in the matter of the application for approval of the … · in the matter of the application for...

IN THE MATTER OF THEAPPLICATION FORAPPROVAL OF THE POWERPURCHASE AND SALEAGREEMENT (PPSA), ASAMENDED, BETWEEN

. TARLAC I ELECTRICCOOPERATIVE, INC.'. ANDGNPOWER LTD. CO. WITHPRAYER FOR ..CONFIDENTIALTREATMENT OFINFORMATION AND THEISSUANCE OF PROVISIONALAUTHORITY,

ERC Case N0.2016-030 RC

TARLAC ICOOPERATIVE,

. (TARELCOGNPOWER(GNPOWER)

ELECTRICINC.

I) ANDLTD. CO.

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Applicants.]C-------------------------------------]C

NOTICE OF PUBLIC HEARING

TO ALL INTERESTED PARTIES:

On 16 March 2016, Tarlac I Electric Cooperative, Inc.(TARELCO I) and GNPower Ltd. Co. (GNPower) filed their jointApplication for approval of their Power Purchase and Sale Agreement(PPSA), with prayer for confidential treatment of information andissuance of provisional authority.

In support of said Application, TARELCO I and GNPoweralleged, among others, the following: •

ERC CASE NO. 2016-030 RCNotice of Public Hearing/ 18May 2016 of20

1. Applicant TARELCO I is a non-stock, non-profitelectric cooperative organized under Philippinelaws, with principal office address at Gerona, Tarlac.It is authorized to distribute and provide electricityservices to its member consumers in theMunicipalities of Anao, Camiling, Gerona,Mayantoc, Paniqui, Pura, Moncada, Ramos, SanClemente, San Jose, San Manuel, Sta. Ignacia, andVictoria, all in the Province of Tarlac; Barangays ofBatangbatang, Bora, Laoang, San Juan de Mata, andSto. Domingo, all in the City of Tarlac;Municipalities of Cuyapo and Nampicuan,Barangays of Maybubon, Agcano, Bagong Barrio,Bulakid, Caingin Tabing Hog, San Agustin, Yuson,Lamorito, and San Miguel, all in the Municipality ofGuimba, and Barangay Villarosa in the Municipalityof Licab, all in the Province of Nueva Ecija(hereinafter, "Franchise Area"). A copy ofTARELCO I's Certificate of Franchise is attached tothe Application as Annex "A" and forms anintegral part thereof. A copy of its Articles ofIncorporation and By-laws are also attached to theApplication as Annexes "A-1" and "A-2" to formintegral parts thereof;

2. Applicant GNPOWER is a duly registered limitedpartnership existing under Philippine laws. It isengaged in the business of developing, constructing,operating, and owning power generation facilities.Its principal office is at 28th Floor, Orient SquareBuilding, Don Francisco Ortigas Jr. Road, OrtigasCenter, Pasig City. Copies of its Certification ofRegistration issued by the Securities and ExchangeCommission (SEC) and Amended Articles ofPartnership are attached as Annexes "B" and "B-1", respectively, of the Application;

3. Applicants may be served with orders, notices, andother legal processes of the Commission through itscounsels of record;

4. Pursuant to Sections 25, 43 (u) and 45 (b) ofRepublic Act No. 9136, otherwise known as theElectric Power Industry Reform Act of 2001(EPIRA) and its Implementing Rules andRegulations, this Application is submitted to the

ERC CASE NO. 2016-030 RCNotice of Public Hearingj 18May 2016 of20

Commission for its due consideration and approvalof the Power Purchase and Sale Agreement (PPSA),as amended, executed by and between ApplicantsTARELCO I and GNPOWER;

STATEMENT OF FACTS

5. TARELCO I, along with eleven other electriccooperatives! in the Central Luzon region, createdCentral Luzon Electric Cooperative Association -First Luzon Aggregation Group, Inc. (CLECAFLAG),a corporation duly registered with the SEC, asevidenced by the attached copy of its Certificate ofRegistration, as Annex "C" of the Application;

6. CLECAFLAG, owned and controlled by twelve (12)member-Electric Cooperatives ("ECs"), was formedto coordinate and manage the administration ofpower supply process including joint planning andselection process, contracting of power of themember- ECs to ensure sustainable power supplyand reduced electricity rates in the region;

7. Accordingly, in 2013, CLECAFLAG conducted acompetitive selection process to bid out the forwardpower needs of its member-ECs, particularly, for thesupply of 300 MW of aggregated base load powerfrom new generating capacity jies for twenty (20)years starting late 2018, subject to the Commission'sapproval process and the signing by all the member-ECs of the PPSA, as per the award notice and aMemorandum of Agreement (MOA), to meet thegrowing demand of the member-ECs;

8. In the selection of a new power provider,CLECAFLAG employed extensive evaluationparameters and procedures, and with all twelvemember- ECs further represented through their own

1 Aurora Electric Cooperative (AURELCO), Nueva Ecija I Electric Cooperative, Inc. (NEECO I),Nueva Ecija II Area 1 Electric Cooperative, Inc. (NEECO II-Area1), Nueva Ecija II Area 2Electric Cooperative, Inc. (NEECO II-Area2), Pampanga Electric Cooperative, Inc. (PELCO I),Pampanga II Electric Cooperative, Inc. (PELCO II), Pampanga III Electric Cooperative, Inc.(PELCO III), Pampanga Rural Electric Service Cooperative, Inc. (PRESCO), Tarlac II ElectricCooperative, Inc. (TARELCO II), Zambales I Electric, Cooperative, Inc. (ZAMECO I), andZambales II Electric Cooperative, Inc. (ZAMECO II)


Technical Working Groups. The selection processwas conducted in two stages, including a SwissChallenge, as follows:

a. The first stage is the selection of a GenerationCompany ("GenCo") that will submit a FirmProposal (the "Firm Proponent") for theaggregated base load to be contracted by themember- ECs. The GenCo shall be selectedbased on the committed price cap, amongother key contract terms. CLECAFLAG'sproposed price cap was PhP4.09/kWh orPhP4.5808/kWh, inclusive of VAT.Nonetheless, the evaluation of the price capshall be based on expected levelized price forthe duration of the contract; and

b. The second stage is the announcement of theFirm Proposal, or that offer of the GenCowhich submitted the lowest proposedcommitted price cap. The Firm Proposal shallthen be subjected to "Swiss Challenge" byother GenCos who were declared qualifiedduring the first stage. The Original FirmProponent has the right to match the proposalof the Challenger;

9. On the first stage of the selection process, threeGenCos participated by submitting their respectivebids, namely: GNPOWER, AES Philippines (AES),and San Miguel Energy Corporation (SMEC);

10. Based on the ranking determined throughCLECAFLAG'sevaluation using a specified set of bidparameters and references in the transactiondocuments, GNPOWER was declared as the FirmProponent, while AES, submitting a bid that wasPhPo.23/kWh greater than that of GNPOWER, wasthe Challenger who had an opportunity to counterGNPOWER's proposal through Swiss Challenge.Meanwhile, SMECwas disqualified for submitting aprice offer that is higher than CLECAFLAG'sproposed price cap ofPhP4.09/kWh;


11. On 8 November 2013, CLECAFLAG and GNPOWERentered into a Memorandum of Agreement (MOA),Annex "D" of the Application, with the individualmember- ECs as witnesses, to define each ofCLECAFLAG and GNPOWER's (as the FirmProponent) rights and obligations undertransaction, such as the following, among others:

a. CLECAFLAG shall allow only AES toparticipate in the Swiss Challenge ofGNPOWER's Firm Proposal (Section 4.6);

b. CLECAFLAG shall immediately award thePPSA with finality to GNPOWER in any of thefollowing circumstances xxx (a) AES' failure tosubmit Letter of Intent to Challenge (Section4.7); and

c. After awarding the PPSA with finality toGNPOWER, CLECAFLAG shall enter into aPPSA with GNPOWER and/or cause itsmember- ECs to enter into a PPSA.

AES failed to submit a counter-proposal to matchGNPOWER's Firm Proposal.

12. On 10 March 2014, CLECAFLAG declaredGNPOWER as the winning proponent, evidenced bythe attached copy of CLECAFLAG's letter of thesame date as Annex "E" of the Application.GNPOWER shall, then, execute individual. powersupply agreements with the twelve member-ECs;

13. Copies of relevant documents used in thecompetitive selection process conducted .byCLECAFLAG to bid out the forward power needs ofits member- ECs, particularly, for the supply of 300MW of aggregated base load power, are attached tothe Application as follows:

[~~R~x- DOCUMENT"F" Invitation to participate in the power

supply aggregation and contracting ofCLECAFLAG

"F-1" Notice of Eligibility to participate in thebiddin sent to GNPOWER

ERC CASE NO. 2016-030 RCNotice of Public Hearing/ 18May 2016 of 20

"F-2" Transaction Information Memorandum"F-3" Supplemental Transaction Information

Memorandum detailing the EvaluationFramework (i.e., terms of reference)

"F-4" Evaluation Result

14. During the negotiations conducted betweenGNPOWER and each of the twelve (12) member-ECsfor the finalization of a PPSA and the final review ofthe latter's projected base load electricity demand, ithad come to their attention that the twelve (12)member- ECs would not be able to procure 300 MWof aggregated base load power in the first ContractYear, as committed in the transaction;

15. As a result, GNPOWER and the member-ECsnegotiated to have an interim supply period, whichis estimated to commence on December 2018subject to the ERC's approval process;

16. On 10 June 2014, GNPOWER executed with each ofTARELCO I and nine (9) other member-ECs. ThePPSA between GNPOWER and TARELCO I isattached as Annex "G" 2 of the Application;

17. GNPOWER agreed to extend the negotiations withCLECAFLAG and its two member- ECs that have notyet signed their respective PPSAs to allowCLECAFLAG to significantly fulfill its obligationunder the MOA;

18. GNPOWER offered to assist CLECAFLAG and itsmember- ECs in fulfilling their obligation to causethe signing of an aggregated 300 MW PPSA as arequirement for GNPOWER's project milestones,and on 18 September 2015, GNPOWER, in itsappreciation to TARELCO I and other member-ECsfor being early supporters of the GNPOWER project,executed an amendment3 to the PPSA reducing therate indicated in the PPSA in favor ofTARELCO I.

2 Each of the PPSA entered into with the other 9 individual MECs are also made an integral parthereto as Annexes G-l to G-9.

3 Attached as Annex "H" of the Application.

ERC CASENO. 2016-030 RCNotice of Public Hearing/ 18May 2016Page7of2o

ABSTRACT OF THE PPSA, AS AMENDED,AND OTHER RELATED INFORMATION

19. The following are the salient features of the subjectPPSA, as amended:

A. Term of Agreement. The PPSA, as amended,shall be effective at the date of its execution,and shall terminate after 240 months from thedate specified in the Commencement DateNotice4 defined as the written notice thatindicates the commencement of the firstdelivery of electric capacity at full commercialoperation of the first unit of GNPOWER'sfacilitys.

B. Source of Supply. GNPOWER shall makeavailable, sell, and deliver or cause to bedelivered to TARELCO I the Product6 at theDelivery Point, whether sourced fromGNPOWER's facility or from other electricitygenerators, including the Wholesale ElectricitySpot Market (WESM).

GNPOWER's facility shall be constructed andoperated in Mariveles, Bataan. The TechnicalDetails of the Project is attached to theApplication as Annex "I";

C. Contracted Capacity. TARELCO I iscontractually entitled to receive fromGNPOWER, at any hour, subject toGNPOWER's Available Capacity (as defined inthe PPSA, as amended) for such hour, theContracted Capacity (as defined in the PPSA, asamended), as follows:

Year1

Contracted Capacityo

4 Section 1.3, Schedule 1. Contracted Capacity, Contract Price and Terms of Agreement, PPSA,page 31

5 Section 1.1, Article 1. Definitions and Interpretations, PPSA, page 4

6 Refers to Electric Capacity, contracted on a variable Capacity Utilization Factor basis, togetherwith energy, as specified in Schedule 1 of the PPSA, as the context requires, or as otherwiseagreed by the Parties. (Section 1.1, Article 1. Definitions and Interpretations, PPSA, page 8)

ERC CASENO. 2016-030 RCNotice of Public Hearing/ 18May 2016 of20

Year Contracted Capacity2 0

3 0

4 17,0005 17,0006 17,0007 19,0008 20,0009 27,000

10 - 20 37,000

C.l. Option to Increase Contracted Capacity.Section 2.7 of the PPSA, as amended,provides that upon written notice toGNPOWER, TARELCO I may, uponapproval by GNPOWER, increase itsContracted Capacity which increase shallbe subjected to the same terms andconditions contained in the PPSA, asamended. In considering whether or notto approve the request for increase inContracted Capacity, GNPOWER maytake into consideration the capacityavailable for such increase from its facilityin its sole opinion, and/or the willingnessof any other buyer to assign its ContractedCapacity. Such increase in ContractedCapacity shall be effective on the dateGNPOWER gives its written approval.

D. Contract Price. The Contract Price shall becomposed of Capacity Price and Energy Price.

D.l The Capacity Fee is the component of theContract Price allocated to pay for thecost, as well as the operations andmaintenance of the power plant and isdesignated as the Capacity Fee inSchedule 1 of the PPSA, as amended, assuch may be adjusted from time to timebased on GNPOWER's Capacity Factor.

The corresponding Capacity Fee for agiven Capacity Utilization Factor is setforth in the table below:


Capacity Capacity FeeUtilization Factor ($/kWh)

(%)100% 0.046699% 0.047098% 0.047497% 0.047796% 0.048195% 0.048594% 0.048q93% 0.049392% 0.049791% 0.050290% 0.050689% 0.051088% 0.051587% 0.051986% 0.052485% 0.052984% 0.053483% 0.053982% 0.054481% 0.054980% 0.055579% 0.056178% 0.056777% 0.057376% 0.057975% 0.058574% 0.059273% 0.059972% 0.060671% 0.061370% 0.062169% 0.062968% 0.063767% 0.064566% 0.065365% 0.0662

In case the Capacity Utilization Factor is not awhole number, the Capacity Fee shall becomputed using the formula below:

ERC CASE NO. 2016-030 RCNotice of Public Hearing/ 18 May 2016 of20

Capacity Fee = - 0.10773 X (CUF)3 + 0.33975 X(CUF)2 -

0.3932 x (CUF) + 0.2078

Where:

Capacity Fee = is the Capacity Fee in $/kWh

CUF = is the Capacity Utilization Factorbetween 65% and 100%,provided that if the actual CUFis below 65% (the "MinimumCapacity Utilization Factor"),the Capacity Price shall becalculated based on the CapacityFee and quantity associated withthe Minimum CapacityUtilization Factor.

The Capacity Utilization Factor (CUF) shall becomputed as follows:

Capacity Utilization =Factor (CUF)

Where:Q =CC =

EHTO =

Quantity of kWhContracted Capacity, in kW, as setforth in Schedule 1Total number of hours in such BillingPeriodThe sum of the duration, III

Equivalent Hours, of ScheduledOutages and Unscheduled Outages insuch Billing Period

D.2 The Energy Fee is the component of theContract Price allocated to pay for thecoal, including Government Charges,designated as the Energy Fee inSchedule 1of the PPSA, as amended,

ERCCASENO. 2016-030 RCNotice of Public Hearing/ 18May 2016of20

as adjusted from time to time due tochanges in the delivered price of coal.The Energy Fee shall be computed inaccordance ~th the follo~ngformula:

Energy~ee = 1EFr CIF~1lCIFJ

Where:IEF = Initial Energy Fee equal to

$0.0370/kWhCIF Cost of Fuel for Billing Period n

= Base CIF Cost of Fuel equal to$11.5573/million kCal

CIFn =CIFo

E. Prompt Payment Discount. Section 4.3 (c)of the PPSA, as amended, provides that ifTARELCO I pays the invoice in full ~thin ten(10) days of receipt from GNPOWER,TARELCO I shall receive a credit on the nextsubsequent bill equal to $0.0012/kWhmultiplied by the actual quantity of the Productactually delivered set forth in such invoice forthe Billing Period for which the credit wasearned.

F. Capacity Utilization Discount. Section 4.3(d) of the PPSA, as amended, provides that ifTARELCO I pays the invoice amount in full inaccordance ~th GNPOWER's invoiceinstruction on or before the twenty-fifth (25th)day of the succeeding calendar month from therelevant Billing Period and TARELCOI's CUF isgreater than or equal to 65%, aside from thePrompt Payment Discount, TARELCO I shallreceive a credit on the next subsequent billequal to 2.8% of the Energy Fee multiplied bythe actual quantity of the Product actuallydelivered set forth in such invoice for the BillingPeriod for which the credit was earned.

ERC CASE NO. 2016-030 RC.Notice of Public Hearing/ 18 May 2016 of20

G. Scheduled and Unscheduled Outage.Pursuant to Section 2.2, GNPOWER is allowedScheduled Outage not to exceed five hundredforty (540) Equivalent Hours for each ContractYear, during which times reduced or nodeliveries will be available to TARELCO 1.. Likewise, GNPOWER is allowed UnscheduledOutage of five hundred forty (540) EquivalentHours for each Contract Year during whichtimes reduced or no deliveries will be availableto the Buyer;

COMMERCIAL ADVANTAGES OF THE PROPOSEDCONTRACT PRICE AND IMPACT ON TARELCO I'S

OVERALL RATES

20. The PPSA, as amended, was executed betweenTARELCO I and GNPOWER to respond to thegrowing power demand of TARELCO I's memberconsumers, which its current providers may not beable to meet and supply;

21. Currently, TARELCO I receives a total of 36 MWfrom its existing suppliers, out of its requirement of42.10 MW. With an annual average growth of5.64%, TARELCO I's peak demand is forecasted toincrease to 64.24 MW by 2020. Copies of TARELCOI's Supply-Demand from 2013 to 2022, Historicaland Forecasted Data, and Average Daily Load Curve,are attached to the Application and made"an integralparts thereof as Annexes "J" to "J-2";

22. The additional supply from GNPOWER assures themember-consumers of TARELCO I of adequate andreliable power service, thus, less likelihood of poweroutages and brownouts;

23. TARELCO I conducted a rate impact analysis whichresulted in a lower effective rate of PhP 4.0263/kWhwith supply coming from GNPOWER, compared to arate of PhP4.7808/kWh without GNPOWER, or areduction of PhPO.7545/kWh if with GNPOWERsupply, as follows:


Simulation of Generation Mix Rate with GNPOWER for the Year2022

Power Amount Percent Resulting WeightedSupplier (PhP) Share Capacity Average Rate

(%) Factor (%) (kWh)GMCP 6. % 100.00%SMCPC 20.09% 100.00% 4.1359

GNPOWER 26.48% 96-46% 3.3239 4.0263WESM 17.17% IMBALANCE 7.4736TOTAL 100.17%

Power Supplier

GMCPSMCPC

GNPOWERWESMTOTAL

24. Aside from the lower generation cost of the powersupply from GNPOWER, TARELCO I is also entitledto Prompt Payment Discount and CapacityUtilization Discount, if conditions are met, whichmakes even more competitive the proposed ratecontained in the subject PPSA, as amended;

25. In support of the instant Application for theapproval of the PPSA, as amended, Applicantsfurther attach the following documents to formintegral parts hereof, to wit:

ANNEX DOCUMENTS- - ~._.- . - -_. - . - - -_. ---- .. ...__ .... --

"K" Details of the PPSA, as amended"L" GNPOWER's Financial Assumptions including Project Cost,

Sources of Financing, Debt-Equity Ratio, WACCcomputation, and Projected Equity IRR

"M" Breakdown of Costs including Engineering, Procurementand Construction (EPC) Costs, Operations and Maintenance(O&M) Costs, and Projected Fuel Costs

"N" Projected Balance Sheet, Income Statement, Revenue andCash Flow

"0" Details of Fuel Procurement"P" Rate Impact Analysis"Q" GNPOWER's 2014 Audited Financial Statement"R" GNPOWER's Transmission Plan for the Dinginin Project


"S" Certificate of Endorsement from DOE that the Project isincluded in the DOE's Power Development Plan

"T" TARELCOI's Distribution Development Plan"u" TARELCOI's Contracted Demand for 25 years"V" GNPOWER's General Partners' Certificate on, among

others, the authority to execute, ratify, accede, perform anddeliver the PPSA, with TARELCOI, and the designation ofduly authorized representatives for said purpose

"W" TARELCOI's Board Resolution with Secretary's Certificateauthorizing the approval and sIgmng of the PPSA,designating representatives thereto and authorizing thefiling of an Application with the ERC

26. Applicants TARELCOI and GNPOWER reserve theright to submit other documents, either in thecourse of the hearing or as may be required by theCommission.

COMPLIANCE WITH PRE-FILING REQUIREMENTS

27. Applicants manifest compliance with the pre-filingrequirements mandated under the ImplementingRules and Regulations of the EPIRA and Rule 6 ofthe ERe Rules of Practice and Procedure, to beestablished by the following:

a. Certifications acknowledging receipt of theApplication with annexes issued by the LegislativeBodies of the Province of Tarlac, the Municipalityof Gerona, and the City of Pasig, to be appendedas Annexes "X", "Y", and "Z", respectively, ofthe Application;

b. Affidavit of Publication stating that theApplication was published in a newspaper ofgeneral circulation within Applicants' FranchiseArea and/or area of its principal operation, to beappended as Annex "AA" of the Application; and

c. Complete newspaper issue where the Applicationwas published, to be appended to the Applicationas Annex "AA-1", and the relevant page thereofwhere the Application appeared, as Annex "AA-2".,


MOTION FOR CONFIDENTIAL TREATMENTOF ANNEXES "F-4", "L", "M", "N", and "0"

28. Under Rule 4 of the ERe Rules of Practice andProcedure, a party to any proceeding before theCommission may request that certain informationnot be disclosed and be treated as confidential, bydescribing with particularity the information to betreated as confidential, specifying the ground for theclaim of confidential treatment of the informationand, if applicable, specifying the period duringwhich the information must not be disclosed;

29. TARELCO I requests for the confidential treatmentof Annex "F-4" of the Application, consisting of theEvaluation Result. This annex shows the individualoffers of the bidders which participated in thecompetitive selection process (CSP). The membersof CLECAFLAG, TARELCO I included, are boundby their undertaking to secure and keep inconfidence the offers and the proposed terms ofsupply, so as not to prejudice or pre-empt any futureCSPs in which these bidders will participate.Otherwise, TARELCO I and the rest of the membersof CLECAFLAG may be held liable for damages forbreach of confidentiality, and eventually, risk theirgood relations with the suppliers concerned;

30. GNPOWER moves for the confidential treatment ofAnnexes "L"7, "M"8, "N"9, and "0"10 of theApplication. These annexes, exclusively owned byGNPOWER, contain documents which areconsidered part of its business and trade secrets. Assuch, GNPOWER has the sole proprietary interestand will be unduly prejudiced should they bedisclosed to the public;

7 GNPOWER's Financial Assumptions including Project Cost, Sources of Financing, Debt-EquityRatio, WACC computation, and Projected Equity IRR

8 Breakdown of Costs including Engineering, Procurement and Construction (EPC) Costs,Operations and Maintenance (O&M) Costs, and Projected Fuel Costs

9 Projected Balance Sheet, Income Statement, Revenue and Cash Flow10 Details of Fuel Procurement


31. These annexes contain numbers, data, formula,methodology, and calculations involving valuableand sensitive commercial, financial andtechnological information reflecting GNPOWER'sbusiness operations and financial trade secrets.Therefore, the disclosure of GNPOWER'sconfidential, proprietary, and private informationincluded in the aforesaid annexes should beprotected from public dissemination. Otherwise,such information can be illegally and unfairlyutilized by business competitors who may use thesame for their own private gain and to theirreparable prejudice of GNPOWER. Negotiationswith prospective customers may also be affected;

32. The information contained in Annexes "L", "M","N" and "0" constitute "trade secrets" for which" ,GNPOWER has actual and valuable proprietaryinterest. As explained by the Supreme Court, a tradesecret may consist of any formula, pattern, device, orcompilation of information that is used in one'sbusiness and gives the employer an opportunity toobtain an advantage over competitors who do notpossess the informationll• It is indubitable that tradesecrets constitute proprietary rights andjurisprudence has consistently acknowledged theprivate character of trade secrets12• Further, as ruledin Garcia vs. Board of Investments13, trade secretsand confidential, commercial and financialinformation are exempt from public scrutiny;

33. It submit that the aforementioned Annexes must beaccorded confidential treatment. As such, they areto be used exclusively by the Commission and forthe sole purpose of evaluating this Application,thereby protecting these data from unnecessarypublic disclosure;

34. In accordance with Section l(b), Rule 4 of the EReRules of Practice and Procedure, Applicants herebysubmit one (1) copy each of Annexes "F-4, "L","M", "N", and "0" in a sealed envelope, with the

11Air Philippines Corporation us. Pennswell Inc., G.R. No. 172835, December 13, 2007.12 Ibid.,13177 SeRA 374 (1989).

ERC CASE NO. 2016-030 RCNotice of Public Hearing/ 18 May 20160f20

envelope and each page of the documents stampedwith the word "Confidential".

ISSUANCE OF PROVISIONAL AUTHORITY

35. All the foregoing allegations are re-pleaded byreference in support of the instant Prayer forprovisional authority;

36. The basis of TARELCO I and GNPOWER for prayerfor the issuance of a Provisional Authority or interimrelief prior to final decision is Rule 14 of the ERCRules of Practice and Procedure:

"Section 3. Action on the Motion. - Motionsforprovisional authority or interim relief may beacted upon with or without hearing. TheCommission shall act on the motion on the basisof the allegations of the application or petitionand supporting documents and other evidences thatapplicant or petitioner has submitted and the commentsor opposition filed by any interested person, if there beany." [Emphasis Ours]

37. Based on the Department of Energy's (DOE) 2015-2030 Luzon and Visayas Grids Supply-DemandOutlook, Luzon's peak demand in 2015 is 8,974MWwith an Annual Average Growth Rate (AAGR) of4.25% while Visayas' Peak Demand is 1,847MW withAAGR of 3.4%. Therefore, Luzon's peak demand isexpected to increase to 10,884MW in 2020, and to16,165MW by the year 2030 and for Visayas,2,042MW in 2020 and 3,025MW in 2030. Thiselectricity demand growth has led to DOE's call forplanning and investments in the power sector;

38. Contributing to the Luzon Grid's demand growth isTARELCO I's peak load demand which increases ata rate of 5.64% per year. By 2020, it is projectedthat TARELCO I's existing power suppliers will notbe able to meet the power needs of its memberconsumers, which is expected to have increased to32.82%;


39. Thus, the PPSA, as amended, with GNPOWER iscrucial for TARELCO I to guarantee that its forwardpower needs are satisfied, without compromisingthe reasonableness of the generation rate to bepassed on to its member-consumers;

40. While actual delivery of power at full capacity under,the terms and conditions of the PPSA, as amended,is expected to commence only in 2020, Applicants,nonetheless, shall begin at the earliest opportunetime their compliance with all financial andregulatory requirements and processes leading up tothe timely completion of GNPOWER's facility;

41. Part of the funds needed to construct GNPOWER'sfacility will be sourced from loans coming frombanks/financial institutions. The Commission'sprovisional approval of the instant Application is avital requirement for the release of the loanproceeds. Hence, a timely financial close ensuresstable source of funds and timely construction of thegeneration facility, and the implementation of thePPSA, as amended, as contemplated by theApplicants;

42. With continuous financing, the timelyimplementation of the project shall be assured, tothe full benefit of TARELCO I and the Luzon andVisayas' Grids. Otherwise, any delay in theimplementation of the project shall exposeTARELCO I to supply risk and unstable marketprices in the future;

43. A copy of the Judicial Affidavit to support the prayerfor provisional 'authority will be attached to theApplication as Annex "BB";

44. In recognition of the fact that a substantial amountof time is needed to evaluate the documentssubmitted to support the approval of hereinApplication, Applicants seek the consideration ofthe Commission to approve the instant Application,immediately, albeit, provisionally, at the soonestopportune time.


PRAYER

1. Applicants TARELCO I and GNPower pray beforethe Commission that:

1. All information attached as Annexes "F-4" "L","M", "N", and "0" to the Application be treatedas confidential;

11. Pending hearing on the merits, a PA be issuedauthorizing the immediate implementation ofthe subject PPSA, as amended, including therate structure therein, as applied;

Ill. After due notice and hearing, the instantApplication, the PPSA, as amended, and the ratestructure contained therein be duly approved;and

IV. In the event that a Final Authority shall beissued after GNPOWER starts actual delivery ofpower to TARELCO I under the terms of thesubject PSA, said Final Authority beretroactively applied to the date of such actualdelivery.

The Commission has set the Application for initial hearing,expository presentation, pre-trial conference, and presentation ofevidence on 05 July 2016 (Tuesday) at three o'clock in theafternoon (3:00 P.M.) at TARELCO I's Main Office, Gerona,Tarlac.

All persons who have an interest in the subject matter of theproceeding may become a party by filing, at least five (5) days prior tothe initial hearing and subject to the requirements in the ERC's Rulesof Practice and Procedure, a verified petition with the Commissiongiving the docket number and title of the proceeding and stating: (1)the petitioner's name and address; (2) the nature of petitioner'sinterest in the subject matter of the proceeding, and the way andmanner in which such interest is affected by the issues involved in theproceeding; and (3) a statement of the relief desired.


All other persons who may want their views known to theCommission with respect to the subject matter of the proceeding mayfile their opposition to the Application or comment thereon at anystage of the proceeding before Applicants conclude the presentationof its evidence. No particular form of opposition or comment isrequired, but the document, letter or writing should contain the nameand address of such person and a concise statement of the oppositionor comment and the grounds relied upon.

All such persons who wish to have a copy of the Application mayrequest from the Applicants that they be furnished with the same,prior to the date of the initial hearing. Applicants are hereby directedto furnish all those making such request with copies of theApplication and its attachments, subject to the reimbursement ofreasonable photocopying costs. Any such person may likewiseexamine the Application and other pertinent records filed with theCommission during the standard office hours.

WITNESS, the Honorable Chairman, JOSE VICENTE B.SALAZAR, and the Honorable Commissioners, ALFREDO J.NON, GLORIA VICTORIA C. YAP-TARDC, JOSEFINAPATRICIA A. MAGPALE-ASIRIT, and GERONIMO D. STA.ANA, Energy Regulatory Commission, this 18th day of May 2016 inPasig City.

ATTY.N J. MARASIGANChief of Staff

Office of the Chairman and CEO

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