eel - erc.gov.ph

Republic of the PhilippinesENERGY REGUIATORY COMMISSIO

San Miguel Avenue, Pasig City

IN THE MATTER OF THEJOINT APPLICATION FOR.THE APPROVAL OF THEPO~ER SUPPLYAGREEMENT (PSA)ENTEREP INTO BY ANDBETWEEN PAIAWANELECTRIC COOPERATIVE,INC. (PALECO) ANDLANGOGAN PO~ER CORP.(LPC) ~ITH PRAYER FORTHE ISSUANCE OFPROVISIONAL AUTHORITY(PA)

ERC CASENO. 2016 -174 RC

PAIA~AN ELECTRICCOOPERATIVE, INC.(PALECO) AND LANGOGANPOWER CORP. (LPC),

Applicants."-~----------------------------------,,

OOCKETEDDate: EEl 2. !L2.018R,,: ..._.~._ ••__

ORDER

On 22 September 2016, Palawan Electric Cooperative, Inc .. (PALECO) and Langogan Power Corp. (LPC) filed a Joint Application(With Prayer for the Issuance of Provisional Authority) (JointApplication) seeking the Commission's approval of the Power SupplyAgreement (PSA) entered into by both parties on 04 September 2015.

PALECO and LPC alleged the following in their JointApplication:

THE NATUREOF THE APPLICATION

1. This is a Joint Application submitted to thisHonorable Commission for its due consideration and approval ofthe Power Supply Agreement (PSA) executed by and betweenPALECOand LPC, pursuant to Rule 2o(B) of the Energy Regulatory

ERC CASE NO. 2016-174 RCORDER/ 18 OCTOBER 2016PAGE20F19

Commission's Rules of Practice and Procedure (the "ERC Rules")!and other pertinent rules and regulations.

THE APPLICANTS

2. PALECO is a non-stock, non-profit electriccooperative duly established and existing under and by virtue of theLaws of the Republic of the Philippines. It is registered concurrentlywith the National Electrification Administration and theCooperative Development Authority. Its principal office is at km.3.35 North National Highway, Puerto Princesa City, where it maybe served with summons and other legal processes.

PALECO is the exclusive holder of the franchise to operateelectric light and power distribution services in the City of PuertoPrinces a and the Municipalities of Aborlan, Agutaya, Araceli,Balabac, Brooke's Point, Cagayancillo, Cuyo, El Nido, Magsaysay,Narra, Quezon, Rizal, Roxas, San Vicente, Sofronio Espanola andTaytay, all in the Province of Palawan.

3. LPC is a Corporation duly organized and existingunder Philippine Laws, with principal office address at Unit 903Page One Building, 1215Acacia Avenue, Madrigal Business Park,Ayala Alabang, Muntinlupa City, Metro Manila, where it may beserved with summons and other legal processes.

COMPLIANCEWITH PRE-FILING REQUIREMENTS

4. In compliance with Rule 6 of the ERC Rules and insupport of the instant Joint Application for the approval of the PSA,a copy of the instant Joint Application (including Annexes) wasfurnished to the respective legislative bodies of the City of PuertoPrincesa, Palawan, and the Province of Palawan, where PALECOprincipally operates.

5. Likewise, a copy of the instant Joint Application(including Annexes) was furnished to the legislative body of the citywhere LPC principally operates.

6. The entire Joint Application, excluding the Annexes,was published in a newspaper of general circulation within theFranchise Area or area where PALECOprincipally operates.

PALECOPOWER SITUATION

7. PALECO is considered a missionary area since it isnot connected to the transmission facilities of the National GridCorporation of the Philippines.

The power supply of PALECO is currently sourced from a)Palawan Power Generation, Inc. (PPGI) (Peaking) - 7.20 MW; b)PPGI (Baseload) - 8.00 MW; c) Delta P, Inc. (DPI)- 13.50 MW; d)DMCI Power Corporation (DPC) - 25.00 MW and e) NPC SPUG1?'l4-44MW. / J

1 ERe Resolution No. 38 - 2006.

ERC CASE NO. 2016-174 RCORDER/ 18 OCTOBER 2016PAGE 3 OF 19

A summary of the PALECO's contracts with power suppliersis attached hereto as Annex "0".

8. All the electricity supplied from the abovementionedsuppliers is from diesel plants. The generation rates of thesesuppliers are all being subsidized by the Missionary ElectrificationFund. The current approved Subsidized/Approved Generation Rate.(SAGR) for PALECO is PhP5.6404/kWh. Together with theprevailing Generation Rate Adjustment Mechanism (GRAM) ofPhPO.5585/ kWh, the total rate payable by the PALECOelectricityconsumer, net of Value Added Tax, is PhP6.1989/kWh.

9. Based on PALECO'sDemand and Energy Forecast for2015 to 2021, the demand requirement of PALECOis expected togrow from 23.2 MWin 2015 to 24.2 MWin 2021.

PALAWANHYDROPOWERRESOURCES

10. Palawan is an area of ecological importance, being thehome to two UNESCO World Heritage Sites and in whichdevelopment is controlled in respect of environmentalconsiderations under Republic Act No. 7611, otherwise known asthe Strategic Environmental Plan for Palawan (the "SEP Law").Development of renewable energy resources in Palawan has verystrong support from local and national NGO's as well as communityorganizations.

11. PALECO has manifold reasons for entering into anelectricity supply contract from renewable energy resources, inaddition to its increasing demand growth:

(1) To obtain a secure and adequate supply ofelectricity for its consumers, since anindigenous RE-based electricity will beinsulated from the pricing and availabilityissues attendant to fossil fuel-based power;

(2) To comply with government policies onprioritization of the development and use ofrenewable energy enshrined in Republic ActNo. 9513, otherwise known as "The RenewableEnergy Act of 2008" (the "RE Law"); and

(3) To prepare itself for eventual removal of thesubsidy for its consumers from the MissionaryElectrification Fund;

and as such, PALECOhas found it advantageous to its consumers tocontract with LPC for the latter to supply 17.8MW at 6.5893Php/kWh for a term of twenty-five (25) years.

12. Since 2008, pursuant to exploration permits issued bythe Department of Energy (DOE), LPC has been offering thegenemtion of the Langogan and Batang- Batang hydroeleetrie P07

ERC CASE NO. 2016-174 RCORDER/ 18 OCTOBER 2016PA.GE40F19

plants (HEPP) to PALECO,at a price that was lower than any of thediesel-fired power plants selling electricity to PALECOat that time.In February 2010, the DOE granted Hydropower Service Contract(HSC) No. 2010-02-123 for the Batang-Batang river and HSC No.2010-02-124 for the Langogan river to LPC.

13. However, during the time that LPCwas making initialoffers of the hydroelectric power to PALECO, PALECO was pre-occupied with its competitive selection process (CSP) for a powerplant with 25MW of guaranteed dependable capacity, and could notconsider the offer from LPC under the terms of reference of theCSP. LPC submitted an alternative offer to PALECO at close of theCSPbut this was not taken up.

13.1 LPC continued to offer the hydroelectricpower from the Projects to PALECO, adjusting theterms and conditions from time to time so as to makethe offer more attractive to PALECOand its electricityconsumers.

14. PALECOresumed consideration of the offer of LPC inthe third quarter of 2014, and on March 9, 2015, PALECOissued aLetter of Intent to LPC (Annex "X") to discuss and negotiate aPower Supply Agreement for the purchase and sale of the actualelectricity generated from the Langogan and Batang-Batang HEPPson a priority dispatch basis. The Talakaigan HEPP would beconsidered when LPChas secured the HSCfor such project.

14.1. PALECO'sdecision to contract with LPC"takes cognizance of the increase in energy demand by2017 and urgency to immediately initiate constructionof the hydro projects as well as significantly lower rateof hydropower vs bunker/diesel energy."

15. On March 30, 2015, LPC requested a certificationfrom the DOE (Annex "Y") that the contract for the sale andpurchase from a renewable energy plant such as the Langogan andBatang-Batang HEPPs is exempted from the requirement of a CSPunder ERC Resolution No. 11-2005 and DOE Department CircularNo. DC2004-0l-001, because of the exclusive nature of the right ofan RE Developer to develop and commercialize an RE resourcepursuant to an RE Service Contract. The request for Certificationalso cited ERC Case No. 2008-021 dated January 19, 2009, wherethe ERC ruled that, where a power plant developer has beengranted an exclusive right to develop and operate a hydro-electricpower plant in a certain area, the Commission deemed itappropriate to exempt the distribution utility and the developerfrom the requirement of CSP under Resolution No. 11-2005, byvirtue of the development contract issued by the DOE to thedeveloper.

16. On April 8, 2~~~~.t~E (Annex "Z") replied to the!etM-'eque't of LPe '" folio::>,i

ERC CASE NO. 2016-174 RCORDER/ 18 OCTOBER 2016PAGES OF 19

"Similar to ERC Case No. 2008-021 dated 19 January2009, ERC did not also require the mini-hydrodevelopers in Sibuyan Island and Oriental Mindoro toundergo a CSP and correspondingly, a certificate fromthe Department of Energy for its approval of thepower supply agreement. Thus, we deem itunnecessary to issue the certificate."

17. On the basis ofthe foregoing, and after discussion andnegotiation, PALECOand LPCentered into a PSA dated September4,2015.

18. It is worthy of note that the pre-development periodfor these Projects has been significantly extended beyond thetypical 4 year pre- development period for run-of-river hydro powerprojects. The extended period was due to lengthy discussions withPALECOon contractual terms for reasons stated above and despitecontinuous efforts to do so, as well as the inordinate time necessaryto obtain certain government permits. This extended pre-development period was also used by LPC to refine the site layoutsand design.

THE POWER SUPPLYAGREEMENT

Salient Features

19. Under the PSA, LPC (referred to as "SUPPLIER" inthe PSA) shall design, construct, commission and thereafter operateand maintain the three (3) Power Stations contemplated under thePSA and generate electricity therefrom for delivery of all suchelectricity to PALECO (the "Deliverable Energy"). On the part ofPALECO (referred to as "OFFTAKER" in the PSA), PALECO shalldispatch the electricity from the Power Stations on a prioritydispatch basis and thereafter pay for all electricity actually deliveredby LPCto PALECO.

20. The three (3) Power Stations are as follows:

(i) the 6.8MW Langogan HEPP, which shall be incommercial operation not later than thirty (30)months from Effective Date of the PSA;

(ii) the 8.oMW Batang-Batang HEPP, which shallbe in commercial operation not later thaneighteen (18) months from COD of theLangogan HEPP; and

(iii) the 3.oMW Talakaigan HEPP, which shall be incommercial operation not later than twenty-four (24) months from COD of the LangoganHEPP (each, a "Target COD").

All electricity from each Power Station shall be delivered toPALECO at the ag~ ;delivery points, and shall be cumulativeunder the PSA./ i


20.1. LPC is presently applying for ahydropower service contract for the Talakaigan River.In the event that LPC is unable to secure said HSCwithin one (1) year from signing of this Agreement,then it is agreed that the Talakaigan HEPP shall nolonger form part of this Agreement and all provisionsrelating to the Power Stations and Deliverable Energytherefrom shall refer only to the Langogan andBatang-Batang HEPPs.

21. The PSA shall have a term (the "Term") commencingfrom Effective Date plus a twenty-five (25) year period, countedfrom the Commercial Operations Date ("COD") of each PowerStation and expiring on the last day of the twenty-fifth (25th)Contract Year for such Power Station. The Agreement with respectto each Power Station shall be renewable under the same terms andconditions for another twenty-five (25) years from the end of theTerm of each Power Station, unless extended or earlier terminatedin accordance with this Agreement.

The Power Plants and Connection to the Palawan Grid

22. The Power Stations are all run-of-river hydropowergenerating plants and are expected to operate continuously. Thegeneration of Deliverable Energy will be variable, dependent on theactual instantaneous flows of the respective rivers, and at timesthere will be reduced or even no deliveries. There is no declaredguaranteed dependable capacity, and all payments from PALECOand revenues of LPC shall be based on the actual delivery ofelectricity.

23. As generators of power from intermittent RenewableEnergy and as agreed in the PSA and mandated under Section 20of the RE Law, the Power Stations will have Priority Dispatch in theMerit Order Table of PALECO,such that the Power Stations deliverthe maximum amount of Deliverable Energy on an "as and whenavailable" basis. LPCwill maintain and provide to PALEeo regularforecasts of output. The annual estimate of Deliverable Energy foreach Power Station is given below:

Station

Lan 0 anNarraAborlan

Annual DeliverableEner

32.3GWh34.9GWh13.oGWh

24. Each Power Station shall be equipped with Francishydro-turbines coupled to a synchronous generator. The installedcapacity of each generating unit is given below:

Generating Installed Capacity,Unit MW

Narra 'A' 4.0Narra 'B' 4.0


3-43-41.51.5

Note 1: Final installed capacity may vary marginally.Capacity will be fixed during equipment procurement.

25. Each of the three (3) Power Stations shall have a ratedvoltage of 69kV and installed with their respective step-up powersubstation, with specifications as may be required to safely conveythe full output of each Power Station and to satisfy therequirements of the Philippine Distribution Code (PDC), includingthe Small Grid Guidelines thereof. Each Power Station shall have acircuit breaker that is capable of interrupting the maximum shortcircuit current at the Connection Point. Disconnect switches shallalso be provided and arranged to isolate the circuit breaker formaintenance purposes.

25.1. Each Power Station generating unit iscapable of supplying its active power output withinthe limits of 0.80 power factor lagging.

25.2. The Revenue Metering Equipment is tobe located within the substation of each PowerStation.

Grid Connection

26. The Connection Point for each Power Station will beat tie-in points to the existing 69kV grid owned by the NationalPower Corporation (NPC). LPC is responsible for provision andoperation of the transmission line from the tie-in point to the PowerStation. The distance from each Power Station to the relevant tie-inpoint is given below:

StationLan 0 anNarraAborlan

Tie-in Line len h19km6.5km15km

27. In the case of Langogan Power Station only, with theobjective of PALECOof achieving better reliability of the PALECODistribution Grid in the municipalities close to the said PowerStation, LPC will provide a 1MVA capacity feed for futureconnection by, and at the cost of, PALECO.

Run of River Hydropower Development Costs

28. It bears emphasis to state that the three HEPPs arelocated on different rivers and will be constructed as 3 separate anddistinct, stand-alone projects. There will be no economies of scaleassociated with the increases in capacity as ea uccessive HEPP isbuilt and put into commercial operation.


29. Unlike other forms of renewable energy, run-of-riverhydropower design and development is critically dependent on thetopographic features of the site. Scheme engineering must be fittedto the "lay of the land" thus each scheme is unique in design andconstruction and subject to extreme variations of overall unit costbetween differing sites.2 It is misleading and inaccurate to attemptto compare the development cost of run-of-river hydropowerprojects on a cost/MW.

29.1. For example, the low pressure headrace(which accounts for approximately 25 to 40% of totalconstruction cost of the HEPP) for the LangoganHEPP is 2km long whilst that for the Narra scheme isover 7 km long in order to achieve the necessary"head" for power generation.

29.2. The cost/MW of a run-of-river project isessentially a product of the topography of theparticular site.

30. Notwithstanding the different development andconstruction costs of the 3 HEPPs, there will be a single rate ofPhP6.5893/kWh to be applied to all Deliverable Energy generatedby the HEPPs.

Energy Fees

31. The energy fees of PhP6.5893/kWh to be charged byLPC is much less than the present charges of the existing dieselbased power suppliers, is lower than the rate currently paid by thePALECO electricity consumer, and will not be subject to VAT inaccordance with Section 15(g) of the Republic Act No. 9513, the RELaw.

32. The sourcmg. by PALECO of its electricityrequirements from LPC will therefore result in a significantreduction of the subsidy requirement of PALECO from theMissionary Electrification Fund and savings to the electricityconsumers.

PALECO's inclusion of renewable energy hydropower in itspower supply mix will allow it to reduce its dependence on moreexpensive fossil based sources, which will ultimately reduce theoverall generation charges paid by its consumers.

33. PALECO has forecasted and simulated the effect ofthe inclusion of the hydropower supplied by LPC on its generationcosts upon the full commercial operation of the three (3) powerplants of LPC.

With LPC PhP 8.69/kWh

2 UKDepartment of Energy and Climate Change "Electricity Generation Costs"(https://www.gov.uk/government/uploads/ system/uploads/attachment ata/file/66176/Renewables_ Obligation_consultation_-_review _ oLgeneration_ costs_and_ deployment_potential. pdO

http://https://www.gov.uk/government/uploads/


PhP9.33 kWhPhP (0.64) kWh

34. The PSA between PALECO and LPC contains thefollowing terms and conditions with respect to the Energy Fees:

I. Computation of Energy Fees

Energy Fees t =Month t

=

Energy Rate t =

ERcoD==

=

Energy Fees payable for the Billing

Energy Rate t x L, (DEtn)

ERcoD X (r 11)

Base Energy Rate at the start ofcommercial operationPhP6.S893 /kWh

=

Where:CPIt

CPICOD

escalation rate on the tariff based on CPICPIt / CPICOD,computed up to the 4th

decimal place, provided, that if rlt < 1, then rltshall be equal to 1

average CPI for all items for the full calendar monthimmediately before the Billing Month, as sourcedfrom the official website of the Philippine StatisticsAuthority

average CPI for all items for the 12 calendar monthperiod immediately before Commercial OperationsDate

DEtn

DEtl

DEt2

DE

Deliverable Energy from each Power Stationactually delivered to OFFTAKER during the currentBilling Month, where:

All Deliverable Energy from the LangoganHydropower Project during the current BillingMonth t

All Deliverable Energy from the Batang-BatangHydropower Project during the current BillingMonth t

All Deliverable Energy from the TalakaiganHydropower Project during the current BillingMonth t

Sample Computation:

A&<umption,(fo, romputatinnalpurpose' 00ly1

ERC CASE NO. 2016-174 RCORDER/ 18 OCTOBER 2016PAGE 10OF 19

ERcOD= 6.5893/kWh

CPIcOD

CPII

=

=

===

14004 ( for July 2014, example only)

141.5(for July 2015, example only)

CPII1CPIcoD141.51140041.0078

1-1

DE 3,456,7891-2

DE 1,234,5671-3

Computation:

Energy Rate 1= ERcODX (r ll)

= 6.5893 IkWh x 1.0078= PhP6.64071 kWh

==

2,987,654 + 3,456,789 + 1,234,5677,679,010 kWh

Energy Fees I= Energy Rate I x L (DE I-n)= PhP6.64071 kWh x 7,679,010 kWh= PhP50,994,001.707

II. Computation of Deemed Energy Fees for Deemed InitialCODScenario and upon OFFTAKERDefault

In the case of the OFFTAKER delay or upon OFFTAKER Default,the Deemed Energy Fees for such delay or default will be calculatedfor each day of delay or default that subsists, based on (A) theaverage Deliverable Energy for each Billing Month for the sameperiod as the preceding Contract Year, multiplied by (B) the EnergyRate for each Billing Month, or portion thereof, wherein the delayoccurred. As such, the Deemed Energy Fees shall be calculated asfollows:

Computation of Deemed Deliverable Energy (DDEtnJ:

DDEln

where:

=

.. '.'-'-

Deliverable Energy from each PowerStation deemed delivered to OFFTAKERduring the Billing Month wherein delay ordefault occurred

ERC CASE NO. 2()16-174 RCORDER/ 18 OCTOBER 2016PAGE 11OF 19

DDE Deemed Deliverable Energy from thet-l,1 Langogan Hydropower Project based on the

Billing Month t-1 of the immediately precedingContract Year

DDE Deemed Deliverable Energy from the Batang-t-l,2 Batang Hydropower Project based on the

Billing Month t-1 of the immediately precedingContract Year

DDE Deemed Deliverable Energy from thet-l,3 Talakaigan Hydropower Project based on the

Billing Month t-1 ofthe immediately precedingContract Year

EBM Number of days of delay or default in BillingMonth t

DBM Number of days in the Billing Month t-1

In the event that the delay or default occurs in the first ContractYear, the Deemed Deliverable Energy shall be based on theprojected Deliverable Energy of the relevant Power Stations as setout in Schedule A [Power Station Specifications].

Sample Computation:

For example, OFFTAKER is in delay for 59 days, from May 20,2016, to July 18, 2016. The Langogan and Batang-Batang PowerStations have been in commercial operation since January 25,2015,while the Talakaigan Power Station commenced commercialoperation in March 25, 2016. The production of SUPPLIER for thesame period in the preceding year is as follows:

Langogan Batang- TalakaiganBatang (Projected)

3,760,930 1,514,341 998,752

2,601,365 3,062,200 1,494,765

2,913,219 3,347,830 1,502,334

[(3,760,930 X (5/31)] + [(2,601,365 X

(31/31)] + [(2,913,219x (23/ 30)]606,602 + 2,601,365 + 2,233,4685,441,435 kWh

~ [(1,514,341 x (5/31)] + )~i3,0~ x(31/31)] + [(3,347,830x (23/ 3~

EnergyRate

BillingMonthMay2015June2015July2015

DDE t-l, 1

==

DDE t-l,2

May 20166.6402

June 20166.6402

July 20166.6404

I.


= 244,248 + 3,062,200 + 2,566,670= 5,873,118 kWh

DDE t-I,3

DDEtn

==

==

[(998,752 X (5/31)] + [(1,494,765 X (31/31)] + [(1,502,334 x (23/ 30)]161,060 + 1,494,765 + 1,151,7892,807,614 kWh

1,011,910 + 7,158,330 + 5,951,927 kWh14,122,167 kWh

Computation ofDeemed Energy Fees:

Billing Energy Deemed Deemed EnergyMonth Rate Deliverable Fees (PhP)

(PhPI EnergykWh) (kWh)

May. 6.6402 1,011,910 6,719,284.782016June 6.6402 7,158,330 47,532,742.872016July 6.6404 5,951,927 39,523,176.052016Totals 14,122,167 PhP93, 775,203. 70

OTHER RELATED DOCUMENTS

35. In further support of the instant application,Applicants most respectfully submit to the Honorable Commission,the following documents:

ANNEX NATURE OF DOCUMENTSA Power Supply Agreement between PALECO

and LPC dated September 4, 2015B PALECO's Certificate of FranchiseC LPCArticles of IncorporationD LPC Certificate of RegistrationE LPC Latest General Information SheetF LPC Latest Audited Financial StatementG Certification from the City of Puerto Princesa,

Palawan for the receipt of Joint Application(including Annexes)

H Certification from the Province of Palawan forthe receipt of Joint Application (including

Annexes)I Certification from the City of Muntinlupa for

the receipt of Joint Application (includingAnnexes)

J Copy of the Affidavit of PublicationK Copy of Newspaper Publication of General

circulation within the franchise area or areawhere PALECO principally operates.

L Executive Summary - LPC Hydropower


ProjectsM PALECO's Actual and Forecasted Load Data

from 2013-2021N Rate Impact Analvsis0 PALECO Power Suppliers SummaryP PALECO's Board Resolutions [1) approval of

PSA; 2) approval of filing/granting authorityto sign verification]

Q Sources of Funds/Financial Plans;Debt/Equity Ratio;Project Cost; and

Computation of Return onInvestment/WACC

R Term Sheet for Financing of the Langogan6.8MW Hydropower Project - Indicative Key

Terms and ConditionsS PALECO Latest Distribution Development

Plan (DDP)T Certificate of Registration No. 2010-02-126 as

RE Developer for the Langogan HEPPU Hydropower Service ContraCt No. 2010-02-

124 for the Langogan HEPPV Certificate of Registration No. 2010-02-125 as

RE Developer for the Batang- Batang HEPPW Hydropower Service Contract No. 2010-02-

123 for the Langogan HEPPX Letter of Intent to LPC from PALECO dated

March 9, 2015Y Letter Request dated March 30, 2015 from

LPC to the DOEZ Letter Response dated April 8, 2015 from

DOE to LPCAA LPC BO! ApplicationBB LPC - Certificate of Non-Coverage - DENRCC Judicial Affidavit-Provisional Authoritv

ALLEGATIONS IN SUPPORT FOR THEISSUANCE OF PROVISIONAL AUTHORITY

36. The issuance of a provisional authority/rate from theEnergy Regulatory Commission in the subject Application is acondition to the effectivity of the PSA as well as the finalization offinancial closing with the banks by LPC.

37. Pursuant to ERC rules of practice and procedures, theHonorable Commission may exercise its discretion by grantingprovisional authority or interim relief prior to a final decision.

38. It is understood that the interim relief sought by theApplicants that may be granted by Commission, shall be subject toadjustments and other conditions that the Commission may imposeafter hearing a~nal determination of the HonorableCommission. / I

ERe CASE NO. 2016-174 RCORDER/ 18 OCTOBER 2016pAGE 14OF 19

PRAYERWHEREFORE Applicants PALECO and LPC mostrespectfully pray that the Honorable Commission:

(1) Approve the duly negotiated PSA between hereinApplicants;

(2) Issue a provisional approval of the PSA betweenPALECO and LPC as well as a provisional authorityauthorizing PALECO to pass on the full amount of thefees and charges under the PSA to its consumers;

(3) PALECO and LPC also prays that after trial on themerits, the Honorable Commission issue a permanentapproval of the PSA, between PALECO and LPC whichwould authorize PALECO to charge and collect thefees under the PSA as well as authorize PALECO topass on the full amount to its consumers.

Other reliefs just and equitable under the premises arelikewise prayed for.

Finding the said Joint Application sufficient in substance withthe required fees having been paid, the same is hereby set fordetermination of compliance with the jurisdictional requirements,expository presentation, Pre-trial Conference, and presentation ofevidence on 13 January 2017 at nine o'clock in the morning(9:00 A.M.), at PALECO's principal office at Puerto PrincesaCity, Palawan.

Accordingly, PALECOand LPCare hereby directed to:

1) Cause the publication of the attached Notice of PublicHearing in two (2) newspapers of nationwide circulation inthe Philippines at their own expense, twice (2X) within two(2) successive weeks, the dates of publication not being lessthan seven (7) days apart and the date of the lastpublication to be made not later than ten (10) days beforethe date of the scheduled initial hearing;

2) Furnish with copies of this Order and the attached Noticeof Public Hearing the Offices of the Provincial Governors,the City and Municipal Mayors, and the Local GovernmentUnit (LGU) legislative bodies within PALECO's franchisearea for the appropriate posting thereof on their respectivebulletin boards;

Inform of the filing of the Joint Application, its reas~~~therefor, and of the scheduled hearing thereon /" lf

ERC CASE NO. 2016-174 RCORDER/ 18 OCTOBER 2016PAGE IS OF 19

consumers within PALECO's franchise area, by any othermeans available and appropriate;

4) Furnish with copies of the Joint Application, and thisOrder and the attached Notice of Public Hearing the Officeof the Solicitor General (OSG), the Commission on Audit(COA), and the Committees on Energy of both Houses ofCongress. They are hereby requested, if they so desire tosend their duly authorized representatives at the scheduledhearing; and

5) Furnish with copies of the Joint Application and itsattachments all those making requests therefor, subject toreimbursement of reasonable photocopying costs.

On the date of the initial hearing Applicants must submit to theCommission their written compliance with the aforementionedjurisdictional requirements attaching therewith, methodicallyarranged and duly marked the following:

1) The evidence of publication of the attached Notice of PublicHearing consisting of affidavits of the Editors or BusinessManagers of the newspapers where the said Notice ofPublic Hearing was published, and the complete issues ofthe said newspapers;

2) The evidence of actual posting of this Order and theattached Notice of Public Hearing consisting ofcertifications issued to that effect, signed by the afore-mentioned Governors, Mayors, and LGU legislative bodiesor their duly authorized representatives, bearing the sealsof their offices;

3) The evidence of the means employed by Applicants toinform of the filing of the Joint Application, its reasonstherefore, and of the scheduled hearing thereon, theconsumers within the affected franchise area;

4) The evidence of receipt of copies of the Joint Application,and this Order and the attached Notice of Public Hearingby the Office of the Solicitor General (OSG), theCommission on Audit (COA),<::~~d~e ommittees onEnergy of both Houses of congre/y /


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

6) Such other proofs of compliance with the requirements ofthe Commission.

Applicants and all interested parties are also required tosubmit, at least five (5) days before the date of initial hearing and Pre-Trial Conference, their respective Pre-Trial Briefs containing, amongothers:

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

2) The issues to be tried or resolved;

3) The documents or exhibits to be presented, stating thepurposes and proposed markings therefore; and

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

Failure of Applicants to submit the required Pre-Trial Brief andJudicial Affidavits of their witnesses within the prescribed periodshall be a ground for cancellation of the scheduled hearing, and theresetting of which shall be six (6) months from the said date ofcancellation.

PALECO and LPCmust also be prepared to make an expositorypresentation of the instant Joint Application, aided by whatevercommunication medium that they may deem appropriate for thepurpose, in order to put in plain words and explain, for the benefit ofthe consumers and other concerned parties, what the JointApplication is all about and the reasons and justifications being citedin support thereof.

SOORDERE0


Pasig City, 18 October 2016.

FOR AND BYAUTHORITYOF THE COMMISSION:

- oc

""-ILS: ICeQ/ NJM

COPYFURNISHED:

•.. -........... .~...•.. ,....••. ,JOSE VICENTE B. S

Chairman and CEO

J;B~auzi~an1III IIIIIIIIIIIIJ-2016-021-0C-05711

1. Palawan Electric Cooperative, Inc. (PALECO)ApplicantKM 3.35, North National Highway, Puerto Princesa City, Palawan

2. Langogan Power Corporation (LPC)Applicant903, Page One Building, 1215 Acacia Avenue, Madrigal Business Park, Ayala Alabang,Muntinlupa City

3. Atty. Gianna Maria C. Comsti and Atty. Miguel K. MathayQuiason Makalintal Barot Torres Ibarra & SisonCounsel/or Applicants21st Floor, Robinsons-Equitable Tower, 4 ADB Avenue corner Poveda Street, Ortigas Center,Pasig City

4. Office of the MayorCity of Puerto Princesa

5. Local Government Unit (LGU) legislative bodyCity of Puerto Princes a

6. Office ofthe MayorAborlan, Palawan

7. Office of the LGU legislative bodyAborlan, Palawan

8. Office of the MayorAgutaya, Palawan

9. Office of the LGU legislative bodyAgutaya, Palawan

10. Office ofthe MayorAraceli, Palawan

11. Office of the LGU legislative bodyAraceli, Palawan

12. Office ofthe MayorBalabac, Palawan

13. Office of the LGU legislative bodyBalabac, Palawan

14. Office ofthe MayorBrooke's Point, Palawan


15. Office of the LGU legislative bodyBrooke's Point, Palawan

16. Office of the MayorCagayancillo, Palawan

17. Office of the LGU legislative bodyCagayancillo, Palawan

18. Office of the MayorCuyo, Palawan

19. Office ofthe LGU legislative bodyCuyo, Palawan

20. Office of the MayorEl Nido, Palawan

21. Office ofthe LGU legislative bodyEl Nido, Palawan

22. Office of the MayorMagsaysay, Palawan

23. Office of the LGU legislative bodyMagsaysay, Palawan

24. Office of the MayorNarra, Palawan

25. Office of the LGU legislative bodyNarra, Palawan

26. Office of the MayorQuezon, Palawan

27. Office of the LGU legislative bodyQuezon, Palawan

28. Office of the MayorRizal, Palawan

29. Office of the LGU legislative bodyRizal, Palawan

30. Office of the MayorRoxas, Palawan

31. Office of the LGU legislative bodyRoxas, Palawan

32. Office of the MayorSan Vicente, Palawan

33. Office of the LGU legislative bodySan Vicente, Palawan

34. Office of the MayorSofronio Espanola, Palawan

35. Office of the LGU legislative bodySofronio Espanola, Palawan

36. Office ofthe MayorTaytay, Palawan

37. Office of the LGU legislative bodyTaytay, Palawan 1

38. Office of the Govern/1

ERC CASE NO. 2016-174 RCORDER/ 18 OCTOBER 2016PAGE 19 OF19""""';~'i"'~~~,"

Palawan

39. Office ofthe LGUlegislative bodyPalawan

40. Office of the Solicitor General134 Amorsolo Street, Legaspi Village, Makati City

41. Commission on AuditCommonwealth Avenue, Quezon City

42. Senate Committee on EnergyGSIS Bldg. Roxas Blvd., Pasay City

43. House Committee on EnergyBatasan Hills, Quezon City

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

45. TWG PSA 1 ~itv A14th Floor, Pacific Center, San Miguel Avenue, Pasig C/ -I

eel - erc.gov.ph

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