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APPLICATION for APPROVAL of the Power Supply Agreement (PSA) between the Abra electric COOPERATIVE, INC. (ABRECO) AND AP RENEWABLES INC. (AP), with PRAYER for PROVISIONAL AUTHORITY, Abra ELECTIC INC. (APPLICANT). ABRECO is an electric cooperative duly organized and existing by virtue of the laws of the Republic of the Philippines
APPLICATION for APPROVAL of the Power Supply Agreement (PSA) between the Abra electric COOPERATIVE, INC. (ABRECO) AND AP RENEWABLES INC. (AP), with PRAYER for PROVISIONAL AUTHORITY, Abra ELECTIC INC. (APPLICANT). ABRECO is an electric cooperative duly organized and existing by virtue of the laws of the Republic of the Philippines
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APPLICATION for APPROVAL of the Power Supply Agreement (PSA) between the Abra electric COOPERATIVE, INC. (ABRECO) AND AP RENEWABLES INC. (AP), with PRAYER for PROVISIONAL AUTHORITY, Abra ELECTIC INC. (APPLICANT). ABRECO is an electric cooperative duly organized and existing by virtue of the laws of the Republic of the Philippines
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San Miguel Avenue, Pasig City IN THE MATTER OF THE APPLICATION FOR APPROVAL OF THE POWER SUPPLY AGREEMENT (PSA) BETWEEN THE ABRA ELECTRIC COOPERATIVE, INC. (ABRECO) AND AP RENEWABLES INC. (APRI), WITH PRAYER FOR PROVISIONAL AUTHORITY, ABRA ELECTRIC INC. (ABRECO, COOPERATIVE, Applicant. )(---------------------------------------------------)( / ,., I ' . i ' ! r I I 2 a , ERC Case No. ____ RC Applicant, ABRA ELECTRIC COOPERATIVE, INC. (ABRECO), thru the undersigned counsel, unto this Honorable Commission, respectfully alleges, that: 1. Applicant is an electric cooperative duly organized and existing by virtue of the laws of the Republic of the Philippines, with principal office address at Calaba, Bangued, Abra; 2. It is the exclusive franchise holder issued by the National Electrification Commission (NEC) to operate an electric light and power distribution service in the twenty-seven (27) municipalities of the province of Abra, namely: Bangued, Baay-Licuan, Boliney, Bucay, Bucloc, Daguioman, Danglas, Dolores, Lacub, Lagangilang, Lagayan, La Paz, Langiden, Luba, Malibcong, Manabo, Penarrubia, Pidigan, Pilar, Sallapadan, San Isidro, San Juan, San Quintin, Tayum, Tineg, Tubo, Villaviciosa ; 3. Pursuant to Rule 20 (B) of the ERG Rules of Practice and Procedure, and other pertinent rules and regulations, this Application is being submitted to this Honorable Commission for its due consideration of the Power Supply Agreement (PSA) executed by and between ABREGO and the AP Renewables, Inc. (APR/); STATEMENT OF THE FACTS 4. ABREGO, in the delivery of its services, sources one hundred percent (100%) of its electricity requirements for distribution to its customers pursuant to a Contract for the Supply of Electric Energy (CSEE) with the National Power Corporation ("NPC") which was subsequently assigned to the Power Sector Assets & Liabilities Management Corporation (PSALM). The CSEE is due to expire on December 26, 2011. 5. PSALM however, has manifested to ABREGO its total inability to supply the latter's power requirements after expiration of the CSEE; 6. Presently, the AP Renewables, Inc. (APR/) owns and has assumed the operation of two (2) geothermal power plants in southern Luzon namely, the Mak-Ban Geothermal Power Plant located in MI. Makiling, Makban, Laguna and the Tiwi Geothermal Power Plant located in Tiwi, Albay, as the winning bidder in the public bidding conducted by PSALM for the privatization of said assets, pursuant to Section 47 of Republic Act No. 9136, otherwise known as the Electric Industry Reform Act (EPIRA). 7. APRI is a domestic corporation duly organized and existing by virtue of the laws of the Republic of the Philippines, with office address at 6F 2 Twin Cities Condominium, 110 Legazpi Street, Legaspi Village, 1229, Makati City. 8. Due to PSALM's insufficient capacity to supply ABREGO's total energy requirements, the latter was constrained to source available power suppliers to be able to meet the requirements of its customers. 9. Accordingly, ABREGO published an invitation to submit proposals, and only the San Miguel Energy Corporation (SMEC) and APRI responded. However, SMEC subsequently manifested that it has no more available capacity to supply ABREGO's electricity requirements. APRI, while being the only remaining available supplier, proposed a competitive rate, which ABREGO found acceptable. 10. Consequently, on December 9, 2011 ABREGO and APRI signed and executed a Power Supply Agreement (PSA) for the supply of electricity under terms and conditions provided therein, subject for the instant Application. THE POWER SUPPLY AGREEMENT 11. Term. The obligation of APRI to deliver electric energy to ABREGO shall commence on 26 December 2011. This obligation shall subsist for a period of five (5) years, or until 25 December 2016. 12. Volume. Under the PSA, APRI shall supply the following energy levels for the periods indicated: 3 26-=e::J-::.2 :o 2E-.J<-::.:: :o 2:J-.. <i-l2 215-K'Jg-::.2 :o 25-Se:J-12 26-iV1ar-::.3 w 2'::!-Aor-.:.3 215-\C'J-.:...: :c 23-)ec-l4 :o 25-'-/ar-::s Zt-'>,;iar<-3 25-Apr-.:.s .26-A;Jr-15 :o 2:->-'/av-1::; 2r::-_.; -.:.::; :o 2" JJ:-.:.s 26-0ct-::.s 25- \iov-::. 'i 26- \:c'v-:.:.s :c 25-Dec-.:.s 2t-oc:-16 :,_::, 25-'.ov-10 7,724 7,716 7,788 7,831 7,570 7.385 7,656 7,606 7,673 7.644 7,948 7.940 8,014 7,790 8.141 7,805 7,87Y 7,827 7,898 7.866 7,850 7.937 8,172 8,164 8,01(: 8,2.:+0 8,379 8,025 8,1Cl 8.047 8.121 8.088 8,071 8,161 8,397 8,388 8,230 8.466 3,245 8,323 3,268 8,3.:4.4 8,310 8,293 8.385 3.621 8.612 SASC 3,692 8,741 8,465 SA89 8,.367 8,.532 8,514 8,609 2,969, 763 3,563,715.45 3 .. 008.999 3,051,000 3,66.1.,:99.55 3 .. 733,128 753,48 3,517,160 4,220.-59::..85 3,662,060 3,.305,925 3 .. 305,925 3,305,925 3,.366,977 4,0-!C,372.68 3 445,214 3.021,019 3.118.388 3,159,587 3 . .203.690 3.84,428.55 3,693,180 3,919.957 3,845,332 3,471.374 3,471,374 3,471.374 ...:.::.cs 6,:,.9.02 4,2..:;::',577.8.1 3.617.634 3,172.209 3.8C6.6"i::..18 3.267.013 3,310,176 :>,,356,381 .:..G27,657.S:i 3.869,2C1 .:1,106,785 4,028,6(:5 .:!..834_325.43 3,636.823 3.6:;6.823 3.636.823 3 703.986 3. 790.054 3,9SS_.C79.6S 3,415 .. 639 3.460.765 ..+,2.52,918.05 3,509 .. 072 4,210,886.55 4.045,221 4.293.614 :>,_;_ ">2,336.92 4,211.877 3.802.272 4-,Sr:l. 726. 3..'.. ::.,,SOL272 4, '162,726. 3..:. 3.802.272 726.3--:. 3.87'2.490 3,962.474 .,:;._ 754 908.49 3,474.590 .:..277_116.62 3.611.354 4.333.62..!..65 3.661.763 4.221.2-H 4.480.443 ::,,37b.S3:.:..40 4395.149 5,274.1.78.42 .::. .. n.::.:..265.0C 3_.967,721 4, 7tSl,265.CC 3,967,721 4,040.994 "'-.8.19,::.93 .. 31 4,134.894 4,.901,872 .. 2") 3_.625.781 4 a) Where ABREGO reduces the Contract Energy, it shall pay APRI the Buy-Out Charge equivalent to Php2.50/kWh x reduction in monthly Maximum Contract Energy multiplied by the remaining Contract Billing Periods. b) If ABREGO shall have taken Additional Energy, it shall pay to Supplier the amount equivalent to: (a) the WESM ex-ante Nodal Energy Price for the hour during which the Additional Energy was supplied at the Receiving Node; or (b) the contract price for the hour during which the Additional Energy was supplied at the Receiving Node, whichever is higher, including all incidental charges attendant to the transactions at the WESM. c) For Back-up Power and Replacement Power, ABREGO shall pay the corresponding Back-up Power Charge and Replacement Power Charge. Back-up Power Charge is the price per kWh of Back-up Power consumed by ABREGO, equal to the WESM ex-ante Nodal Energy Price for the period during which the Back-Up Power was supplied at the Receiving Node. For any other outages not arising out of Force Majeure, APR I shall provide Replacement Power for a period of up to one hundred forty four (144) hours per calendar year, for which APRI shall charge ABREGO according to the terms specified in Schedule 6.1.2 (Electricity Fees). If the outage exceeds such one hundred forty four (144)-hour period, APRI shall charge ABREGO the Back-Up Power Charge. d) In case of shortfall in the consumption of ABREGO, it shall pay an amount equivalent to the Minimum Energy Charge computed as to the load weighted average price of APRI for the Billing Period multiplied to the difference between the Contract Energy and the actual Energy consumed by ABREGO in case the latter consumes less than the Contract Energy 13. Electricity Fees. APRI shall supply and deliver energy at the rates computed in Schedule 6.1.2 of the PSA, thus 5 HHERV/>L BF- 0100
0 00 o6oo 0700 o3oo '300 1400 1500 1tioo 1700 : '-- ' - - 1,:.'- - , __ - :Lo_:,_ : ,_ - : ,_.- : 1.7- : L'- : , __ - - ,_ -- ' ,_ -- : ,_-- SYUBGL DESCRIPTIOfJ R, Time-of-U;e ht Time BF M O&PJ F, Find Fees- PHP Portion f 1 Tim,. FM;n f:or lntetRtl t on the folleowin 5Yt.180L DES(R!PTIOtJ PHP USD Rate US (PI, US CPI MOIJ SAT BF, M F"--.. F-F-.h "-F-:.11 : (2.; --o
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I:,. J:;: '' UNIT VALUE PHP;kWh PHPikVJh o "'7o PHP,k'Nh o. PHP;kV_Ih o.S8.,.9 UNIT VALUE DATE REfERENCE PHP,'IJSJ 4->.2l7 Oct.lcn SSP 2>6.t+1I USDep;, '749 >vi BSP R 1 IHTERVAL BF, M SUN & HOL r, P,_,p,._Nh ;!, 154 l3ti4 2.96ti4 Sti4 2. 864 2. 64 2- 864 2. 864 . 214 9':P34 " 93234 . 234 234- .0265
; '!. -- C -3'C 0 P-P .,,,, P-P . ,,-,h "'-'OC Z 6o .. 5 o 5;cc z 6,-.:,.6 - .. : : End of Billing Period refers to the 25th of a calendar month, and when used in the calculations for base fuel and fixed costs in Table 1 of this Schedule 6.12, means that the relevant indices as published on the 25th of the calendar month shall be applied in those calculations. If there is no published index on that day, then the most recently published index shall apply. 2 The Newcastle Coal Index is the midpoint of the bid and offer rates for the physical Newcastle forward market three (3) months subsequent to the current Billing Period. If there is no midpoint published for that month, the midpoint of the previous month (published on the same day) shall be used, 3 If the CPI for the current Billing Period is not published and available within two days from the end of the same Billing Period, the most recent available published CPI shall be used. 4 If the source of any of the foregoing indices is no longer available, or if any index has not been published or has otherwise become unavailable for 2 consecutive Billing Periods], Supplier shall select a replacement index, and any such replacement index shall supersede the then-current index and be binding upon the Parties, 5 If any of the foregoing indices are re-based during the Contract Period, Supplier has the option to apply a corresponding adjustment to the inflation formula to conform to the re-basing of the subject indices. 6 F P <:h
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14. Indexation. The Basic Energy Charge shall be adjusted monthly based on the current indexation to coal price, freight cost, consumer price indices and peso-dollar exchange rates. 15. Discount. Provided that ABREGO has no overdue obligation to APRI, APRI shall grant ABREGO the following discounts: Nature of Discount Rate of Discount Early Payment Php 0.0319 per kWh if Supplier receives payment on or before the 15 1 h day of the Payment Month. Discount Php 0.0953 per kWh if Customer maintains average Operations systems loss not exceeding 14%, Collection Efficiency of Efficiency Discount not lower than 90%, Load Factor not lower 50% Security Deposit Php 0.0973 per kWh if Customer maintains the full value Discount of the Security Deposit 16. Penalty. If ABREGO fails to pay the Electricity Fee or any other amounts payable on the due date, it shall pay a penalty of 2% per month based on the amount due, from the date when such payment is due until the date such amount is received in full by APR I. 17. Security Deposit. The Security Deposit shall be in an amount equivalent to PHP 32,000,000.00. 18. Buy-out Charge. Buy-out Charge is equivalent to Php 2.50 per KWh x reduction in monthly Maximum Contract Energy multiplied by the remaining Contract Billing Periods. 7 RATE IMPACT 19. The estimated power adjustment to ABREGO's purchased power cost as impact of the purchase from APR I, is computed as follows: Effective Generation Rates PSAwith TSC-CSEE APR I Increase/( decrease) 4.8100 6.2128 1.4028 20. The overall impact is an increase in rate equivalent to about Php1.4028 /kWh using 26 October- 25 November 2011 billing data for APRI and NPC. PROVISIONAL AUTHORITY 21. Under Rule 14 of the ERG Rules of Practice and Procedure, the Honorable Commission is authorized to issue provisional authority or interim relief prior to a final decision, provided the facts warrant such remedy. The present Application involves such facts warranting the issuance of a provisional authority; 22. Section 1 of Department of Energy Circular No. 2003-12-11 declares as a State policy that: "All distribution utilities must henceforth take cognizance and assume full responsibility to forecast, assure and contract for the supply of electric power in the respective franchise areas to meet their obligations as a distribution utility." (Underscoring supplied.) 23. By way of emphasis, ERG Resolution No. 21, Series of 2005 dated 19 October 2005 directed all distribution utilities "to enter into future bilateral 8 power supply contract with power producers to be subjected to a review by the Commission"; (Underscoring supplied.) 24. To prevent a delay in the implementation of the PSA and to mitigate the impact of the spot market prices in the WESM, a provisional authority is respectfully prayed for; RELATED INFORMATION 25. Finally, in compliance with the ERG Guidelines for the Recovery of Costs for the Generation Component of the Distribution Utilities' (DUs) Rates as well as Rule 20(8) of the ERG Rules of Practice and Procedure, ABREGO is submitting herewith copies of the following documents which are attached hereto as annexes of this Application, to wit: I ANNEX NATURE OF DOCUMENT Certificates of Franchise issued by the National Electrification A to A-1 Commission (NEC) in favor of ABREGO ! B Certificate of Registration issued by the Cooperative Development Authority (CDA) in favor of ABREGO I C to C-2 APRI's Certificate of Incorporation issued by the SEC, Amended Articles of Incorporation and latest General Information Sheet filed with the SEC D APRI's 2010 Audited Financial Statements E to E-1 General Plant Descriptions of the Mak-Ban Geothermal Power Plant and I Tiwi Geothermal Power Plant .. F to F-1 Board of Investment (801) Certificates of Registration for the Mak-Ban Geothermal Power Plant and Tiwi Geothermal Power Plant - I G to G-1 Certificates of Compliance issued by the ERC for the Mak-Ban Geothermal Power Plant and Tiwi Geothermal Power Plant 9 H to H-1 DENR letter dated September 8, 2009 approving the transfer of ownership of ECC No. 0112-871-203 from National Power Corporation to AP Renewables, Inc.; Environmental Compliance Certificate (ECC) No.
0112-871-203 issued by DENR for the Mak-Ban Geothermal Power Plant; DENR letter dated September 28, 2009 approving the transfer of ! ! I to 1-1 ownership of ECC No.0109-642-203 from National Power Corporation to AP Renewables, Inc.; Environmental Compliance Certificate (ECC) No.01 09-642-203 issuEld by DENR for the Tiwi Geothermal Power Plant J NGCP Certification dated October 29, 2009 regarding APRI's contracts for connection, transmission service and metering service 1- - K Power Supply Agreement (PSA) between ABREGO and APR I dated , G; December 9, 2011 Schedule 1.1 (a)- Allowable Downtime K-2 Schedule 4.1 -Delivery Schedule K-3 Schedule 6. 1.1- Meterinq Points K-4 Schedule 6.1.2- Rates Schedule K-5 Schedule 6. 7- Buv-out K-6 Schedule 7.2.1- Security Deposit L ABREGO Board Resolution authorizing the execution of the PSA with APR I M Details of the PSA - Executive Summary M-1 APRI's Sources of Funds (in sealed envelope) M-2 APRI's Cash Flow (in sealed envelope) M-3 APRI's Purchased Power Rate (in sealed envelope) ' M-4 APRI's Procurement Process of Fuel (in sealed envelope) N ABREGO's Actual and Forecasted Data I 0 ABREGO's Distribution Development Program for 2010 p Rate Impact Analysis Q ABREGO Board Resolution approving the filing with the ERC for approval of the PSA and authorizing its General Manager to cause the filing of the Rt;Rt application and to execute all necessary documents - Certifications issued by the Sangguniang Bayan of Bangued and Sangguniang Panlalawigan of Abra 10 I--------,-------------------------, I S to S-2 Publication of the Application in a newspaper of general circulation in the L franchise area of ABRECO or where it principally operates, with Affidavit
REQUEST FOR CONFIDENTIAL TREATMENT OF INFORMATION 26. Applicant respectfully requests that the information contained in the documents attached hereto in a sealed envelope and marked as Annexes P- 1 to P-4, respectively, be treated as confidential in nature pursuant to the Confidentiality provisions contained in Article 13 of the Power Supply Agreement (PSA) subject of the instant application. APRI treats said data and calculations as not generally available to the public on a non-confidential basis, as the same involves trade secrets reflecting APRI's investment and business calculations. 27. This request is likewise being made by virtue of Section 1 (b), Rule 4 of the ERC Rules of Practice and Procedure under which the Honorable Commission may, upon request of a party and determination of the existence of conditions which would warrant such remedy, treat certain information submitted to it as confidentiaL PRAYER WHEREFORE, in view of all the foregoing, Applicant respectfully prays that the Honorable Commission: 1) upon initial review of the Application and pending trial on the merits, issue an order granting provisional approval/authority for the Applicant to implement the provisions of the PSA, including the rates set forth in paragraph 12 hereof, effective on the billing period beginning on 26 December 2011; 11 2) after trial on the merits, issue a permanent approval of the PSA, including the rates set forth in paragraph 12 hereof; 3) grant the request for confidential treatment of the information contained in Annexes "M-1" to "M-4", respectively. Other reliefs just and equitable are likewise prayed for. Pasig City, Metro Manila, December 19, 2011. By: LERIOS-AMBOY & DELOS REYES LAW OFFICES Counsel for the Applicant Units 1609-1610 Tycoon Centre Pearl Drive, Ortigas Center, Pasig City, Metro Manila dv DITAS A. LERIOS-AMBOY Roll No. 40628 MCLE Compliance Ill Cert. No. 0006100/Nov. 12, 2009 PTR No. 6659777/Jan 13, 2011/Pasig City IBP No. 850568/Jan 14, 2011/RSM ' (' " ../ ~ F v J : . . ~ . - soJ'i'AYDA M. OMAR Roll No. 59470 PTR No. 6638339 Jun. 21, 2011/Pasig City IBP No. 859585 Mar. 28, 2011/RSM Chapter MCLE Compliance Cert. No.: N/A 12