IN

THE
~TTER
OF
THE
APPLCATION
FOR
APPROVAL OF THE POWER
SALES
CONTRACT
(PSC)
BETWEEN
ILOILO
III
ELECTRIC
COOPERATIVE,
INC. (ILECO III) AND SPC
ISLAND ,
POWER
CORPORATION (SIPC), WITH
MOTION FOR THE ISSUANCE
OF
PROVISIONAL
AUTHORITY
ERC CASE NO.

2016-001

RC

ILOILO
III
ELECTRIC
COOPERATIVE, INC. (ILECO
III) and SPC ISLAND POWER
CORPORATION (SIPC),
Applicants.
)(- - - -,- - - - - - - - - - - - - - - - -)(

- -

ORDER
On 05 January 2016, Iloilo III Electric Cooperative, Inc. (ILECO
III) and SPC Island Power Corporation (SIPC) filed their joint
Application for approval of their Power Sales Contract (PSC), with
prayer for the issuance of provisional authority.
In support of said Application, .ILECO III and SIPC alleged,
among others, the following:
1.

\.

Applicant ILECO III is a National Electrification Administration

(NEA)-franchisee electric cooperative. Its principal office is
located in Brgy. Preciosa, Sara, Iloilo, Philippines. ILECO Ill's
franchise area encompasses thirteen (13) municipalities, namely
Anilao, Banate, Barotac Viejo, San Rafael, Ajuy, Lemery, Sara,
Concepcion, San Dionisio, Batad, Balasan, Estancia, and Carles .
Copies of ILECO Ill's Certificate of Registration from NEA and
its Constitution and By-laws are attached to the Application as

Annex" "F" ond "F~l'" ,e~PCCtiVcl~

,\

'

..

';

ERC CASE NO. 2016-001

Order/ 01 March 2016
Page 20f18

RC

2.

Applicant SIPC is a generation company organized and existing

under the laws of the Republic of the Philippines, with office
address at the 1hfloor of the Citibank Center, 8741 Paseo de
Roxas, Makati City. It is a wholly owned subsidiary of SPC
Power Corporation (SPC). Copies of SIPe's amended Certificate
of Registration, Amended Articles of Incorporation, Amended
By-laws, General Information Sheet, and Audited Financial
Statements are attached to the Application as Annexes "A", "B",
"C", "D", and "E", respectively. The list of current stockholders
of SIPC, attested to as correct by its corporate secretary, is
attached as "Annex D-l" of the Application. Also, attached as
Annex "D-2" is SIPe's Certificate of Compliance (COC), issued
by the Commission.

3.

The Parties may be served with orders and other processes of

the Commission through their counsel.
NATURE OF THE APPLCATION

4.

The Application was filed pursuant to Rule 20(B) of the ERC

Rules of Practice and Procedure and other pertinent rules and
regulations of the Commission. Meanwhile, the issuance of the
Provisional Authority (PA) is being sought pursuant to Rule 14
of the same Rules. A copy of the PSC is attached to the
Application as Annex "G".
COMPLANCE

5.

WITH PRE-FILNG

REQUIREMENTS

In compliance with Rule 6 of the ERC Rules of Practice and

Procedure, Applicants have furnished the legislative bodies of
the Municipality of Sara in Iloilo, where ILECO Ill's principal
office is located, and the Province of Iloilo with copies of their
Application with all its annexes. The certifications attesting
receipts and postings thereof are attached to the Application as
Annexes "H" and "H-1", respectively. Applicants have caused
the publication of their Application in a local newspaper
circulating within the franchise area of ILECO III. Copies of the
Affidavit of Publication and the local newspaper are attached to
the Application as Annexes "I" and "1-1", respectively.
BACKGROUND

6.

On 12 November 2008, the Power Sector Assets and Labilities

Management Corporation (PSALM) issued a Notice of Award to
SPC, officially declaring the latter the winning bidder for the
privatization of the Dingle, Iloilo 146.5 MW Panay Diesel Power
Plant and the Tagbilaran City, Bohol 22 MW Bohol Diesel
Power Plant, for the bid price of US$5.7 Million (approxim~

ERC CASE NO. 2016-001 RC

Orderf 01 March 2016
Page 3 Of1S
PhP272.9 Million). The Certificate of Effectivity was issued to
SPC on 08 December 2008.
7.

On 24 March 2009, with consent and confirmation from

PSALM, SPC executed the .Assignment and Assumption
Agreement (AAA) in favor of SIPC for the assignment of the
Asset Purchase Agreement (APA) and the Land Lease
Agreement (LLA) from SPC to SIPC. A copy of the AAA is
attached as Annex "K" of the Application. SIPC started the
commercial operations of the Panay and Bohol Diesel Power
Plants on 26 March 2009.
ABSTRACT OF THE POWER SALES CONTRACT
AND RELATED INFORMATION

8.

Executive Summary
(Annex "L"). Contract Quantity.
Under the PSC, SIPC shall supply ILECO III a total Contract
Quantity of 5,280,000 kWh for a period of 5 years or an annual
contract quantity of 1,056,000 kWh. The PSC is essentially a
peaking power arrangement intended to supplement the power
supply requirements of ILECO III between the hours from 1701
to 2100.

9.

The Power Plant. The Panay Diesel Power Plant Complex

(PDPPC), situated in Brgy. Tinocuan, Dingle, Iloilo, is SIPC's
power plant. The PDPPC has two generating facilities, namely:
1) Panay Diesel Power Plant 1 (PDPP1), which is the original
generating facility of the National Power Corporation; and 2)
Panay Diesel Power Plant 3 (PDPP3), which is the diesel
generating sets transferred from the defunct Pinamucan Diesel
Power Plant in Pinamucan, Batangas, Luzon. The Description of
the PDPPC and the technical specifications of the PDPP3 and
PDPP1 are attached to the Application as Annexes "M", "M-1",
and "M-2".

10. The current maximum deliverable capacity of SIPC's power

plant for all its buyers is 52,000 KW. Attached as Annex "N" of
the Application is the latest three-year operational history of the
power plant. Also attached as Annexes "N-1" and "N-2" are the
plant statistics as of 25 December 2012 and from 26 December
2012 to 25 December 2013, respectively. Finally, attached as
Annex "0" are the plant statistics for the period 26 December
2008 to 25 December 2009.
11. Term. The term of the PSC is five (5) years from the Agreed
Date. Agreed Date, as defined in the PSC, is the start of the
delivery of electdc ene"" by tbe Sellee to the Buyee', f'Cili

ERC CASE NO.

2016-001

RC

Order/ 01 March 2016

Page40f18
12. Sale and purchase of power. The sale and purchase of the
SIPC Contract Quantity shall be at a Basic Rate' of
PhP2.50/kWh, plus Fuel Fee based on the actual cost of fuel
used during the billing period to deliver energy (Annex "B" of
the PSC), computed as follows:
RATE COMPUTATION

Basic Rate
Add: Fuel Fee
Energy Fee

PhP 2.50/kWh
x.xx/kWh
PhP x.xx/kWh

13. Fuel Fee. Fuel Fee refers to the average monthly cost of fuel
used to generate one (1) kWh of energy exported by the Power
Plant based on the actual amount of bunker-C and diesel fuel
consumed, computed at the weighted average price of the
respective fuels during the Billing Period.
The Fuel Fee is computed as follows:
Fuel Fee (FF)

Fuel Oil Consumption Rate (FOCR)

x Fuel Cost (FC)

FOCR (in L/kWh) is the average fuel consumption rate needed

to generate one (1) kWh of energy during every billing period

based on the actual total fuel consumption of the Power Plant
used to deliver the total metered quantity (MQ), as measured in
theWESM.
FC (in PhP/L) is the price at which the Seller acquired the fuel

equivalent to the weighted average price of fuels (Bunker-C and

Diesel) consumed for the month.
14. Sample Fuel Fee Computation. For presentation purposes,
hereunder is SIPe's Sample Fuel Fee Computation (Annex "B"
of the PSC) taking into account the specific FOCR of both
bunker-C and diesel fuels, based on actual plant performance
on 26 August to 25 September 2012, as follows:
I. Total Metered Quantity (MQ):

3,323,040.00

kWh

The Basic Rate represents the fixed and variable costs incurred by the Seller in deliVe~ring
energy. to the Buyer including the capital recovery and profit margin, subject to the

"'=',.oo'",,~l.

ERC CASENO. 2016-001 RC

Order/ 01 March 2016
Page 5 Of1S

II. Fuel Consumption and Fuel Cost (FC):

u.

For Bunker C (HFO):

Volume, L Price, PhP /L Total Cost, PhP

29.1843
45,385,883.53
1,555,145.09

Beginning Inventory:
Deliveries:
08/26/12 - 09/26/12
Total Fuel Volume/Cost:

220,249.53
1,775,394.62

29.2866

6,450,352.00
51,836,235.53

Less:
g Balance Per
Physical Inventory
(09/25/12)

Actual Fuel Consumption

891,918.06

08/26/12 - 09/25/12

Weighted Ave. Price (FCHFO) Total Cost / Total Volume

FCHFO

PhP 51,836,235.53 / 1,775,394.62 L

PhP 29.1970/L

FCHFo
b.

For Diesel (LFO):

Beginning Inventory:
Deliveries:
08/26/12 - 09/26/12
Total Fuel Volume/Cost:

Volume, L
3,648-49

Price, PhP /L
39.2608

Total Cost, PhP

143,242.68

9,817.14
13,465.63

43-4585

426,638.00
569,880.68

Less:
Ending Balance Per
Physical Inventory
'9/25/12)

11,139.37

Actual Fuel Consumption

2,326.26

08/26/12 - 09/25/12

Weighted Ave. Price (FCLFO)

FCLFO

FCLFo

Total Cost / Total Volume

PhP 569,880.68 / 13,465.63 L
PhP 42.3211/L~

ERC CASE NO. 2016-001 RC

Order/ 01 March 2016
Page 6 Of18
III. Fuel Oil Consumption
a.

For Bunker-C(HFO)

Actual Fuel Consumption

Total Metered Quantity
Fuel Oil Consumption Rate
FOCRHFO
b.

Rate (FOCR):

891,918.06 L
3,323,040 kWh
891,918.06 L/3,323,040 kWh
0.2684 L/kWh

For Diesel(LFO)

Actual Fuel Consumption

Total Metered Quantity
Fuel Oil Consumption Rate
.
FOCRLFO

2,326.26 L
3,323,040 kWh
2,326.26 L/3,323,040 kWh
0.0007 L/kWh

Therefore, computing for the Total FOCR:

Total FOCR
Total FOCR
Total FOCR

FOCRHFO+ FOCRLFO
0.2684 L/kWh + 0.0007 L/kWh
0.2691 L/kWh

IV. Fuel Fee (FF):

FFHFoCinPhP/kWh)

FOCRHFOX FCHFO
0.2684 L/kWh x PhP 29.1970/L
PhP 7.8364/kWh

FFLFO(in PhP/kWh)

FOCRLFOX FCLFO
0.0007 L/kWh x PhP 42.3211/L
PhP 0.0296 /kWh

Total FF (in PhP /kWh)

FFHFO+ FFLFO
PhP 7.8364/kWh + PhP 0.0296/kWh
PhP 7.866/kWh

Where:
FF (in PhP /kWh) is the Total Fuel Fees
FFHFO(in PhP /kWh) is the Fuel Fee for HFO (Bunker-C)
FFu", (in PhP/kWh) i,the Fuel Fee 0' LFO (Di~

ERC CASE NO. 2016-001

Order/ 01 March 2016
Page 70f18

RC

FOCR (in L/kWh) is the Total Fuel Oil Consumption Rate

FOCRHFo(in L/kWh) is the Fuel Consumption Rate of HFO
FOCRLFo(in L/kWh) is the Fuel Consumption Rate of LFO
FCHFO (in PhP /L) is the Weighted Ave. Price of HFO (Bunker-C)
for the Billing Period
FCLFO(in P/L) is the Weighted Ave. Price of LFO (Diesel) for the
Billing Period
15. Breakdown
of the PhP2.50/kWh
Basic Rate. SIPC's Basic
Rate is equivalent to PhP2.6857/kWh. It, however, decided to
offer to the DDs a Basic Rate of PhP2.50/kWh as reflected in
the PSC. SIPC's Basic Rate is broken down as follows:
Capital Recovery Fee (CRF)
Fixed Operation & Maintenance Costs
Variable Operation & Maintenance Costs

TOTAL

PhPl.1502/kWh
PhPO.7075/kWh
PhPo.8280/kWh
PhP2.6857/kWh

16. SIPC's monthly capital recovery was derived by setting a rate

that will result in an annual cash flow over the estimated useful
Life of the PDPP assets (lO-year useful Life) and at the same
time yield the desired Internal Rate of Return. Likewise, the net
present value of the net cash flow should equal the initial cost of
investment (represented by the acquisition cost of the PDPP
assets) and the additional capital expenditures (CAPEX) needed
to sustain the operations. The computed annuity was
PhP88,372,200.oo
(or PhP7,364,350.00 per month) using a
rate of return of 15% and the lO-year asset Life as recovery
period. The computed annuity is then translated into kWh
based on the monthly billing determinant.
A breakdown
of SIPC's Base Price, Monthly Billing
Determinant, Fixed O&M Costs and Variable O&M Costs, and
Net Heat Rate Assumption is attached to the Application as
Annex "P".
17. Project
Cost and Cost Analysis
in Support
of the
Proposed
Pricing. Attached to the Application as Annex "Q"
is the power plant's acquisition cost which provides the amount
of PhP235,366,824.o0
and the required CAPEX needed to
sustain the operations of the power plant. Annex "Q-l" also
provides notes of the Cash Flow Specifying Initial and
AdditionalCostsand SIPe's Computationof Levelizedcapy:

ERC CASE NO. 2016-001 RC

Order/ 01 March 2016
Page 8 Of18
Recovery Fee. The justification for the CAPEX to sustain the
operation of the power plant for the next ten (10) years is
attached as Annex "Q-2" of the Application.
Based on SIPC's monthly capital cost recovery using the Cash
Flow schedule, it determined the Levelized Payment of
PhP88,055,721.00 per annum (or PhP7,337,977.00 per month)
to recover its capital investment during the asset life of the
power plant at 15% Rate of Return.
18. Recovery of the Levelized Payment.
The monthly
levelized payment of PhP7,337,977.00 shall be recovered from
WESM/PSC transactions and Ancillary Service Procurement
Agreement
(ASPA) transactions
in the
amounts
of
PhP4,285,608.00
and PhP3,076,742.00,
respectively. The
Billing Determinants in computing the sharing of the Levelized
Monthly Payment for the WESM/PSC and ASPA transactions
are 3,725,920 kWh and 2,676,667 kWh, respectively (Annex "Q1" of the Application).
19. Billing Determinants. The Billing Determinants used in the
recovery of the Levelized Monthly Payment from WESM/PSC
and ASPA transactions were computed as follows:

Rated Capacity, MW
Dependable
Output
Capacity, MW
Available Factor
Billing
Determinant
(kWh/month)
Percent of dependable
output capacity
capacity,
Equivalent
MW
Equivalent kWh/month

TOTAL
66.2

ASPA

WESM/PSC

52
80%

12.27%

42.31%

54.58%

6.38

22.00

28.38

3,725,920

2,676,667
(assuming average
5hr/day utilization)

6,402,587

20. WESM Membership.

WESM.

Both Applicants

are members

of

21. Sources of Funds. SIPC's purchase of the Panay Diesel Plant

in 2009 was made with 100% equity of the company and was
fully paid on 25 March 2009. ~

ERC CASE NO. 2016-001 RC

Orderj 01 March 2016
Page 9 OflS
22.

Computation
of Return
on Investment/Weighted
Average Cost of Capital. The average Return on Investment
(ROI) is 15%. The Weighted Average Cost of Capital (WACC) is
irrelevant in the Application since the project is 100% equity.

23. Cash Flow. The cash flow analysis related to the operations of
the power plant is attached to the Application as Annex "Q".
PENDING APPLCATIONS AND
ACTUALCOST OF GENERATION
24. On various dates, SIPC filed Applications for the approval of its
PSC with various electric cooperatives, namely: AKELCO (ERC
Case No. 2013-091 RC), ILECO I (ERC Case No. 2012-030 RC),
ILECO II (ERC Case No. 2012-031 RC), NOCECO (2013-168
RC), NORECO I (2013-175 RC), VRESCO (ERC Case No. 2014026 RC), and ANTE CO (ERC Case No. 2014-114 RC). Hearings
therein were conducted on various dates and all of the
Applicants have formally offered their evidence.
25. SIPC filed a Motion to Resolve all its Applications based on the
applied rate of PhP2.50jkWh. SIPC manifested that based on its
2012 and 2013 Financial Statements, its true cost of operations
showed that the applied rate of PhP2.50jkWh is way lower than
the actual cost of generation, which were PhP2.9695 in January
to November 2014, PhP3.1069 in 2013, and PhP3.0572 in 2012.
SIPC adopts as part of its evidence said Motion and the
documents attached to the Application.
26. Environmental
Compliance Certificate. In 2004, the
Department of Environment and Natural Resources (DENR)
issued an Environmental Compliance Certificate (ECC) for the
power plant (Annex "R" of the Application).
27. Details of the Procurement
Process. SIPC follows its
standard policy and procedure in the procurement of its fuel for
the Panay Diesel Power Plant 3. A copy of SIPe's procurement
procedure is attached to the Application as Annex "S".
28. ILECO Ill's Procurement Process (Annex "T"). ILECO
Ill's Transition Supply Contract (TSC) expired last 25 December
2014. PSALM advised ILECO III (Annex "U" of the Application)
that the TSC will no longer be renewed and that ILECO III
should explore contractin1~~s e~
requirements with power
suppliers in the Visayas

Gr~~:/l_/

ERC CASE NO. 2016-001 RC

Order/ 01 March 2016
Page 10 of 18
29. In compliance with the Commission's "Guidelines for the
Recovery of Costs for the Generation Component of
Distribution Utility Rates," the Panay-Guimaras Power Supply
Consortium where ILECO III is a member, invited potential
offerors to submit offers for the supply of its electricity
requirements. The Invitation to Bid was published on 15 and 22
August 2014.
Power suppliers Green Core Geothermal Inc., Solexas Energy
International, NV Yogt Philippines, SIPC, and Panay Energy
Development Corporation responded to the invitation and
submitted their offers on 24 September 2014. After evaluating
the economic and financial impact of each proposal, the
technical working group of the consortium decided to award the
supply of peaking power requirements of ILECO III to SIPC.
RATE IMPLCATIONS OF THE
POWER SALES CONTRACT
30. The following table (shown in Annex "Y" of the Application)
shows the impact of the PSC on the generation rates paid by the
prospective Buyers of SIPC in the Yisayas:
WESM Prices During Peak (Panay) vs. PSC Price Offer
(1800H - 2100H; January to December 2012)
BILLNG
PERIOD
From: Dec. 2011
To: Jan. 2012

From: Jan. 2012

To: Feb. 2012

From: Feb. 2012

To: Mar. 2012

From: Mar. 2012

To: Apr. 2012

HOUR
1800H
1900H
2000H
2100H
1800H
1900H
2000H
2100H
1800H
1900H
2000H
2100H
1800H
1900H
2000H
2100H
1800H

MAXIMUM WESM PRICE

PRICE
DATE
1O-Jan-12
34.09
1O-Jan-12
25-Jan-12
30-Dec-11
12-Feb-12
2-Feb-12
12-Feb-12
30-Jan-12
24-Mar-12
2-Mar-12
2-Mar-12
2-Mar-12
21-Apr-12
21-Apr-12
21-Apr-12
25-Apr-12
1O-MaY-12

38.72
11.20
9.89
10.83
12.66
10.83
10.65
5.27
13-48
11.12
11.23
4.61
11.42
10-41
11.31
7.99

PROPOSED
PSC NET PRICE
10.83
10.83
10.83
10.79
10.83
10.83
10.83
10.83
11.59
11.23
11.23
11.23
11.31
11.31
11.31
11.31
11.43

PRICE
DIFFERENCE
23.26
27.90
0.37
-0.90
0.00
1.83
0.00
-0.17
-6.32
2.25
-0.11
0.00
-6.71
0.11
-0.90
0.00
-3-44

ERC CASE NO. 2016-001 RC

Order/ 01 March 2016
Page 11Of18
From: Apr. 2012
To: May 2012

From: May 2012

To: Jun. 2012

From: Jun. 2012

To: Jul. 2012

From: Jul. 2012

To: Aug. 2012

From: Aug. 2012

To: Sep. 2012

From: Sep. 2012

To: Oct. 2012

From: Oct. 2012

To: Nov. 2012

From: Nov. 2012

To: Dec. 2012

1900H
2000H
2100H
1800H
1900H
2000H
2100H
1800H

9-MaY-12
30-Aor-12
9-MaY-12
9-Jun-12
1O-Jun-12
20-Jun-12
21-Jun-12
5-Jul-12

32-42
13.83
32.93
14.70
35.26
45.86
43.30
12.98

11.43
11-40
11.43
11.43
11.43
11.44
11.44
11.07

21.00
2-42
21.50
3.27
23.83
34-42
31.86
1.91

1900H
2000H

8-Jul-12
11-Jul-12

22.18
20.84

11.07
11.01

11.11
9.83

2100H
1800H
1900H
2000H
2100H
1800H
1900H
2000H
2100H
1800H
1900H
2000H
2100H
1800H
1900H
2000H
2100H
1800H
1900H
2000H
~lOoH

7-Jul-12
27-Jul-12
26-Jul-12
26-Jul-12
26-Jul-12
25-Sep-12
25-Sep-12
25-Seo-12
25-Sep-12
19-0ct-12
9-0ct-12
18-0ct-12
18-0ct-12
23-Nov-12
26-0ct-12
26-0ct-12
20-Nov-12
1O-Dec-12
3-Dec-21
3-Dec-12
9-Dec-12

16.09
7.30
11.95
11.10
9.82
32.63
63.63
17.84
24.07
28.72
31.34
17.55
10.74
24.74
18.60
17.12
17.17
29.00
36.08
18-46
13.71

11.07
10.61
10.61
10.61
10.61
10.10
10.10
10.10
10.10

5.02
-3.31
1.34
0-49
-0.79
22.53
53.53
7.74
13.97
18.29
21.03
7.12
0.31
14.21
8.20
6.71
6.64
18.63
25.69
8.06
3.31

10-43
10.32
10-43
10-43
10.53
10.41
10-41
10.53
10.37
10.39
10.39
10.39

31. ILECO Ill's Load Forecast. Also attached to the Application

as Annex "W' is ILECO Ill's power requirements with supplier
allocation as follows:

+'HfST0R1CA1JjJJJMi'cA~6WI!()nE{SYSTMI)
2008

MAXIMUM
DEMAND

MW

2009

2011

2012

2013

2014

12.499 12.026 13.729 13.731 14.535 15.180

ERC CASE NO. 2016-001

Order/ 01 March 2016
Page 12 Of18

RC

FORECASTED DATA (WHOLE SYSTEM)

20

20

20

20

20

20

20

20

20

20

20

20

20

16

18

20

21

22

25

26

16 16. 18 19 20 22 23 25 27 29 31. 33 36
.0 97 .0 .2 .5 .0 .6 .4 .31.3
56 .0.4
20 0
50 60
0
0 60 10 0
60 0
0
0

.0
00

32. ILECO Ill's Rate Impact Analysis (Annex "X" of the

Application), is summarized in the Table hereunder, as follows:
RAW DATA OF
CONTRACTED
ENERGY
Purchased
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

TOTAL
AVE. RATE

8,418.00
8,136.14
7,951.93
7,649.26
7,821.0"
8,015.25
7,289.84
7,699.61
q.162.51

9,866.00
10,711.36
10,014.82
10.031.65
11,172.81
8,770.95
10,685.53
10.685.53
10,005.11
9,283.06
12.2Q8.60
14,475.69
14,695.83
13.356.17
11.071:;.24
241.073

PEDC

GCGI

BASE LOAD

BASE LOAD

4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4.000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
Q6.000

Fl,FlOO
5,500
5,500
5,500
5.500
5,500
5,500
5,500
5.500
5,500
5,500
5.FlOO
","00
5,500
5,500
",':;00
5,500
5,500
5,500
5.500
5,500
5,500
5.500
5,500
132.000

SALC
ON

WESM

PEAKING PURCHASED

1,000
1.000
1,000
1,000

4.000

Actual rate

(1,082)
(1,364)
(1,548)
(1,851)
(1,678)
(1,485)
(2,210)
(1,800)
(337)
366
1,211
1,415
1,432
1,673
(729)
1.186
1.186
505
(1,217)
1,7QQ

2Q.51

3,976
4,196
~,8Fl6
1,575

27.12
25.50
25.00
3.74

2.11
2.20
2.30
2.29
2-49
2.55
1.77
3.79

Cost

(2,27q)

3-48
11.93

(3,117)
(3,559)
(4,247)
(4.170)
(3,780)
(3,905)
(6,832)
(1.335)
1,274
14,448

17.2q

24,45Q

26.56
26.65
32.67
20.86
6.62
6.73
28.34

38,010
44,572
(23,816)
24,728
7.8Fl~
3,402
(34,486)
53,075
107,828
107,009
96,390
5,886

~.q6

Q.073

437.407
13.1468

ERC CASE NO. 2016-001 RC

Order/ 01 March 2016
Page 13 OflS

Power Supply
PRICE
KWH PURCHASED
TOTAL COST

PEDC

GCGI

SALCON

BASE

BASE

PEAK

6.334

5.050

10.968

13.147

96,000.00

132,000.00

4,000.00

9,072.92

241,072.92

608,064.00

666,600.00

43,873.20

119,279.83

1,437,817.03

WESM

AVERAGE RATE

Total

5.964

Note: withl
SALCON

33. SIMULATION OF THE NUMBER OF OPERATING

UNITS
NECESSARY
TO MEET THE ENERGY
REQUIREMENTS OF SIPC's CUSTOMERS. Attached to
the Application as Annex "Y" is the simulation of the number of
operating units necessary to meet the energy requirements of
SIPC's customers.
34. Connection and Grid Projects/Agreements. The PDPPC
that will supply electric power to SIPC's customers is an existing
power plant and is already connected to the Visayas Grid
through the National Grid Corporation of the Philippines
(NGCP) prior to its privatization and was transferred to SIPC on
25 March 2009. There is no grid connection project associated
with the instant PSC. Copies of the Connection Agreement,
Transmission
Service Agreement,
and Metering Service
Agreement, all between NGCP and SIPC, are attached to the
Application as Annexes "Z", "AA", and "BB", respectively.
35. Delivery Point.
total energy as
accordance with
appropriate rules

SIPC shall deliver or cause the delivery of the

prescribed on the Contract Quantity in
good utility practice and in compliance with
and regulations.

36. The Electricity Delivery Requirements as provided in Annex "A"

of the PSC are as follows:
Electricity Delivery Requirements:
a)

The Seller shall deliver the electricity at the high voltage

side of its main transformer.

b)

The active power delivered to the Buyer must be within

the system frequency range of 59.7 to 60.3Hz and a
reactive power output under steady state conditions
within the voltage range of + 5% of the nominal value at
the connection point.
~

ERC CASE NO. 2016-001 RC

Order/ 01 March 2016
Page 14 Of1S
The Seller shall cooperate with the NGCP and the Buyer in
establishing emergency plans including, but not limited to,
recovery from local or widespread electrical blackout, voltage
regulation to effect load curtailment, and such other plans as
may be necessary.
37. Payment. Commencing on the Agreed Date and continuing
throughout the Term, ILECO III shall pay to the SIPC an
amount (Monthly Payment) calculated in accordance with the
formula set forth in Annex "D" of the PSC, after reconciliation
and settlement, including Value-Added Tax (VAT). The
Computation of the Monthly Payment provides:
COMPUTATION OF MONTHLY PAYMENT
TOTAL ENERGY FEE:
Energy Fee (in P/kWh)

[(BCQ) x (Basic Rate + FF)] + VAT

Where:
1) BCQ is the total Bilateral Contract Quantity in kWh
(either the Monthly Contract Quantity or the
accumulated confirmed Final HCQ within the Billing
Period, whichever is higher)
2) FF is the Fuel Fee in PhP/kWh, as determined in
Annex "B"
3) Basic Rate is set at PhP2.50/kWh
approval)

(subject to ERC

4) VATis 12%
38. Board Approval of the PSC and the Filing of the
Application. The Board of Directors of ILECO III has
approved the PSC through a Resolution (Annex "CC" of the
Application). Also attached as Annex "CC-1" is ILECO III's
Resolution on the joint filing of the subject Application and the
appointment of a counsel to handle the same. The secretary's
certificate attesting to the approval of the PSC for SIPC is
likewise attached as Annex "DD" of the Application.
39. DOE Certificate of Endorsement.
A Certificate of
Endorsement from the Department of Energy (DOE) is no
longer needed for the PDPP since this power plant was
previously issued a Certificate of Compliance from this

ERC CASE NO.

Order/ 01 March
Page 15 Of18

2016-001

RC

2016

Commission. DOE's confirmation letter dated

attached to the Application as Annex "EE".

02

May

2011

is

MOTION FOR THE ISSUANCE OF

PROVISIONAL AUTHORITY
40. ILECO Ill's TSC with PSALM has expired on 25 December
2014. The latter advised the former that the TSC will not be
renewed and that ILECO III should explore contracting its
energy requirements with power suppliers in the Visayas Grid.
The subject PSC is technically, economically, and financially
compliant. Due to the urgency of the situation, Applicants seek
temporary relief allowing the parties to buy and sell electricity
pursuant to their PSC during the pendency of the proceedings
on the Application.
PRAYER
41. ILECO III and SIPC pray that the Commission grants their

request for a provisional authority allowing SIPC to sell

electricity to ILECO III prior to the final approval of the
Application, at the rate being applied for, and approves the
subject PSC.
Finding the said Application to be sufficient in form and in
substance with the required fees having been paid, the same is hereby
set for hearing for the determination of compliance with jurisdictional
requirements, expository presentation, pre-trial conference, and
presentation of evidence on 19 April 2016 (Tuesday) at eight
o'clock in the morning (8:00 A.M.) at ILECO III Main Office,
Barangay Preciosa, Sara, Iloilo.
ILECO III and SIPC are hereby directed to cause the publication
of the Notice of Public Hearing in two (2) newspapers of general
circulation in the Philippines at their own expense, twice (2X) within
two (2) successive weeks, the dates of publication not being less than
seven (7) days apart and the date of last publication made not later
than ten (10) days before the date of the scheduled initial hearing.
They are also directed to inform the consumers within ILECO Ill's
franchise area, by any other means available and appropriate, of the
filing of the Application, their reasons therefor, and of the scheduled
hearing thereon.
Let copies of the Application, this Order, and the attached
Notice of Public Hearing be furnished the Office of the Solicitor
General (OSG), the Commission on Audit (COA) and the commit~

ERC CASE NO.

2016-001

Order/ 01 March
Page 16 Of1S

2016

RC

on Energy of both Houses of Congress. They are hereby requested, if

they so desire, to send their duly authorized representatives at the
scheduled hearing.
Likewise, let copies of this Order and the attached Notice of
Public Hearing be furnished to the Office of the Governor of the
Province of Iloilo and to the Offices of the Mayors of the
Municipalities within ILECO Ill's franchise area for the appropriate
posting thereof on their respective bulletin boards.
ILECO III and SIPC are hereby directed to furnish all those
making requests therefor with copies of the Application and its
attachments, subject to reimbursement of reasonable photocopying
costs.
On the date of the initial hearing and pre-trial conference,
ILECO III and SIPC must submit to the Commission their written
Compliance with the jurisdictional requirements attaching therewith,
methodically arranged and duly marked, the evidence of the actual
posting and publication of the Notice of Public Hearing consisting of
certifications issued to that effect, signed by the aforementioned
Governor and Mayors or their duly authorized representatives,
bearing the seals of their offices, and the affidavits of the Editors or
Business Managers of the newspapers where said Notice of Public
Hearing were published, together with the complete issues of the said
newspapers, and such other proofs of compliance with the
requirements of the Commission.
ILECO III and SIPC, and all interested parties are directed to
submit, at least five (5) days before the date of initial hearing and pretrial conference, their respective Pre-trial Briefs containing, among
others:
(a)

A summary of admitted facts and proposed stipulation of

facts;

(b)

The issues to be tried or resolved;

(c)

The documents or exhibits to be presented, stating the

purposes thereof and proposed markings therefor; and

(d)

The number and names of the witnesses, with their

written testimonies in an individual affidavit form, to be
attached to the Pre-trial Brief.

ERC CASE NO.

2016-001

Order/ 01 March
Page 17 of 18

2016

RC

Failure of ILECO III and SIPC to submit the required Pre-trial

Brief and Judicial Affidavits of their witnesses within the prescribed
period shall be a ground for cancellation of the scheduled hearing and
the resetting of which shall be six (6) months from said date of
cancellation.
As part of the pre-trial conference, ILECO III and SIPC must
also be prepared to make an expository presentation of their
Application, aided by whatever communication medium that they
may deem appropriate for the purpose, in order to put in plain words
and explain, for the benefit of the consumers and other concerned
parties, what the Application is all about and the reasons and
justifications being cited in support thereof.
SO ORDERED.

Pasig City, 01 March

2016.

FOR AND BYAUTHORITY

OF THE COMMISSION:
.~~~-a~

-\

'.

\1\\\\1~~1\l\'~\..

&<

....

-'5

JOSE VICENTE B. SALAZAR

. C_2016_01-0C-01550

Chairmanand CEOy

Copy furnished:
1.

Atty. Russel Alabado

Counsel for SIPC and ILECO III
3/F, Builder's Center Building
170
Salcedo St., Legaspi Village, Makati

2.

Office ofthe Solicitor General

134 Amorsolo Street, Legaspi Village, Makati City

3.

Commission on Audit
Commonwealth Ave., Quezon City

4.

The Senate Committee on Energy

GSIS Building, Roxas Boulevard, Pasay City

5.

The Committee on Energy

House of Representatives
Batasan Hills, Quezon City

ERC CASE NO.

Order/ 01 March
Page 18 of 18

2016-001

2016

6.

The Municipal Mayor

Anilao,Iloilo

7.

The Municipal Mayor

Banate, Iloilo

8.

The Municipal Mayor

Barotac Viejo, Iloilo

9.

The Municipal Mayor

San Rafael, Iloilo

10.

The Municipal Mayor

Ajuy, Iloilo

11.

The Municipal Mayor

Lemery, Iloilo

12.

The Municipal Mayor

Sara, Iloilo

13.

The Municipal Mayor

Concepcion, Iloilo

14.

The Municipal Mayor

San Dionisio, Iloilo

15.

The Municipal Mayor

Batad, Iloilo

16.

The Municipal Mayor

Balasan, Iloilo

17.

The Municipal Mayor

Estancia, Iloilo
The Municipal Mayor
Carles, Iloilo

18.

19.

RC

The Governor
Province of Iloilo

20.

National Grid Corporation of the Philippines (NGCP)

Quezon Avenue corner BIR Road, Diliman, Quezon City

21.

Philippine Chamber of Commerce and Industry (PCCl)

3rd Floor, ECC Building, Sen. Gil PuyatAvenue /'/
Makati City
.
/
/ /.