Oc1cT 16 APR 26 P4 :40 REPUBLIC OF THE PHILIPPINES ENERGY REGULATORY COMMISSJtJNDnv: —. — SAN MIGUEL AVENUE, PASIG CITY IN THE MAflER OF THE APPLICATION FOR THE APPROVAL OF THE RENEWABLE ENERGY SUPPLY AGREEMENT BETWEEN ZAMBOANGA DEL SUR I ELECTRIC COOPERATIVE, INC. (ZAMSURECO I) AND ASTRONERGY DEVELOPMENT PAGADIAN, INC. (ASTRONERGY), WITH PRAYER FOR THE ISSUANCE OF PROVISIONAL AUTHORITY, ERC Case No. 2016- 0-c'2RC ZAMBOANGA DEL SUR I ELECTRIC COOPERATIVE, INC. (ZAMSURECO I) AND ASTRONERGY DEVELOPMENT PAGADIAN INC. (ASTRONERGY), Applicants. APPLICATION WITH MOTION FOR CONFIDENTIAL TREATMENT OF INFORMATION AND PRAYER FOR ISSUANCE OF PROVISIONAL AUTHORITY Joint Applicants, ZAMBOANGA DEL SUR I ELECTRIC COOPERATIVE, INC. (ZAMSURECO I) and ASTRONERGY DEVELOPMENT PAGADIAN INC. (ASTRONERGY) through counsel, unto this Honorable Commission1 respectfully allege, that: ljPage THE APPLICANTS 1. ZAMSURECO I is a non-stock, non-profit electric cooperative, organized and existing by virtue of Presidential Decree No. 269, as amended, with principal office at Gov. Vicente M. Cerilles St., Pagadian City, Zamboanga del Sur. It is engaged in the distribution of electric light and power within its service area which covers the City of Pagadian and certain municipalities of the province of Zamboanga Del Sin, namely: Aurora, Dimataling, Dinas, Dumalinao, Dumingag,Guipos,1Labangan, Lapuyan, Mahayag, Margosatubig, Midsalip, Molave, R. Magsaysay, San Miguel, San Pablo, Tabina,Tambulig, Tigbao, 2Tukuran, Sominot (formerly Don Mariano Marcos), 3Pitogo, Josefina and Vincenzo Sagun, and the municipality of Don Victoriano in the province of Misamis Occidental4 . Copies of ZAMSURECO I's Articles of Incorporation and By-Laws, Certificate of Franchise, NEA Certificate of Registration and latest Audited Financial Statements are attached hereto and made integral parts hereof as Annexes "A", "B", "C", "D" and "E", respectively. 2. ASTRONERGY is a renewable energy generation company duly organized and existing under the laws of the Republic of the Philippines with principal address at Unit 201 Midway Court Building, Brgy. WackWack, Greenhills 241 EDSA, Mandaluyong City. Copies of Astronergy's Certificate of Incorporation, Articles of Incorporation, latest General Information Sheet and latest unaudited Financial Statements are attached hereto and made integral parts hereof as Annexes "F", "G", "H", and "I", respectively. Copies of the pertinent Board Resolutions authorizing the filing of the Application are attached hereto and made integral parts hereof as Annexes "J" and "K". 1 Under Republic Act 7159, Barangays Guipos, Katipunan, BagongOroquieta, and Dalapang, all in the Municipality of San Miguel; Barangays Datagan, Dagohoy, Balongating, Baguitan, Magting, Sikatuna, Dacsol, Guling, and Canunan, all in the Municipality of Dumalinao; Barangays Lintum, Singclot and Litan, all in the Municipality of Dinas; and Barangay Regla in the Municipality of San Pablo, were separated from their respective municipalities and constituted into a distinct and independent Municipality of Guipos. 2 Under Republic Act 7162, Barangays Tigbao, New Tuboran, Nangan- Nangan, Lacarayan, Upper Nib, Nib, Lacupayan, Diana Countryside, Busol, Maragang, Umas, Guinlin, Libayoy, Timolan, Mate, Begong, Caluma, and Longmot, all in the Municipality of Dumalinao, Province of Zamboanga del Sur were separated from the said municipality and constituted into a district and independent Munidpay of ligbao. Repub1ic Act 6684. 4 Republic Act 6845. -- 2 IPage 3. ZAMSURECO I and ASTRONERGY may be served orders and other processes through the undersigned counsel/representatives. NATURE OF THE APPLICATION 4. The Application is filed pursuant to Rule 20(B) of the Energy Regulatory Coniniission's Rules of Practice and Procedure ("ERC Rules"), and other pertinent rules and regulations, for the Honorable Conmsion's approval of the Renewable Energy Supply Agreement (RESA), executed by and between ZAMSURECO I and ASTRONERGY. Copy of the RESA is attached hereto and made integral part hereof as Annex "L". I COMPLIANCE WITH PRE-FILING REQUIREMENTS 5. ZAMSURECO I and ASTRONERGY furnished the concerned legislative bodies of the local government units where they principally operate with copy of the Application together with all the annexes and accompanying documents. Copies of the proof of service to the Sanggtmiang Panlungsod of the Cities of Pagadian and Mandaluyong and the Sangguniang Panlalawigan of the Province of Zamboanga del Sur are hereto attached and made integral parts hereof as Annexes "M", "N" and "0, respectively. 6. ZAMSURECO I caused the publication of the instant Application in its entirety with the exception of Annexes, in a newspaper of general circulation within its franchise area. Copies of the corresponding Affidavit of Publication and the newspaper are attached as Annexes "P" and "P-i", respectively. STATEMENT OF THE FACTS 7. At present, ZAMSURECO I sources the majority of its power requirements from the Power Sector Assets and Liabilities Management Corporation (PSALM) under a contract for the Supply of Electric Energy (CSEE) which will expire on December 2016. The remainder of its power requirements is sourced from Therma South Inc., Therma Marine Inc. and Mapalad Power Corp. 3j P a g e 8. It is uncertain whether PSALM still has the capacity to supply power requirements beyond December 2016 as PSALM is in the process of privatizing its generation assets in Mindanao. In fact the contracted capacity under the current CSEE of ZAMSURECO I and PSALM is already a reduced capacity in view of the existence of a region-wide power supply deficiency problem in Mindanao. 9. The reduced capacity has already resulted in daily rotating brown-outs in the franchise area of ZAMSURECO I at an average of three (3) hours per day. 10. Further, the energy requirements of ZAMSURECO I customers is projected to increase in the next few years as demonstrated by ZAMSURECO I Distribution Development Plan, Supply-Demand Outlook and Forecasted Demand, copies of which are attached hereto and made integral parts hereof as Annexes "Q"R" and "S", respectively. 11. In order to ensure sufficient power supply to the ZAMSURECO I service area, the power requirements of the cooperative should be adequately covered by supply contracts. 12. Sometime in the year 2014, ASTRONERGY, offered to supply power to ZAMSURECO I, to partly address the latter's power supply deficiency. 13. ZAMSURECO I decided to contract with ASTRONERGY because of its commitment to deliver power within a short time from approval by the Energy Regulatory Conmiission. The short construction period of less than a year will provide immediate relief to the power deficiency problems of ZAMSURECO I. In addition, the energy price for power delivered under the RESA is fixed at an agreed rate for the entire contract period which will help insulate ZAMSURECO I from any external factors that may cause price hikes in the future. 14. Furthermore, the power offered by ASTRONERGY is appropriate to ZAMSURECO Is daytime power requirement based on the ZAMSURECO I average daily load profile for the past twelve months prior to the filing of this application and ASTRONERGY's generation curve. Copies of ZAMSURECO I historical and projected Average Daily Load Curve and ASTRONERGY's Solar Plant Load Curve are attached hereto and made integral parts hereof as Annexes "T" and 'lull, respectively. 41 P a g e 15. More importantly, ASTRONERGY agreed to be an embedded generator. The delivery of power from its plant provides benefits in terms of support for ZAMSURECO I distribution system and savings in purchased power since there are no transmission charges and systems losses. 16. Finally, ZAMSURECO Is utilization of a renewable energy source like ASTRONERGY's solar power is in support of government policy promoting the use of renewable energy so as to reduce the emission of pollutants. 17. ZAMSURECO I and ASTRONERGY executed a RESA on 28 July 2015. Details on the procurement process undertaken by ZAMSURECO I which led to the selection of ASTRONERGY (as stated in the Affidavit of the ZAMSURECO I General Manager) is attached hereto as Annex "V". Likewise, the ZAMSURECO I Board Resolution authorizing the execution of the RESA with ASTRONERGY is attached hereto and made an integral part hereof as Annex "W". THE RENEWABLE ENERGY SUPPLY AGREEMENT AND THE MEMORANDUM OF AGREEMENT MATERIAL PROVISIONS AND OTHER RELEVANT INFORMATION . 18. Project Description. In order to supply power to ZAMSURECO I under the RESA, ASTRONERGY shall construct, own, operate, manage and maintain ASTRONERGY's Pagadian Solar Project (PSP) located at Barangay Banale, Pagadian City. Copies of the Department of Energy Solar Service Contract Application and Department of Environment and Natural Resources Environmental Compliance Certificate (ECC) and the filed application for Board of Investment Certificate of Registration, covering the PSP are attached hereto and made integral parts hereof as Annexes "X", "1" and "Z", respectively. 19. The PSP will be designed and constructed using polycrystalline photovoltaic modules connected to a 1MW inverter. All inverters on each site will be combined through a single on-site substation, before interconnecting to the ZAMSURECO I grid. Copies of the PSP Plant Description and Astronergy Limited Warranty for Crystalline PV Module are attached hereto and made integral parts hereof as Annexes "AA" and "BB", respectively. 5j P a g e 20. The commercial operation date of PSP is estimated to be within six (6) months from the date of receipt of the approval of the Application for Provisional Authority by the Energy Regulatory Commission. 21. Salient Features of the RESA. 21.1. Product. The capacity to be delivered and sold by ASTRONERGY and received and purchased by ZAMSURECO I under the RESA is "As-Available Energy", produced by the PSP (net of station service). 5 The capacity provided under the RESA shall be supplied from PSP only. 6 21.2. Delivery Term. The RESA shall remain in force and effect for a period of twenty-five (25) years counted from the Is Commercial Operation Date. 7 21.3. Contract Capacity and Energy. The contract capacity is ten megawatts (10MW) for the subject solar plant.