and improve efficiency in operation
c. Project Cost: PhPI ,602,1 00.00
29. 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: PhP2,557,1 28.50
30 Acquisition of Transformer Test Equipment
a. Project Description:
• The project consists of the following: 1) acquisition of Insulator Power Factor (C and DF) Megger, 10 kV; 2) e phase TTR w/ PowerDS On-Board; and 3) Transformer Ohm meter
b. Rationale of the Project:
• To improve reliability in the distribution system
c. Project PhP7,550,000.00 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pace 18of62
31. Procurement of Service Vehicles
a. Project Description:
• Procurement of the following vehicles: 1) three (3) units of XRM 125 Dual Sport Motorcycles; 2) three (3) units of 4WD Asian Utility Vehicle (AUV) Nissan Navarra; and 3) five (5) units of Van L-300FB
b. Rationale of the Project:
To improve efficiency in operation
c. Project Cost: PhP6,734,705.37
32. Procurement of Boom Trucks
a. Project Description:
• Procurement of two (2) units of ALTEC DM47 boom trucks
b. Rationale of the Project:
• To improve efficiency in operation
c. Project Cost: PhP24,000,000.00
33. SynerGee Software Protection Module and SynerGee Software's Maintenance Fee
a. Project Description:
• Maintenançq Fee for the SynerGee Software Protectionfivjodule and SynerGee Software ERG Case No. 2011-123 RG DECISION/December 10, 2012 Page 19 of62
b. Rationale of the Project:
To improve reliability of the distribution system
c. Project Cost: PhP78,300.00
Projects for 2012
34. Refurbishment of 69 kV Subtransmission Lines
a. Project Description:
• Refurbishment of 69 kV subtransmission lines, namely: 1) San Esteban-Candon 69 kV line; 2) New Bantay-Sto. Domingo 69 kV line; and 3) San Esteban-Narvacan 69 kV line (Tower 21 take-off)
b. Rationale of the Project:
To improve distribution system reliability
C. Project Cost: PhP5,342,01 8.59
35. Conversion of Secondary Lines
a. Project Description:
• Conversion of secondary lines to underbuilt or open-secondary lines using nine #6 duplex wires to #2 or #4'uplex wires I ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pacie2O of 62
b. Rationale of the Project:
• To promote safety and to comply with standard electrical practice
c. Project Cost: PhP2,168,431.34
36. Installation of Distribution Transformers (DTs)
a. Project Description:
• Installation of DTs of various sizes and capacities, namely: 1) twenty-three (23) units of 10 kVA; 2) twenty-three (23) units of 15 kVA; 3) eighteen (18) units of 25 kVA; 4) eighteen (18) units of 37.5 kVA; 5) five (5) units of 50 kVA; 6) five (5) units of 75 kVA; 7) ninety-two (92) units of Fuse Cut-out, 15 kV; 8) ninety-two (92) units of Lightning Arresters, 15 kV; and 9) one (1) set accessories
b. Rationale of the Project:
• To address load growth and improve power quality and reliability
c. Project Cost: PhP8,070,934.37
37. Construction of Additional Distribution Lines
a. Project Description:
• The project consists of the installation of the following: A) two hundred sixteen (216) units of 25 footer wo4jlen poles; 2) one hundred sixteen (116) units of 31 footer, anchor log wooden poles; 3) four
i, ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 21 of62
thousand nine hundred eighty one (4,981) meters of #2 duplex conductor; three thousand nine hundred eighty five (3,985) meters of #1/0 duplex conductor; nine hundred ninety six (996) meters of #2/0 duplex conductor; six thousand six hundred forty one (6,641) meters of #2 poly-insulated conductor; five thousand three hundred thirteen (5,313) meters of #1/0 poly-insulated conductor; one thousand three hundred twenty eight (1,328) meters of #2/0 poly- insulated conductor; and 4) one (1) set accessories
b. Rationale of the Project:
• To address load growth and improve power quality and reliability
c. Project Cost: PhP3,781 ,070.31
38. Installation of Kilowatt-Hour (kWh) Meters
a. Project Description:
• The project consists of the installation of the following: 1) eight thousand four hundred thirteen (8,413) units of I phase 10 (60) A bottom connected electric kWh meters; 2) eight hundred twenty six (826) 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: PhPI9,470,753.57 ERG Case No. 2011-1 23 RC DECISION/December 10, 2012 Pace 22 of 62
39 Replacement of Old and Inaccurate kWh Meters
a. Project Description:
• The project consists of the replacement of old and inaccurate kWh meters with the following: 1) six thousand four hundred (6,400) units of ENERTEK meters; 2) six thousand four hundred (6,400) units of ACCURA meters; and 3) thirty eight thousand (38,000) units of woodscrews
b. Rationale of the Project:
To mitigate systems losses
c. Project Cost: PhPI 2,537,600.00
Construction of Distribution Lines for Rural Electrification
a. Project Description:
• Construction of 19.70 kilometers (km.) 1 phase distribution line of 2.71 open secondary and 2.00 underbuilt configuration
b. Rationale of the Project:
• To address load growth and for missionary electrification c. Project Cost: PhP9,062,989.68
4 ) ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pacie23 of 62
41 Acquisition of Infrared Thermal Imager
a. Project Description:
• Acquisition of one (1) unit of infrared thermal imager
b. Rationale of the Project:
• To address load growth and improve power quality and reliability
c. Project Cost: PhP943,200.00
42. 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: PhPI ,994,078.50
43. Procurement of Service Vehicles
a. Project Description:
. Procurement of five (5) units of Van L-300FB ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe 24 of 62
b. Rationale of the Project:
To improve efficiency in operation
c. Project Cost: PhP3,205,500.00
44. Procurement of Boom Trucks
a. Project Description:
• Procurement of two (2) units of ALTEC DM47 boom trucks
b. Rationale of the Project:
To improve efficiency in operation
c. Project Cost: PhP24,000,000.00
45. Acquisition of a Lot and Construction of Collection Office Building
a. Project Description:
• Acquisition of a parcel of land with an area of 300 square meters (sq. m.) and construction of a 10 x 8.5 sq. m. collection office building
b. Rationale of the Project:
• To addresA consumers' satisfaction and improve efficiency (n peration ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe 25 of 62
c. Project Cost: PhPI ,883,701 .60
46. Acquisition of Utility Billing and Collection System (TUBS)
a. Project Description:
• Acquisition of one (1) unit of TUBS with site license and two (2) free teller's printers
b. Rationale of the Project:
• To address consumers' satisfaction and improve efficiency in operation
c. Project Cost: PhP2,505,280.00
47. SynerGee Software Protection Module and SynerGee Software's Maintenance Fee
a. Project Description:
• Maintenance Fee for the SynerGee Software Protection Module and SynerGee Software
b. Rationale of the Project:
• To improve reliability of the distribution system
c. Project Cost: PhP78,300.00 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pane 26 of 62
The total project cost is as follows:
DESCRIPTION PROJECT COST (PhP) Projects for 2010 Construction of a substation and 69 kV subtransmission Line 33,091,643.50 Installation of line recloser for three (3) feeders 2,212,809.48 Reconfiguration/splitting of two (2) feeders 4,857,411.18 Installation of distribution transformers (DTs) 7,616,126.42 Construction of additional distribution lines 3,477,367.11 Installation of kilowatt-hour (kWh) meters 9,991,983.32 Replacement of old and inaccurate kWh meters 6,660,600.00 Construction of distribution lines for rural electrification 5,095,718.58 Acquisition of new meter reading and billing devices 1,233,375.36 Acquisition of linemen's tools and safety apparels 625,068.50 Procurement of service vehicles 125,667.86 Procurement of boom trucks 1,398,200.00 Procurement of a computer server 254,900.00 Acquisition of synergee software protection module and synergee software 324,003.00 Subtotal 7609640874.31 Projects for 2011 Acquisition of 69 kV subtransmission lines 24,409,329.52 Refurbishment of 69 kV subtransmission lines 5,342,018.59 Installation of line recloser for two (2) feeders 1,457,206.32 Installation of power capacitors 623,669.69 Installation of one (1) MVA Auto Voltage Regulator (AVR) 1,059,072.68 Conversion of secondary lines 989,280.61 Construction of additional distribution lines (feeders) 3,081,932.18 Installation of distribution transformers (DT5) 7,837,783.87 Construction of additional distribution lines 3,700,875.15 Installation of kWh Meters 17,691,692.68 Replacement of old and inaccurate kWh meters 8,815,500.00 Construction of distribution lines for rural
electrification 1\ 22,778,869.42 Acquisition of new mefl, reading and billing devices j 4 / 1,760,913.50 Ni ERG Case No. 2011-123 RC DECISION/December 10, 2012 Page 27 of 62
Acquisition of additional calibrating machine 1,602,100.00 Acquisition of linemen's tools and safety apparels 2,557,128.50 Acquisition of transformer test equipment 7,550,000.00 Procurement of service vehicles 6,734,705.37 Procurement of boom trucks 24,000,000.00 Synergee software protection module and synergee software's maintenance fee 78,300.00 Subtotal 142,070,378.08 Projects for 2012 Refurbishment of 69 kV subtransmission lines 5,342,018.59 Conversion of secondary lines 2,168,431.34 Installation of distribution transformers (DT5) 8,070,934.37 Construction of additional distribution lines 3,781,070.31
Installation of kWh meters . 19,470,753.57 Replacement of old and inaccurate kWh meters 12,537,600.00 Construction of distribution lines for rural electrification 9,062,989.68 Acquisition of infrared thermal imager 943,200.00 Acquisition of linemen's tools and safety apparels 1,994,078.50 Procurement of service vehicles 3,205,500.00 Procurement of boom trucks 24,000,000.00 Acquisition of a lot and construction of collection office building 1,883,701.60 Acquisition of utility billing and collection system (TUBS) 2,505,280.00 Synergee software protection module and synergee software's maintenance fee 78,300.00 Subtotal 95,043.857.96 TOTAL 314,079,110.35
TECHNICAL ANALYSIS
Construction of New Sta. Cruz Substation and 69 kV Subtransmission line from Candon to Sta. Cruz
The Candon Substation's Sta. Cruz and Candon feeders were experiencing under-voltage problem with 0.80 and 0.86 per unit voltage, respectively. These were measured at the farthest end of the line. Poor power quality problem was also observed in the areas being served by the Cancfr Substation which normally occurred at peak hours in far flung ar4d\,yriountainous areas supplied by the said substation. ili. / ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 28 of 62
The measurements of the voltage levels do not comply with the standards provided in the Philippine Distribution Code (PDC). The voltage levels at the customer's connection point must be within ±10% of the nominal voltage level of 230 volts or per unit values ranging 0.9 to 1.1.
ISECO believes that the ultimate solution to resolve this problem is to construct a new 5 MVA substation in Sta. Cruz with a corresponding 69 kV subtransmission line. It also proposes to install capacitors at strategic locations to correct the power quality at the said Sta. Cruz feeder.
The Commission observed that the proposed projects have the same purposes. Thus, ISECO should pursue only one (1) project considering that the said substation can sufficiently serve its areas for the next seven (7) years based on the loading analysis of the Candon Substation,. Shown below is a summary of the Candon Substation's loading analysis:
Interim cAPEx Period 1st Regulatory Period 2010 2011 2012 2013 2014 2015 2016 Rated MVA 15 15 15 15 15 15 15 Capacity Max. MW 18 18 18 18 18 18 18 Capacity Demand (MW) 11.49 12.09 12.75 13.47 14.26 15.10 16.01 % Loading 63.84% 67.17% 70.83% 74.84% *20% 83.90% 88.94%
The Commission considered the financial impact of the proposed projects based on a least cost criteria. It was established that other projects are least costs compared to the construction of a new 5 MVA substation in Sta. Cruz. Since the capacity of the Candon Substation is sufficient to address the power requirements of the coverage area, the construction of a new substation is not necessary. ISECO should instead pursue the proposed installation of capacitors within the Sta. Cruz feeder. Shown below is a comparative analysis of two (2) proposed projects: ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 29 of 62
Alternative No. Proposed Project Initial Cost (PhP) 0&M (PhP) Cost of Energy Lifetime Cost Remarks Loss (PhP) NPV (PhP)
Construction of 44,081,576.86 1,322,447.31 9,680,492.49 153,482,210.52 Rank I in Substation Cost 2 Capacitor Installation 354,000.00 10,620.00 13,710,357.66 141,289,348.27 Least Cost
Acquisition of 69 kV Subtransmission Line and Refurbishment of Acquired 69 kV Subtransmission Line
On December 16, 2010, the National Transmission Corporation (TRANSCO) and ISECO filed a joint application with the Commission for the approval of the sale of various subtransmission lines/assets of TRANSCO within the franchise area of ISECO as covered by a Lease
Purchase Agreement docketed as ERC Case No. 2010-151 RC 1 .
Relative thereto, on August 15, 2011, the Commission issued a Decision approving with modification the aforesaid application. The approved cost for the purchase of the 69 kV amounted to PhP14,589,224.09, exclusive of the provision of a twenty percent (20%) down payment. The approved subtransmission lines to be acquired by ISECO are as follows:
a) San Esteban—Candon 69kV line; b) New Bantay—Sto. Domingo 69kV line; and c) San Esteban—Narvacan 69kV line (Tower 21 Take-off).
The Commission denied the acquisition of the San Esteban- Narvacan Junction (Old 115kV line) since it does not serve the purpose of delivering power to ISECO consumers.
Upon receipt of the Deed of Transfer of Possession of the approved subtransmission assets, ISECO proposed to refurbish these assets in order to extend its economic life and improve the power supply reliability of the cooperative. Refurbishment will include the replacement of rotten wooden poles, cross-arms and braces that contributed to power interruptions during rainy season.
In the Matter of the Application for the Appmval of the Sale of Various Subtransmission Lines/Assets of the National Trannission Corporation (TRANSCO) to llocos Sur Electric Cooperative, Inc. (ISECO) as coverfçI by an ApYended Contract to Self' ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 30 of 62
In the ocular inspection conducted by the Commission, it was disclosed that several poles and accessories of the said subtransmission lines were rotten and worn-out.
The refurbishment of the 69 kV lines would entail an amount of PhP10,684,037.18. The Commission recalculated the cost and determined that the cost should be reduced due to the exclusion of the sale of the San Esteban-Narvacan Junction (Old 115kV line). The other factors that contributed to the reduction of the project cost were due to the alignment of major materials, specifically the poles and the price benchmark provided in the 2012 National Electrification Administration's (NEA) Price Index. The said price index already includes five percent (5%) contingency and twelve percent (12%) Value Added Tax (VAT). Shown below is the breakdown of the total project cost:
No. of Units Unit cost Project Cost (PhP) No. Subtransmission Line Specifications 2011 2012 (PhP/unit) 2011 2012
San Esteban - Candon 60' steel pole 18 18 69,605.47 1,252,898.46 1,252,896.46 69kv Pole hardware 1 1 1044,535.52 1 , 044,535.52 1,044,535.52
San Esteban - 60' steel pole 4 4 69,605.47 243,619.15 243,619.15 2 Narvacan 69kV Pole hardware 1 1 377,057.42 377,057.42 377,057.42
New Bantay - Sto. 60' steel pole 6 6 69,605.47 362,830.09 382,830.09 Domingo Pole hardware 1 1 316,917.45 316,917.45 316,917.45 Sub-Total (PhP) 3,617,858.08 3,617,858.08 Acquisition cost (PhP) 14,589,224.09
Total Project Cost (PhP) 21,824,940.25
Installation of Line Reclosers for Three (3) Feeders in 2010 and for Two (2) Feeders in 2011
Some of ISECO's existing feeders were found to have a minimum fault below the existing protection setting of the protection devices installed along the feeder lines. Based on the short-circuit analysis conducted by ISECO, the existing substation recloser could not determine the minimum fault current in the farthest end of the line in the event of minimum fault occurrences within the area. This situation poses danger to the safety of consumers living nearby these lines. Shown below is a summary of the short circuit analysis and existing minimum settingo eeders involve for additional back-up protection: I I , 1 ERC Case No. 2011-1 23 RC DECISION/December 10, 2012 Paae 31 of62
No. Substation Feeder LG Protection LG Mm. Fault LLG Protection LLG Mm. Fault Setting (zf=30) Setting (zf=30) 1 Candon F1-Candon 624 379 187 118 2 Candon F2- Sta. Cnn 532 326 160 72 3 Narvacan F1-Narvacan 330 322 99 119 4 Vigan F3-Bantay 1,030 790 309 140 5 Sto. Domingo F2-San Juan 602 302 181 98
The feasible solution is to install additional backup recloser in the affected areas not detected by the substation's recloser. Fuses should not be used in three (3) phase system since this can only isolate faulted phase and affect the three (3) phase customers. Moreover, the automatic circuit recloser will solve the incapacity of the fuse to sense zero-sequence component.
Installation of additional reclosers near the downstream section of the line will serve as back-up protection in case of minimum fault occurrence. The existing reclosers at the substation could not isolate these occurrences. The proposed project will also provide reliability and improvement of the system since it will isolate the downstream section from the upstream section of the feeder in case of fault. The upstream customers will not be affected in case a fault occurred in the downstream section of the line.
Moreover, the energy curtailed or the Energy Not Served (EENS), System Average Interruption Frequency Index (SAIFI) per customer-year and System Average Interruption Duration Index (SAIDI) are significantly reduced. Shown below are significant reduction of EENS, SAl DI and SAIFI:
SAIFI SAIDI EENS Feeder Existing With Project Existing With Project Existing With Project Sta. Cruz 27.00 11.85 32.37 22.73 75,397.14 52,849.73 Bantay 30.89 9.76 25.15 16.81 68,014.35 41,606.23 San Juan 19.80 13.22 27.53 25.21 62,680.37 56,837.60 Candon 9.64 9.44 12.29 11.95 39,286.11 38,316.80 Narvacan 26.60 8.38 22.16 12.78 45,507.33 27,795.08
The Commission recalculated the total cost and determined that the cost of the proposed projects should be reduced. The cost adjustment was based primarily on the cost alignment of the required materials such as, conductors, cross-arms, and poles, with the price benchmark provided in the 2012 NEA Price Index. Shown below is the recomputed project cost:
iNo I N o. of Units Unit Cost I Project Cost (PhP) Materials I Specifications I 2010 I 2011 I (PhPlunit) I 2010 I 2011 1 I 3-phase Recloser 15kV, 630A 3 I 2 I 673,000.00 I 2,019,000.00 1346,000.00 I I 2 I Lightning Arresters I 15 kV 18 I 12 I 2,500.00 I 45,000.00 I 30,000.00 I I 3 I pole I 35' wood HF-3 , 2 I 12,792.84 38,378.52 25,585.68
ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 32 of 62
4 Cross Arm 4x4x8 6 4 1,224.00 7,344.00 4,896.00 5 Conductor 4/0ACSR 360 240 61.65 22,194.00 14,796.00 6 GroundWire #4AWG 90 60 150.00 13,500.00 9,000.00
7 Accessories - 3 sets 2 sets 16,935.16 50,805.48 33,870.32 Sub-Total (PhP) 2,196,222.00 1,464,148.00 Grand Total (PhP) 3,660,370.00
Installation of Capacitors for Power Quality Correction for Two (2) Feeders of the Candon Substation
Sta. Cruz and Candon Feeders of the Candon Substation are presently experiencing power quality problem at medium voltage sections. Candon Feeder has a voltage of 0.88 per unit while Sta. Cruz Feeder has a voltage of 0.80 per unit. These were measured at farthest end of the lines which are not in compliance with the standards provided in the PDC.
ISECO proposed to implement the following: 1) installation of six (6) units of 50 kVAR capacitors and four (4) units of 25 kVAR capacitors within the Sta. Cruz Feeder; and 2) installation of three (3) units of 25 kVAR capacitors within the Candon Feeder. The existing performance assessment of the feeders and the strategic location of the proposed capacitors are shown in the following figures:
Figure 1. Sta. Cruz Feeder Figure 2. Candon Feeder
1 Legd. rc:z :t ,. SUB STaTIGN j... . '. "4 Leerid. OpenSecondary - F,iae _s - , •c1daryUrderbuit f'w -- • r i -i.. 0.90 P.U. - ,' - Rhw e ,,e
':' i-\ (L
- -, 1
. . t;\
LE I: CIDOF, fr.L( UBSTATION I 1 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 33 of 62
The proposed project will not only address the power quality problem but also provide a more efficient distribution system within the areas served by the Sta. Cruz and Candon Feeders. Shown below are the indications of the technical system loss reduction by an average of nine percent (9%) within five (5) years:
5th. Cruz voltage Level candon voltage Level Sta. cruz System loss Candon System loss Year . . . . . . With . . . . . Existing With Project Existing Existing With Project Existing With Project Project 2010 0.80 0.96 0.86 0.99 2532440.76 2,296890.46 816460.72 813,721.91 2011 0.78 0.94 0.85 0.98 2,734,943.26 2,474,242.45 881,432.16 878,395.65 2012 0.77 0.93 0.84 0.97 2,972,701.31 2,682461.46 955,875.06 652,485.94 2013 0.76 0.91 0.83 0.96 3,239,305.40 2,915,947.31 1,042,268.03 1,038,475.30 2014 0.74 0.90 0.81 0.95 4,170,704.04 3,711,565.33 1,102,768.93 1,098,011.85
ISECO has formulated feasible alternatives to determine the optimum project that will address the power quality problems at a least cost, to wit:
I Alternative cost of Energy Lifetime cost Proposed Project Initial cost (PhP) O&M (PhP) I I I Remarks No. Loss (PhP) NPV (PhP) I 1 I Capacitor Installation I 460,200.00 13806.00 I 13,482,098.58 52,916,564.14 Least cost 2 I Installation ofAVR I 634,632.68 I 19,038.98 I 13,486,042.51 I 53,112,289.11 I Rank 2 in cost 3 conductor Uprating 12,674,508.21 380,235,25 13,296,209.91 64,824,591.37 Rank 1 in cost I
The Commission has computed the proposed project costs and determined that said costs should be reduced in view of the following: a) The unit cost for the capacitor was based on the price benchmark provided in the Commission's Valuation Handbook; b) The estimated cost already includes the installation, plant and overhead costs for unit and accessories required for the installation; and c) The cost of the 25 kVAR capacitor is not available in the said benchmark and in the 2012 NEA price index.
In view thereof, the Commission considered its unit cost as similar with the 50 kVAR capacitor. Shown below is a breakdown of the recalculated total project cost:
No. of Unit Cost Project / Activity Materials I specifications I I Total cost (PhP) I I Units (PhP/unit) capacitors 25kVAR 35,400.00 247,800.00 Capacitor Installation I I I I capacitors f 50k VAR I 6 I 35,400.00 212,400.00 Grand Total (PhP) 460,200.00 - I I DIFA ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 34 of 62
Installation of I MVA Auto Voltage Regulator (AVR) for San Juan Feeder
The Santo Domingo Substation/San Juan Feeder is presently experiencing power quality problem at medium voltage section. The said feeder has a voltage of 0.77 per unit which was measured at its farthest end of the line. Most areas with under-voltage are beyond the economic load reach of the particular circuit. The said measurement is not in compliance with the standards provided in the PDC.
To address the deficiency, ISECO intends to install three (3) units of single phase, 333 kVA Automatic Voltage Regulator (AVR) within the said feeder. The existing performance assessment of the feeder and the strategic location where the proposed AVR shall be installed is shown in the figure below:
1 - • Opcn Sco ndcjry S j r tJry Un dr b it E BK210-Ar 0.90 P.U. 3-33KVA A.V.P.
4..
ETCDOflWCC t.
The proposed project will not only address power quality problem but also provide a more efficient distribution system within the areas served by the said feeder. Shown below are the indications of technical system loss duction by an average of seventeen percent (17%) within fiv : ERC Case No. 2011-1 23 RC DECISION/December 10, 2012 Paae 35 of 62
Voltage Level Technical System Loss ear Existing With the Project Existing With the Project 2010 0.75 0.98 2,911,830.29 2,448,247.24 2011 0.74 0.97 3,210,203.39 2,628,258.13 2012 0.72 0.96 3,481072.20 2,837,840.94 2013 0.70 0.95 3,799,837.20 3,084,983.42 2014 0.65 0.92 4,113,864.44 3,552,163.65
ISECO has formulated feasible alternatives to determine the optimum project that will address the power quality problems at a least cost, to wit:
Alternative Cost of Energy I Lifetime cost I Proposed Project I Initial cost (PhP) O&M (PhP) Remarks No. I I I I Loss (PhP) I NPV (PhP) I I Capacitor Installation I 1,311,779.30 I 39,353.38 I 21,913,614.97 I 86,592,858.33 Rank 2 in cost 2 lnstallationofAVR I 1,059,072.68 31,772.18 I 13,340,451.19 52,984,911,84 I LeastCost 3 Conductor Uprating 17,529,859.62 I 525,895.79 I 18,042,281.11 I 88,306,172.77 Rank 1 in cost
The Commission has recalculated the proposed project costs and determined that said costs should be reduced in view of the following: a) The cost alignment of some materials, specifically the required poles and wires, was based on the price benchmark provided in the Commission's Valuation Handbook; and b) The said price index already includes five percent (5%) contingency and twelve percent (12%) Value Added Tax (VAT). Shown below is a breakdown of the total project cost:
No. Materials Specifications Length (m) No. Unit cost Total Cost (PhP) of (PhP/unit) Units
1 AVR 333 kVA - 3 319,680.00 959,040.00
2 Blade Switch 15kV - 3 9,888.00 29,664,00
3 Lightning Arresters 15 kV - 3 2,500.00 7,500.00
4 Poles 35' Wood Pole - 2 12,792.00 25,584.00
5 CrossArm 4x4x10' - 9 1,680.00 15,120.00
6 Main Conductor #4/0 ACSR AWG 30.00 - 61.65 1,849.50
7 Ground Wire #4AWG 30.00 - 150.00 4,500.00
8 Accessories - - 1 set 14,041.52 14,041.52 Grand Total (PhP) 1,057,299.02 4t
ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 36 of 62
Reconfiguration/Splitting of Two (2) Feeders
The Candon Feeder of the Candon Substation and Bantay Feeder of the Vigan Substation are presently exposed to outages. The occurrence of outages in any one (1) of them is detrimental to the said customers considering that both feeders are serving large commercial consumers.
To improve the power supply reliability in these feeders, ISECO proposed the following: 1) reconfiguration and splitting of the Candon Feeder in two (2); and 2) reconfiguration and splitting of the Bantay s Feeder in two (2). The first (i ) proposed project includes the refurbishment of an existing line which was previously used by Philippine Tobacco Flue-curing Corporation (PTFC), a decommissioned commercial consumer of ISECO. The second (2nd) proposal includes the construction of a 1.695 km. double circuit three (3) phase line. The existing line configuration of the feeders and the proposed projects are shown in the following figures:
Figure 1. Candon Feeder Figure 2. Bantay Feeder
- Lecjend Lrid
PFi :2_ Il --• 1 C . - Opii5ecoiidrv •-: ! I . / ' I •, (J1 I ) I -
/lSUBSTATFON TATO 4.. -• ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pacie 37 of 62
The proposed project will not only address reliability improvement but also provide a more efficient distribution system in the areas served by the said feeders. EENS of the Candon and Bantay Feeders will improve by forty eight percent (48%) and twenty seven (27%) percent, respectively. Shown below are the indications of technical system loss reduction by an average of seventeen percent (17%) and twenty seven percent (27%), respectively, within five (5) years:
candon Feeder Bantay Feeder Year Existing With Project Existing. With Project 2010 2,876,978.10 2,429,500.44 3,278,979.91 2,428,773.80 2011 3,111,325.81 2,615,271.48 3,527,748.99 2,596,906.33 Technical System ° 2012 3,379,932.18 2,827,809.26 3,824,430.77 2,797804.23 2013 3,691,574.06 3,074,603.13 4,145,850.56 3,014,619.76 2014 3,924,705.60 3,224,991.34 4262,527.37 3,065,232.75 EENS (KWh) 75,390.38 39,286.11 41,606.23 30,325.78
Since the project is intended to optimize the distribution system, ISECO assessed its economic viability upon implementation. Based on its assessment, the proposed project is viable since its Net Present Value (NPV) is positive and the Benefit-Cost Ratio is greater than one (1). The assessment was based on five (5) years effectivity period exclusive of any discount rate considering that the project will be funded through its Reinvestment Fund for Sustainable Capital Expenditures (RFSC). Shown below is a summary of the assessment:
B/C 8.65 Discount Rate (cost of debt) N/A PV of Benefits PhP36,067,743.70 PV of Cost PhP4,167,523.02 Total Benefits (NPV) PhP31 ,900,220.68
The Commission has recomputed the proposed project cost and determined that said cost should be reduced taking into account the following: 1) the cost alignment of the required materials for the refurbishment of the PTFC line in Candon; and b) the construction of double circuit line in Bantay consisting of poles and wires with the price benchmark provided in the 2012 NEA Price Index.
The said price index already includes five percent (5%) contingency and (12%) Value Added Tax (VAT). Shown below is th the total project cost: ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 38 of 62
Length (in) No. Unit Cost (PhP/unit) Project Cost (PhP) No. Project I Activity Specifications of Candon Bantay candon Bantay Candon Bantay Unith
1 Recloser Installation - - - 1 set 732074.00 732074.00 732074.00 732074.00 Disconnect Switch 2 - 1 set 344,533.16 344533.16 344,533.16 344533.16 Installation - - Refurbishment cost
3 Pole Installation - - - 1 set 284,047.68 270,576.00 284,047,68 1 270,576.00
#4/0AcSR - 5,040 - - 61.65 - 310,716.00
#2/0AcsR 3,540 - - 38.68 - 136,927.20 -
4 Conductor Installation #1/0 ACSR 450 - - 30.14 - 13,563.00 - #2ACSR 15 - - 3873 - 58095 -
5 Required Accessories - - - 1 set 230,996.06 223,311.86 230,996.06 223,311.86 Sub-Total (PhP) 1,742,722.05 1,881,211.02 Grand Total (PhP) 3.623.933.06
Conversion of the Secondary Lines
ISECO has utilized #6 AWG duplex wires as service drop and service entrance on some of its residential consumers which were filled on improvised lift poles. This type of installation is hazardous since it can cause electrocution due to overloading of the conductor. It is also not in compliance with standards set by the Philippine Electrical Code (PEC), particularly on the required minimum height clearances forservice entrance.
The conversion of these lines to underbuilt or open-secondary will prevent accidental electrocution and overloading and deter the commission of pilferages.
ISECO proposed the rehabilitation and upgrading of service drops from #6 duplex wires to #2 or #2/0 duplex wires. Shown below is a summary of the project costs requirement:
Unit Cost Project Cost (PhP) Project I Activity No. of Project Year (PhP/project) 2010 2011 9 109,920.07 2010 989,280.61 Line Rehabilitation - 21 103,258.64 I 2011 - 2,168,431.34 Sub-Total (PhP) 219,840.14 206,517.27 Grand Total (PhP) 3,157,711.95
ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 39 of 62
Low Voltage for Power Quality Correction
ISECO assessed the effect of the increasing power demand of its consumers. Based on its load flow simulations, several secondary lines will experience under-voltage since some of these lines will be over-extended to energize future customers. Shown below are the possible line configurations and its effect on the system without the project:
Figure 1. Existinq Set-up
Primary Line, 7.62kV Over-extended Secondary Line, 230V
TI n Additional DT H I! II Voltage measured at the farthest end Luies (Servce Drop) going to ISECOs customers of the sec line = 0.85 p u or 195 V
Figure 2. Proposed Set-up
Secondary Extended Primary Line, 7.62kv Line, 230V C ) (ET ( Additional OT H 1 Voltage measured at the farthest end Lines (Service Drop) going to ISECOs customers of the sec. line = 0.97 pu or 223 V
A shown in Figure 2, ISECO intends to construct additional lines to extend its primary lines in order to improve its power quality using secondary lines. It further identified feeders intended for extension. Shown below is a summary of feeders and their corresponding cost requirement:
No. of Primary Line No. Feeder Name Total Cost (PhP) Segment for Extension 1 Sto. Domingo 2 206,153.46 2 Narvacan 7 636,212.02 3 Caoayan 7 817,172.10 4 Bantay 17 1,422,394.56 \ Grand Total (PhP) 3,081,932.14 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 40 of62
Installation of Distribution Transformers (DTs)
The installation of additional distribution transformers is a continuing process to address load growth. Additional loads require additional capacity in the secondary network.
The distribution transformer (DT) requirement was predicted based on the 7-year historical trend of the installed communal transformers in the distribution system. The historical and forecasted number of customers were used as the regressor to predict the annual DT requirement. The forecasted model used to determine the quantity of DT requirement is represented by the equation: DT = 198.7924 + 5.7153t + 0.0069t3. The chosen model passed and met all the criteria necessary to validate the accuracy of the forecasted model. The said model has an Adjusted R 2 of 0.99218 and a MAPE of 2.3049%. Meanwhile, the predicted annual quantity of DT per capacity is an allocation based on the percentage sharing of capacity for the year 2009.
Shown below is the summary of the total cost requirement of the project:
No. of Units Unit Cost Project Cost (PhP) - Equipment 2010 2011 1 2012 (PhP/unit) 2010 2011 2012 DT, 10 WA 22 22 1 23 58,300.00 1,282,600.00 1,282,600.00 1340,900.00 DT, 15 kVA 22 22 23 62,700.00 1,379,400.00 1,379,400.00 1,442,100.00 DT, 25 WA 17 18 18 75,200.00 1,278,400.00 1,353,600.00 1,353,600.00 DT, 37.5 WA 17 18 18 108,640.00 1,846,880.00 1,955,520.00 1,955,520.00 DT, 50 kVA 4 4 5 110,000.00 440,000.00 440,000.00 550,000.00 DT, 75 kVA 4 4 5 140,900.00 563,600.00 563,600.00 704,500.00 Fuse Cutout, 15kV 87 89 92 2,588.33 225,184.71 230,361.37 238,126.36 Lightning Arresters, 15kv 87 89 92 2,500.00 217,500.00 222,500.00 230,000.00
Accessories 1 set - - 285,846.42 285,846.42 - -
Accessories - 1 set - 311,263.87 - 311,263.87 -
Accessories - - 1 set 153,914.37 - - 153,914.37 Sub-Total (PhP) 7,519,411.13 7,738,845.24 7,968,660.73 Grand Total (PhP) 23,226,917.10
The estimated cost already includes all costs to establish the •distribution transformer including High Voltage (HV) fuse cut-outs and lightning arresters. The unit cost of the fuse cut-out was based on the 2012 NEA Price Index. ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe 41 of 62
CAPEX for Low Voltage Distribution Lines
ISECO proposed the expansion of its secondary network to provide secondary lines for the predicted new residential consumers and other 230-volt customers.
The predicted secondary expansions were based on a seven (7) year historical trend of secondary line construction projects. The historical and forecasted residential connections were used as the regressor to determine the length requirement of the secondary distribution. The regression model used to establish the required length of tines is represented by the equation: SL = 471.481 + 1.6552t2 - 0.05478t3. The said model passed all the necessary testing to validate the accuracy of the forecasted model. The said model has an Adjusted R 2 of 0.99714 and a MAPE of 0.421%.
The Commission has recalculated the proposed project costs and determined that said costs should be reduced in view of the following: a) The cost alignment of some materials, specifically the required poles and wires, was based on the price benchmark provided in the Commission's Valuation Handbook; and b) The said price index already includes five percent (5%) contingency and twelve percent (12%) Value Added Tax (VAT). Shown below is a breakdown of the total project cost:
Length_(m) No. of Units Unit cost Project Cost (PhP) peciS ica•f Ions 2010 2011 2012 2010 2011 2012 (PhP/unit) 2010 2011 2012
25 Wood - - - 198 211 216 7,306.00 1,446,588.00 1,541,566.00 1,578,096.00
ch 3'Wood - - - 107 114 116 727.40 77631.80 82,923.60 84,376.40
#2 Duplex 4,581 4,875 4,981 - - - 41.58 190,477.98 202,702.50 207,109.98
#1/0 Duplex 3,665 3,900 3,985 - - - 72.24 264,759.60 281,736.00 287,876.40
#2/0 Duplex 916 975 996 - - - 90.57 82,962.12 86,305.75 90,207.72 o #2 Poly- 6,108 6,500 6,641 - - - 36.73 236,562.84 251,745.00 257,205.93 insulated
4,686 5,200 5,313 - - - 49.10 239,902.60 255,320.00 260,666.30 insulated #2/0 Poly- 1,222 1,300 1,328 - - - 55.75 66,128.50 72,475.00 74,036.00 insulated
Accessories - - - - 1 set - - 269,839.10 269,839.10 - -
Accessories - - - - - 1 set - 287,183.03 - 287,183.03 -
Accessories ------1 set 1 293,406.05 - - 293,406.05 Sub-Total (PhP) 2,877,050.54 3,063,956.88 3,133,184.76 Grand Total 9,074,192.20 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 42 of 62
New Low Voltage Customer Connection Requirements
ISECO is committed to provide distribution services and connections to its distribution system network consistent with the PDC.
Load growth dictates the addition of new equipment and assets to forecast the number of new connections. Forecasting of new customers was based on a seven (7) year historical customer data of ISECO. Each of customer types was forecasted separately to capture the best model for each customer type. The model adapted in the customer forecast of the whole system is represented by the equation: Customer = 106,453 - 10,347f 1 + 436t2. The chosen model passed and met all the criteria necessary to validate the accuracy of the forecasted model. The said model has an Adjusted R2 of 0.99617 and a MAPE of 0.446%.
With the determination of the total number of customers per year, the annual additional number of customers will then be identified by subtracting the forecasted number of customer in a year from the total number of customers for the year 2009.
The Commission recalculated the proposed project costs and determined that said costs should be reduced in view of the following: a) The cost alignment of some materials, specifically the required poles and wires, was based on the price benchmark provided in the Commission's Valuation Handbook; and b) The said price index already includes five percent (5%) contingency and twelve percent (12%) Value Added Tax (VAT). Shown below is a breakdown of the total project cost:
Length (m) No. of Units Unit Cost Project Cost (PhP) Materials Specifications 2010 1 2011 2012 2010 2011 1 2012 (PhP/unit) 2010 2011 2012
1 phase, -
10(60)A, - . . 6,667 7.625 8,413 818.57 5,457,406.19 6.241.596.25 6,886,629.41 bottom Electronic connected KWh meter 1 phase, iSA,
2-wire, soolcet - . . 801 765 826 1.76869 1,416,720.69 1,353,047.85 1,460,937.94 type #6 ACSR Conductor - 251,700 277.170 . - . 20.77 . 5,227,809.00 5,756,820.90 Duplex
Accessories . - . . 1 set . . 2,003.21632 2,003,216.32 - -
Accessories - - . - 1 set - 2,737,153.60 - 2,737,153.60 -
Accessories - - - - 1 set 3,014,130.96 - - 3.014,130.96 Sub-Total (PhP) 8,877,343.20 15,559,606.70 17.118,519.21 Grand Total (PhP) 41,555,469.11
C ffif • ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 43 of 62
Replacement of Old and Inaccurate kWh meters
Several of ISECO's installed kWh meters have exceeded their operational life making them inaccurate and unreliable. These meters contributed to the continuous amplification of unaccounted losses or high non-technical losses. Shown below is a summary of the installed meters with high internal meter loss and low accuracy:
EnyNo. Ave. Internal No. Meter Type In,7aaZd Ave. Error (%) Physical Remarks 1 GOLDSTAR 25 3,919 1.440 5.89 Adjustment is improbable 2 TATUNG 32 6,684 0.936 3.07 Adjustment is improbable 3 FUJI 29 7,431 0.936 3.87 Adjustment is improbable 4 SOLAR 31 2,018 2.160 6.96 Adjustment is improbable 5 EVER 20 1,829 2.160 9.31 Adjustment is improbable 6 ACESTAR 5 15,399 0.300 2.00 Blurred Meter Glass 7 HARBIN 30 591 0.864 8.13 Adjustment is improbable 8 MITSUBISHI 25 479 1.944 2.00 Adjustment is improbable Total Installed Meters 38,350 Proposed Meters for 28,600 Replacement
ISECO proposed to purchase new KWh meters to replace its existing old and inaccurate kWh electronic meters. Brand new kWh meters have lower internal meter loss compared to electromechanical meters. Shown below is the summary of the proposed project cost:
Equipment Meter No. of Units Unit cost Project cost (PhP) I Materials Brand 2010 2011 2012 (PhP/unit) 2010 2011 2012 ENERTEK 3,400 4,500 6,400 1,000.00 3,400,000.00 4,500,000.00 6,400,000.00 KWh M e er ACCURA 3,400 4,500 6,400 950.00 3,230,000.00 4,275,000.00 6,080,000.00 Wood - 20,400 27,000 38,400 1.50 30,600.00 40,500.00 57,600.00 Screw ______Sub-Total (Qty.) 6,800 9,000 12,800 Sub-Total (PhP) 6,660,600.00 8,815,500.00 12,537,600.00 Total Grand Total (Qty.) 28,600 28,013,700.00 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pace 44 of 62
Based on ISECO's assessment, the proposed project is viable since its NPV is positive and the Benefit-Cost Ratio is greater than one (1). The assessment was based on a ten (10) year effectivity period of the project and a nine percent (9%) discount rate considering that the said project will be funded through a private bank. Shown below is a summary of the assessment:
B/C 1.37 Discount Rate (cost of debt) 9% PV of Benefits PhP37578,679.66 PV of cost PhP27,498,465.58 Total Benefits (NPV) PhP10,080,214.08
Construction of Distribution Lines for Rural Electrification
The project aims to address new connection and missionary electrification to remote areas of ISECO. It intends to construct primary and secondary distribution lines extension to its potential forty eight (48) locations with 1,264 consumers are expected to benefit through the project which will be subsidized by the Department of Energy (DOE), congressional funds, Local Government Unit (LGU), and the NEA.
Required ciréuit Length (km) Project cost Year Open 1-phase I Under Built (PhP) I Secondary 2010 8.85 I 3.41 1.87 5095,718.58 2011 50.26 I 11.29 9.24 22,778,869.42 2012 19.70 2.71 2.00 9,062,989.68 Grand Total 36,937,577.68 (PhP)
Acquisition of Meter Reading and Billing Devices
ISECO proposed to replace its existing phased-out meters, reading devices rmal printers with modern devices. The specifications of thaalterio and billing devices should be an IF ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pace 45 of 62
rated, Windows CE based hand held computer with wireless printing capability using Bluetooth technology. The procurement of said devices is necessary considering its existing devices are obsolete and beyond repair. In fact, the manufacturer of the said equipment has already stopped its production making it expensive to procure the spare parts. ISECO has no other recourse but to replace the existing devices.
Based on its economic analysis, the procurement of a new up- to-date meter reading and billing devices are economical in terms of maintenance cost. The reliability of reading data and time lost or delayed reading due to faulty reading device were also considered by ISECO. Shown below is a breakdown of spare parts and corresponding cost and summary of annual cost requirement inclusive of twelve percent (12%) VAT and handling cost:
PSION Work-About MX Spare Parts (Existing PSION Neo (New Unit) Items/Parts cost (PhP) Items/Parts cost (PhP) PSION Neo 35,400.00 Work-About Case & Keypad 8,500.00 Wall Charger Adaptor 2,073.60 Drawer Kit Assembly 6,500.00 Docking Connector 1,324.80 LCD Screen 10,500.00 Lithium Ion Battery 5,100.00 Top Cover w/ Drawer Lock 2,500.00 Charging Unit 4,546.00 NIMH Rechargeable battery 1.949,00 ______Solid State Disk 2MB 10,100.00 Total (PhP) 43,898.40 Total (PhP) 42,646.00
Project Cost Year No. of Units I I (PhP) I 2010 I 20 sets I 1,233,375.36 I 2011 I 25 sets I 1,760,913.50 I Grand Total (PhP) I 2,994,288.86 I
Acquisition of Additional Calibrating Machine
The purchase of additional calibrating machine is in compliance with the Commission's regtirement for a Category "A" Meter Shop. The existing calibrating miine will serve as the reference electronic watt-hour meter standard ile the additional calibrating machine will ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 46 of 62 serve as the working electronic waft-hour meter standard. The working electronic waft-hour meter standard with PTS2.3 CALPORT model will be used for field testing of brand new and reconditioned/repaired meters. The proposed project cost is inclusive of twelve percent (12%) VAT and handling cost.
Acquisition of Infrared Thermal Imager
ISECO has proposed to acquire Thermal Imager essential in determining the hot spot connections of the entire electrical distribution network due to corrosion and loose connections. The device will also determine and measure temperature, energy and thermal losses caused by loose connections on primary and secondary bushings or taps of power and distribution transformers, voltage regulators, reclosers, circuit breakers, capacitors, and other line equipments, as well as the primary and secondary line tappings and service drop wires. The project will provide reliability in terms of customer service and safety of ISECO's entire distribution system.
Acquisition of Linemen Tools and Safety Apparels
The safety and welfare of ISECO's human resources will be its utmost and priority program, which is part of its Human Resource Management (HRM) program. Its technical personnel, particularly the linemen are presently equipped with tools and safety personal protective devices which are already old and worn-out. Some of its field technical men are presently deficient in the necessary safety apparels such as safety shoes, hardhats and working gloves.
The Commission deems it appropriate to include the acquisition of linemen's tools and safety apparels for maintenance works to ISECO's Operations and Maintenance (0 & M) expenditures. if ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 47 of 62
Acquisition of Transformer Test Equipment
The acquisition of Transformer Test Equipment will enable ISECO to continuously monitor the condition of its power transformers and other high voltage equipment such as circuit breakers, three (3) phase reclosers, air break switches, bank capacitors and others. The test equipments include the Insulation Power Factor (C and DF), three (3) phase Transformer Turns Ratio (TTR) w/ Power DB Onboard and Transformer Ohm meter (Winding Resistance Tester).
At present, the insulation tester is the only test equipment that it possesses which is already defective. The probability of a longer power outage is imminent considering that there is no immediate test equipment available on hand. This equipment will improve ISECO's system reliability since it has the capability of providing preventive maintenance measures. Below is a summary of the project cost:
Brand! No. of Unit Cost Project Cost No. Equipment Specifications Units (PhP/unit) (PhP) Insulator Power Factor Megger, 10kV 1 set 4,800,000.00 4,800,000.00 3-phase 1TR w/PowerDB 2 Megger, 230V 1 set 1,550,000.00 1,550,000.00 On-Board 3 Transformer Ohmmeter Megger, 230V I set 1,200,000.00 1,200,000.00 Grand Total (PhP) 7,550,000.00
Acquisition of Service Vehicles
The acquisition of additional eighteen (18) service vehicles such as 4-Wheel Drive Extreme Utility Vehicles (4WD-XUV), Transportation Van and Motorcycles will be utilized in addressing requests/complaints of member-consumers. The vehicles will also enable it to reach far areas during rainy season, augment the fleet of available vehicles and enhance mobility and improve reliability of service to customers. ISECO is replacing its old service vehicles that are costly to maintain. ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae 48 of 62
The Commission reduced the proposed project cost based on the submitted quotations from potential suppliers. The said price index already includes all costs incurred in acquisition of the vehicles. Shown below is a summary of the project cost:
Year Vehicle Specifications No. of Units Unit cost (PhP/unit) Project Cost (PhP)
XRM (125 Dual 2010 Motorcycle 2 59,266.00 118,532.00 Sport) XRM (125 Dual Motorcycle 3 59,266.00 177,798.00 Sport) 2011 4WDAUV NISSAN Navara 3 1,110,000.00 3,330,000.00 Van LL-300FB 5 641,100.00 3,205,500.00 2012 Van -3FB00 5 641,100.00 3,205,500.00 Grand Total (PhP)J 10,037,330.00
Acquisition of Boom Trucks
ISECO deems it appropriate to acquire dependable and additional vehicle in order to meet, if not surpass, its customer's expectation on maintenance capability. It proposed to acquire two (2) second hand Boom Trucks and four (4) brand new Boom Trucks.
Boom trucks are designed with a single or double-arm boom or a hydraulic outrigger jack for extra stability. With trained employees to operate the equipment, ISECO will be able to save time and effort in addressing power interruptions and maintaining with power supply reliability. Shown below is a summary of the total project cost:
No. of I Unit Cost Year Vehicle Description Project Cost (PIP) Unith I (PhP/unit) 2010 Boom Truck I Second Hand 2 I 699,100.00 1,398,200.00 I 2011 Boom Truck I ALTEC DM47 2 I 12,000,000.00 24,000,000.00 I 2012 I Boom Truck ALTEC DM47 2 12,000,000.00 24,000,000.00 Grand Total (PhP) 49,398,200.00 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pane 49 of 62
Acquisition of Server Computer
ISECO's current main server is used for the computerized billing, collection and meter reading. Its present computer system could no longer accommodate its large number of customer data such as master file, consumer ledger, history, sales, teller collection files and meter reading data. It opted to buy an additional new hard drive but the type of server is no longer available in the market.
Thus, ISECO intends to acquire a brand new and modern type server to meet the existing and increasing demand of its customers. The model it intends to purchase is IBM x 3500 M3 type main frame computer with licensed operating system and server class UPS for the Computerized Electric Billing and Collection System. Its features are more reliable due to swappable hard drive and power. It also has a password that enables the server operating system and automatic hard drive replication through Redundant Array of Independent Disk (RAID) technology. It includes original license Windows 2008 Advance Server that can support up to 20 clients. The estimated cost already includes the necessities for its installation and configuration and the required VAT.
Acquisition of Lot and Construction of a Collection Office at Cervantes
ISECO's collection of bulk payments and data processes are conducted in its Sta. Cruz Sub-office. Its sub-office had been serving its widest coverage area which includes three (3) lowland and seven (7) upland municipalities. The two (2) upland Municipalities of Cervantes and Quirino are the farthest towns being served by the said sub-office with substantial increase of customers due to the recent developments in these towns for several years. ISECO rented an office in Cervantes in order to serve the technical and institutional needs of its consumers.
In view of the c mor of its consumers in the Municipality of Cervantez to have collection office, it intends to acquire a prospective resident 4J or copImercial lot located in the said town. ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 50 of 62
The lot has an area of 300 sq. meters suitable for an office of about 10 x 8.5 sq. meters. This office building will serve as collection and payment center for the town of Cervantes, Quirino and Suyo. It will also serve as venues for official business or institutional meetings and as stock room for the materials acquired for serving the abovementioned towns. The proposed project would provide collection efficiency and improve services to its consumers.
The Commission reduced the project cost due to the modification of the labor cost and contingency allotment using the twenty five percent (25%) and five percent (5%) of the material cost. Shown below is a summary of project cost:
Labor & Material No. Project / Activity contingency cost Project cost (PhP) I cost (PhP) I (PhP) 1 civil wos 1,092,208.00 I 327,662.40 1,419,870.40 I 2 I Lot Acquisition 300,000.00 I - 300,000.00 Grand Total (PhP) 1,719870.40
Acquisition of Total Utility Billing and Collection System - TUBS
ISECO's existing billing, collection and meter reading systems were used since 2003. In the event that this system will have to be revised or additional program processes are needed, ISECO will require the service provider source code. However, there were instances that the said provider could no longer accommodate the immediate request of ISECO. Certain program processes and report generation is not accurately performed by its existing system. For instance, the back-end database (Fox Based) used by the said system is not ideal for enterprise level operation and requires higher bandwidth in order to operate in WAN environment.
ISECO intends to replace its entire existing Computerized Electric Billing/Collection with a precise and updated type of system to aid the management in decision-making. It proposed to purchase a new system that applies industry standard development software and SQL as backend database. It shall also feature a complete auditing trail of transactions and high level of security. The overall design of the systeny'all comply with current demands of the ERG Gase No. 2011-123 RC DEGISION/December 10, 2012 PaQe 51 of62
electric industry in compliance with existing government and regutory agencies and actual work flow of the cooperative.
The cost for each components of the project is not quantified considering that the said system are being offered in package. Shown below are the required components of the project:
Equipment! No. of Unit cost Project cost (PhP) No. Payment Scheme Year Materials Units (PhP/unit) 2011 I 2012 Initial Payments TUBS w/site 1 1 751,584.00 2011 751,584.00 (30%) license j - Remaining & 2 free tellers 2 1 1,753,696.00 2012 1,753,696.00 Payment printer - Grand Total (PhP) 2,505,280.00
Acquisition of SynerGee Software Protection Module and SynerGee Software's Maintenance Fees
ISECO will procure computer software to enable its engineers to perform evaluation of the protective devices of its distribution system. If not properly evaluated and damage to equipment occurs, its systems reliability and consumer safety will be adversely affected.
The software program that it intends to purchase is the SynerGee Software Protection Module which is designed to provide useful engineering information about coordination problems or settings problems that may exist among the protective devices in the system. It has the protection coordination analysis application that will evaluate the characteristics of fuses, reclosers, breakers, and sectionalizers with the use of the said software, coordination of these devices throughout the system will be examined, verified overcurrent coordination among protective devices as well as the protection of transformers.
The said software requires a maintenance fee which will be paid annually to the supplier. ISECO already had another SynerGee program (Load Flow Analysis Software) from the same supplier but with different function. It also proposed to include its maintenance fees to this project. Shonj below is a summary of the project cost: ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pacie 52 of 62
No. Project Cost (PhP) Unit Cost No. ProjectlActivity of Year (PhP/unit) 2010 2011 2012 Units Acquisition of 1 271,803.00 2010 271,803.00 - - Software
2 M&S Protection 1 52,200.00 2010 52,200.00 - -
3 Maintenance Fee 1 78,300.00 2011 .. 78,300.00 -
4 Maintenance Fee 1 78,300.00 2012 - - 78,300.00 I (irand Total (PhP) I 450,603.00
COST ANALYSIS
ISECOs' proposed Cost estimates included the corresponding economic and financial analysis. The estimated cost of its network and non-network projects were based on the NEA Price Index and standards on specific Construction Assembly Units for electric distribution system. It also includes acquisition cost of the needed materials, taxes and labor. On the other hand, the estimated cost for non-electrical capital projects such as the power transformers, circuit breakers, sets of testing equipment and computer generated programs to be acquired by the cooperative was determined based on the prevailing market price with the assistance of Professional Engineering Consultants and were subjected to public, transparent and competitive biddings.
The Commission evaluated and assessed the entire cost estimates of the recommended projects for capitalization by ISECO. The cost assessment was based primarily in reference with the ERC Valuation Handbook pursuant to Resolution No. 17, series of 2010 entitled "A Resolution Adopting the Valuation Handbook for the Optimized Depreciated Replacement Cost Valuation of System Fixed Assets of Privately Owned Distribution Utilities Operating Under Performance-Based Regulation (PBR)" and the latest NEA Price Index for the year 2012. The proposed cost estimates that has exceeded the benchmark provided in the said ERC Valuation Handbook or the NEA price index were reduced while the estimated costs that are close to the said benchmarks were retained. ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe 53 of62
Considering disapproval and cost reductions of some of the proposed projects, the recommended estimated project cost is shown below:
Summary of the Recommended CAPEX Cost
Annual Project Cost (PhP) Pro pose d Pro ects Total Project 2010 2011 2012 Cost (PhP) Acquisition of TransCo's 69kV subtransrnission line - 14589,224.09 - 14,569,224.09 Refurbishment of the acquired 69kV subtransmission line - 3.617,658.08 3,617,85806 7,235,716.16 Installation of Line Recloser for Three (3) Feeders 2,196,222.00 . - 2,196.222.00 Installation of Line Recloser for Two (2) Feeders - 1,464,148.00 - 1,464,148.00 Installation of 475kVAR Capacitors for Two (2) Feeders . 460,200.00 - 460,200.00 Installation of 1 MVA AVR for San Juan Feeder - 1,057,299.02 . 1,057,299.02 Reconfiguration / Splitting of Two (2) Feeders 3,623,933.06 - - 3.623,933.06 Revamp of Secondary Lines 989,280.61 2,168,431.34 - 3,157,711.95 Low Voltage Distribution for Power Quality Correction - 3,081,932.14 - 3,081,932.14 CAPEX for Distribution Transformer 7,519.411.13 7,738,845.24 7,968,660.73 23,226,917.10 CAPEX for Low Voltage Distribution Lines 2,877,050.54 3,063,956.88 3,133,184.78 9074,192.20 New Low Voltage Customer Connection Requirements 8,877,343.20 15,559,606.70 17,118.519.21 41,555,469.11 Replacement of Old, Dilapidated and Low Accuracy lh meters 6.660,600.00 8,815,500.00 12,537,600.00 28,013,700.00 Energization of Remaining Sitios 5,095,718.58 22,778,869.42 9.062,989.68 36,937,577.68 Meter Reading and Billing Devices 1,233,375.36 1,760,913.50 - 2,994,288.86 Acquisition of Additional Calibrating Machine - 1.602,100.00 - 1,602,100,00 Acquisition of Infrared Thermal Imager - - 943,200.00 943,200,00 Acquisition of Transformer Test Equipment - 7,550,000.00 . 71 550,000.00 Purchase of Service Vehicles 118,532.00 6713,298.00 3,205,500,00 10,037,330.00 Purchase of Boom Trucks 1.398,200.00 24,000,000,00 24.000,000.00 49,398,200.00 Server Computer 254,900.00 - . 254,900.00 Acquisition of lot and Construction of Collection Office at Cervantes - - 1,719,870.40 1,719.870.40 Acquisition of Total Utility Billing and Collection System (TUBS) - 751,584,00 1,753,696.00 2,505.280.00 Acquisition of SynerGee Software Protection Module and SynerGee Software's Maintenance Fees 324,003,00 78,300.00 78,300.00 480,603.00 Grand Total (PhP) 41,168,569,48 126,852,066,41 85,139,378.88 253,160,014.77
ISECO has included in its application an annual inflation rate 2 factor of three percent (3%) to cover the future cost of projects. However, as can be gleaned from the above tabulation, the proposed costs of several materials are higher than the NEA price references. The Commission finds ISECO's proposed inflation rate not meritorious considering that the NEA price benchmark already includes contingency and inflation rate factor of five percent (5%) of the total material cost and that the published breakdown of project cost was not incorporated with the said inflation rate.
2 Inflation rate is a measur • the rate of increase of a price index such as the consumer price inde, ntage rate of change in price level over time, usually one year. ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 54 of 62
AUTHORITY TO SECURE LOAN
ISECO seeks authority to secure loan from NEA and other financing institutions to finance its capital expenditure projects. The National Transmission Corporation (TRANSCO) also offered the cost of its subtransmission asset in the amount of PhP19,527,464.00. Shown below is the breakdown of ISECO's financiers:
Amount to be Loaned (PhP) Financing Source Total (PhP) 2010 I 2011 I 2012
TRANSCO - I 19527,464.00 - 19,527,464.00
NEA - I 37,044,009.00 36,631,029.00 73,675,038.00
Private Banks - I 48,904,160.00 25,461,600.00 74,365,760.00 Grand Total (PhP) 105,475,633.00 62,092,629.00 167,568,262.00 - I
NEA and several private banks have certified that they will finance ISECOs capital projects in the amount enumerated in the table above. The proposed principal amount was based on the projects it specified. The proposed loan conditions of NEA constitutes a fifteen (15) year loan term with annual interest rate of nine percent (9%) while the private banks shall be for a five (5) year loan term with annual interest rate of 7.0225%, subject to their respective present lending policies on loan approval and releases.
ISECO proposed a staggered scheme on NEA's and private bank loan releases. The release shall be on an annual basis as projected in the annual implementation of the projects. Funding for annual requirement shall be given before the periodic implementation of the project. Meanwhile, ISECO's Audited Financial Statements (AFS) for the base year 2009 and the projected financial statements with the implementation of the projects for the applied CAPEX years are as follows: -
Historical (Actual) Projections (with the projects in PhP'OOO) Financial Indicators 2009 2010 2011 2012 TotalAssets 1,008,662 1,062,992 1,215,614 1,276,732 Total Liabilities 303,209 301,361 401,139 441,263 Total Equity 705,453 761,631 814,474 835,469 Quick Assets 2197tp 230,674 235,135 208,422 Total Current Assets 3473) 351,186 355,647 328,935 Total Current Liabilities 20l,11 ,106,363 1 227,236 1 212,130 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe 55 of 62
Operating Revenue 1 1,042,005 1,172,510 1,237,659 1,305,755 Average collection Period 26 28 30 30 EBITDA (5,931) 43,079 1 44,516 42,824
The preceding tabulation above shows that with the implementation of the projects, Operating Margin (EBITDA 3) will increase from a negative amount to as high as PhP42.824 Million by year 2012 and with an annual growth of PhPI6.252 Million. Moreover, the expected social and economic benefits of these projects may not be realized if the network will remain in its existing condition. Investments and financial obligations appear stable so long as ISECO would be able to manage its cash flows and implement its capital projects.
RATE IMPACT ANALYSIS
Considering the modification of the total CAPEX requirement of ISECO, the loanable amount from the aforesaid financing institutions should be as follows:
Annual Project cost i Amount to be Loaned Financing Source (PIP) Total (PhP) 2010 1 2011 2012
TransCo - 14,589,224.09 - 14,589,224.09
NEA - 33,075,706.82 31,425,864.72 64,501,571.54
Private Banks - 44,911,580.14 24,000,000.00 68,911,580.14
Grand Total (PhP) - 92,576,511.05 55,425,864.72 148,002,375.77 • the recommended principal amount to be loaned from TransCo has been approved as per Decision issued on August 15, 2011 under ERc Case No. 2010-151 RC
The principal amount of PhP148,002,375.77 that ISECO should avail was derived on the basis of ISECO's projected cash flow on RFSC in order to mitigate the additional interest expense and to maximize the utilization of its RFSC revenues.
The Commission simulated the probable effect of ISECO's existing RFSC rate if it opted not to avail of any loans and utilize its expected revenues from the RFSC in financing the entire capital expenditure projects. Shown below is the Commission's simulation, to wit:
EBITDA - Earnings before and Amortization ERC Case No. 2011-123 RC DECISION/December 10, 2012 Page 56 of 62
2010 2011 2012 - 3-year Impact Energy Sales Forecast, Kwh 171,148,369 180,007,830 189,715,700 540,871,898 Approved RFSC Rate, PhP/KWh 0.2178 0.2178 0.2178 0.2178
Cash balance beginning, PhP, excess/(shortfall) - 1,664,216.23 1 (48,795,725.11) - CASH INFLOWS Current year RFSC Collection, PhP 37,276,114,69 39,205,705.35 41,320,079.46 117,801,899.49 50% income on leased properties, PhP 769,716.72 769,716.72 769,716.72 2,309,150.15
Loan proceeds from financial institutions, PhP - - - - Total Cash Inflows, PhP 38,045,831.40 39,975,422.06 42,089796.17 120,111,049.64 Available cash for disbursement, RiP 38,045,831.40 41,639,638.29 (6,705,928.94) 120,111049.64 CASH OUTFLOWS CAPEX Requirement, RiP 36,072,850.90 89,483,972.90 76,076,389.20 201,633,213.00
CAPEX Amortization, PhP - - 2,124,090.55 2,124,090.55 ERC Permit Fees, PhP 308,764.27 951,390.50 638,545.34 1,898,700.11 Total Cash Outflows, PhP 36,381,615.18 90,435,363.40 78,839,025.10 205,656,003.67 Cash balance ending, PhP, Excess/(Shortfall) 1,664,216.23 (48,795,725.11) (85,544,954.03) (85, 54.03) Rate Impact on RFSc, PhP/kWh, 00097 '0' 2711' '04509' 101582 Excess!(Shortfall) ' ' '
It can be gleaned that the revenues derived from ISECO's existing RFSC rate will not be sufficient to finance the total cost of the CAPEX without increasing its RFSC rate. Thus, the need to secure of the loan is essential to finance its CAPEX.
Shown below is the Commission's simulation of the indicative effect on the existing RFSC rate of ISECO by adopting the following conditions on the financing scheme of the ôapital expense:
1. Rate Impact based on the proposed loan terms and conditions of the aforementioned financiers:
2010 2011 2012 3-year Impact Energy Sales Forecast, KWh 171,148,369 180,007,830 189,715,700 540,871,898 Approved RFSC Rate, PhP/KWh 0.2178 0.2178 0.2178 0.2178
Cash balance beginning, RiP, excess/(shortfall) - 1,664,216,23 29,191,561.85 - CASH INFLOWS Current year RFSC Collection, PhP 37,276,114,69 39,205,705.35 41,320,079.46 117,801,899.49 50% income on leased properties, RiP 769,716.72 769,716.72 769,716.72 2,309,150.15 Loan proceeds from financial institutions, 77,987,286.96 55,425,864.72 133,413,151.68 PhP Total Cash Inflows, PhP 38,045,831.40 117,962,709.02 97,515,660.89 253,524,201.32 Available cash for disbursement, RiP 38,045,831.40 134,216,149.34 126,707,222.74 253,524,201.32 CASH OUTFLOWS CAPEX Requirement, PhP 36,072,850.90 89,483,972.90 76,076,389,20 201,633,213.00
CAPEX Amortization, PhP - - 16,893,193,74 16,893,193.74 ERC Permit Fees, PhP 308,764.27 951,390.50 638,545.34 1,898,700,11 Total Cash Outflows, PhP 36,381,615.18 90,435,363.40 93,608,128.28 220,425,106.85 Cash balance ending, PhP, Excess/(Shortfall) fl3,664,216.23 29,191,561.85 33,099,094.47 33,099,094.47 Rate Impact on RFSC, PhPIkWh, 00097 0.1622 01745 00612 Excess/(Shortfall) F/A ERC Case No. 2011-123 RC DECISIONIDecember 10, 2012 Pace 57 of 62
2. Rate Impact based on the entire CAPEX requirement to be financed from NEA:
2010 2011 2012 3-year Impact Energy Sales Forecast, KWh 171,148,369 180,007,830 189,715,700 540,871,898 Approved RFSC Rate, PhP/KWb 0.2178 0.2178 0.2178 0.2178
Cash balance beginning, PhP, excess/(shortfall) - 37,737,067.13 72,355,113.43 - CASH INFLOWS Current year RFSC Collection, PhP 37,276,114.69 39,205,705.35 41,320,079.46 117,801,899.49 50% income on leased properties, PhP 769,716.72 769,716.72 769,716.72 2,309,150.15 Loan proceeds from financial institutions, 36,072,850.90 89,483,972.90 76,076,389.20 201,633,213.00 PhP Total Cash Inflows, PhP 74,118,682.31 129,459,394.96 118,166,185.37 321,744,262.64 Available cash for disbursement, PhP 74,118,682.31 167,196,462.09 190,776,313.90 321744,262.64 CASH OUTFLOWS CAPEX Requirement, PhP 36,072,850.90 89,483,972.90 76,076,389.20 201,633,213.00
CAPEX Amortization, PhP - 4,150,970.17 16,572,148.22 20,723,118.39 ERC Permit Fees, PhP 308,764.27 951,390.50 638,545.34 1 1,898,700.11 Total Cash Outflows, PhP 36,381,615.18 94,586,333.57 93,287,082.76 224,255,031.50 Cash balance ending, PhP, Excess/(Shortfall) 37,737,067.13 72,610,128.53 97,489,231.14 97,489,231.14 Rate Impact on RFSC, PhP/kWh, 02205 04034 0.5139 01802 Excessl(Shortfall)
3. RFSC utilization and its deficit upon implementation of the projects:
2010 2011 2012 3-year Impact Energy Sales Forecast, KWh 171,148,369 180,007,830 189,715,700 540,871,898 Approved RFSC Rate, PhP/KWh 0.2178 0.2178 0.2178 0.2178
Cash balance beginning, PhP, excess/(shortfall) - 1,664,216.23 - - CASH INFLOWS Current year RFSC Collection, PhP 37,276,114.69 39,205,705.35 41,320,079.46 117,801,899.49 50% income on leased properties, PhP 769,716.72 769,716.72 769,716.72 2,309,150.15 Loan proceeds from financial institutions, - 48,795,725.11 42,364,243.93 91,159,969.04 PhP Total Cash Inflows, PhP 38,045,831.40 88,771,147.17 84,454,040.11 211,271,018.68 Available cash fordisbursement, PhP 38045,831.40 90,435,363.40 84,454,040.11 211,271,018.68 CASH OUTFLOWS CAPEX Requirement, PhP 36,072,850.90 89,483,972.90 76,076,389.20 201,633,213.00
CAPEX Amortization, PhP - - 7,739,105.56 7,739,105.56 ERC Permit Fees, PhP 308,764.27 951,390.50 638,545.34 1,898,700.11 Total Cash Outflows, PhP 36,381,615.18 90,435,363.40 84,454,040.11 211,271,018.68
Cash balance ending, PhP, Excessf(Shortfall) 1,664,216.23 - - - Rate Impact on RFSC, PhP/kWh, 00097 - - - Excessl(Shortfall)
Based on the above simulations and as discussed earlier, ISECO should secure loans and utilize its RFSC funds to finance its proposed project in order togiitigate the rate impact to its consumers. ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pace 58 of 62
ISECO should exert best effort in negotiating for a longer and better terms on all its borrowings in order to negate any possible increase in its RFSC rate without compromising the needs of its distribution system and for the benefit of its consumers.
A perusal of the evidence presented herein showed that the approval of ISECO's 2010 to 2012 capital expenditure projects in accordance with the provisions of Republic Act No. 9136 and the "Resolution Amending the Rules for Approval of Regulated Entities' Capital Expenditure Projects" will redound to the benefit of its consumers in terms of continuous, reliable and efficient power supply as mandated by Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (Section 2. Declaration of Policy - (b) "to ensure the quality, reliability, security and affordability of the supply of electric power').
WHEREFORE, the foregoing premises considered, the application filed by Ilocos Sur Electric Cooperative, Inc. (ISECO) for approval of its proposed electric capital projects for the years 2010 to 2012 is hereby APPROVED WITH MODIFICATION.
Accordingly, ISECO is authorized to implement its 2010 to 2012 proposed projects and to secure loan from the National Electrification Administration (NEA). It is hereby directed to file an application for authority to secure loan from other financing institutions.
Relative thereto, ISECO is hereby directed to pay a total permit fee in the amount of One Million Eight Hundred Ninety-Eight Thousand Seven Hundred Pesos and Eleven Centavos (PhPI ,898,700.1 1), computed as follows:
PhP253,1 60,014.77 x PhPO.75 = PhPI,898,700.11 PhPIOO.00
Breakdown of Permit Fees
Year Project Cost (PhP) Permit Fee (PhP) Due Date 2010 41,168,569.48 308,764.27 2011 126,852,066.41 951,390.50 Within fifteen (15) 2012 85,139,378.88 638,545.34 days from receipt 253,160,014.77 1,898,700.11 hereof TOTAL , • I. fr 1 ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pacie 59 of 62
Finally, ISECO is hereby directed to: 1) submit a progress report with an indication of any variance in the implementation of the projects and time schedule; and 2) conduct a competitive bidding for the purchase of major materials in the implementation of the proposed projects.
SO ORDERED.
Pasig City, December 10, 2012.
NAID'AG. RUZ-DUCUT k Chairperson
MARIA AtEDA JOSEC. REYES mission Co
Qbt'-'~ ALFREDO J. NON G L$iMI ifOiA$(AP-TARUC Commissioner Commis ioner
flP S/FGB D/ISECO ERC CASE NO. 2011-123 RC-Decision •! I ERC Case No. 2011-123 RC DECISION/December 10, 2012 Pace 60 of 62
Copy Furnished:
1. LERIOS-AMBOY AND UYBARRETA LAW OFFICES Units 1609-1610, Tycoon Centre Pearl Drive, Ortigas Avenue, Pasig City
2. ILOCOS SUR ELECTRIC COOPERATIVE, INC. (ISECO) Bigbiga, Santiago, Ilocos Sur
3. The Office of the Solicitor General 234 Amorsolo Street, Legaspi Village, Makati City Metro Manila
3. The Commission on Audit Don Mariano Marcos Avenue Diliman, Quezon City, Metro Manila
4. The Committee on Energy Senate of the Philippines GSIS Building, Roxas Blvd., Pasay City, Metro Manila
5. The Committee on Energy House of Representatives Batasan Hills, Quezon City, Metro Manila
6. Office of the President of PCCI Philippine Chamber of Commerce and Industry (PCCI) 3rd Floor, ECC Building, Sen. Gil Puyat Avenue Makati City
7. Office of the Municipal Mayor Sinait, Ilocos Sur
8. Office of the Municipal Mayor Cabugao, Ilocos Sur
9. Office of the Municipal Mayor San Juan, Ilocos Sur
10. Office of the Municipal Mayor Magsingal, Ilocos Sur
11. Office of the Municipal Mayor San Ildefonso, Ilocos Sur
12. Office of the Municipal Mayor Sto. Domingo, Ilocos Sur
13. Office of the Municipal Mayor Bantay, Ilocos Sur I
ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paae6l of62
14. Office of the Municipal Mayor Vigan, Ilocos Sur
15. Office of the Municipal Mayor Caoayan, Ilocos Sur
16. Office of the Municipal Mayor San Vicente, Ilocos Sur
17. Office of the Municipal Mayor Sta. Catalina, Ilocos Sur
18. Office of the Municipal Mayor Santa, Ilocos Sur
19. Office of the Municipal Mayor Narvacan, Ilocos Sur
20. Office of the Municipal Mayor Sta. Maria, Ilocos Sur
21. Office of the Municipal Mayor Nagbukel, Ilocos Sur
22. Office of the Municipal Mayor Burgos, Ilocos Sur
23. Office of the Municipal Mayor Lidlidda, Ilocos Sur
24. Office of the Municipal Mayor Banayoyo, Ilocos Sur
25. Office of the Municipal Mayor San Emilio, Ilocos Sur
26. Office of the Municipal Mayor San Esteban, Ilocos Sur
27. Office of the Municipal Mayor Santiago, Ilocos Sur
28. Office of the Municipal Mayor Candon, Ilocos Sur
29. Office of the Municipal Mayor Galimuyod, Ilocos Sur
30. Office of the Municipal Mayor Salcedo, Ilocos Sur
31. Office of the Municipal Mayor Sigay, Ilocos Sur )' ERC Case No. 2011-123 RC DECISION/December 10, 2012 Paqe62 of 62
32. Office of the Municipal Mayor Del Pilar, Ilocos Sur
33. Office of the Municipal Mayor Sta. Lucia, Ilocos Sur
34. Office of the Municipal Mayor Sta. Cruz, locos Sur
35. Office of the Municipal Mayor Tagudin, Ilocos Sur
36. Office of the Municipal Mayor Suyo, Ilocos Sur
37. Office of the Municipal Mayor Cervantes, Ilocos Sur
38. Office of the Municipal Mayor Sugpon, Ilocos Sur
39. Office of the Municipal Mayor Quirino, liocos Sur
40. Office of the Municipal Mayor Alilem, Ilocos Sur