IN THE MATTER OF THE

APPLICATION FOR APPROVAL

OF THE RENEWED ELECTRIC
POWER SUPPLY CONTRACT
BETWEEN CAMARINES SUR II
ELECTRIC COOPERATIVE, INC.
AND BICOL HYDROPOWER
CORPORATION, WITH PRAYER
FOR THE ISSUANCE OF
PROVISIONAL AUTHORITY
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ERe CASE NO. 2013-215 RC
CAMARINES SUR II ELECTRIC
COOPERATIVE, INC.
(CASURECO II) AND SICOL
HYDROPOWER CORPORATION
(BHPC),
Ap p licants.
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ORDER
On No ve mbe r 20, 2013, Camarine s Sur II Ele ctric Co o p e rative ,
Inc. (CASURECO II) and Sico l Hyd ro p o we r Co rp o ratio n (SHPC) file d
an ap p licatio n fo r ap p ro val o f the ir re ne we d Ele ctric Po we r Sup p ly
Co ntract (EPSC), with p raye r fo r the issuance o f a p ro visio nal
autho rity.
In the said ap p licatio n, CASURECO II and BHPC alle ge d ,
amo ng o the rs, the fo llo wing:
1. CASURECO II is an e le ctric co o p e ratlive , o rganize d and
e xisting und e r and by virtue o f Pre sid e ntial De cre e No .
269, as ame nd e d by Pre sid e ntial De cre e 1645 and
Re p ublic Act NO.1053, with p rincip al Office at De l
Ro sario , Naga City, Camarine s Sur. It may be se rve d
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 2 of 12
with order, notices and other legal processes at their
business address at Del Rosario, Naga City;
2. It holds an exclusive franchise to operate distribution of
electric service in the City of Naga and nine (9)
Municipalities in the Province of Camarines Sur
(collectively, the Franchise Area) such as Canaman,
Magarao, Bombon, Calabangga, Tinambac, Siruma,
Milaor, Minalabac and Pili. A copy of its Certificate of
Franchise issued by the National Electrification
Administration (NEA) is attached to the application to
form an integral part thereof as Annex "A";
3. BHPC, is a domestic corporation duly organized and
existing under and by virtue of the laws of the Republic of
the Philippines with principal office at Elias Angeles St.,
Naga City; it may be served with order and other
processes at their business address;
4. By and pursuant to Rule 20 (B) of the ERC Rules of
Practice and Procedure and other pertinent rules and
regulations, the instant application is submitted to the
Commission for its due consideration and approval. A
copy of the subject EPSC is appended to the application
to form an integral part thereof as Annex liB";
I. STATEMENT OF FACTS
5. BHPC is a corporation duly organized and existing under
Philippine laws engaged in generation and wholesale of
electric power thru its Hydropower Plant;
6. Copies of pertinent documents showing BHPC's due
registration and permit to operate as a generation
company are appended to the application as follows:
DOCUMENT ANNEX
Amended Articles of Incorporation and By- "C
n
Laws
Securities and Exchange Commission "0"
(SEC) Certification of Registration of said
Articles
General Information Sheet 2012
"En
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 3 of 12
"F"
UG"
7. On March, 1996, the SHPC and CASURECO II executed
a Memorandum of Agreement (Supply Contract) whereby
SHPC as an Independent Power Producer (IPP) agreed
to sell to CASURECO II electric energy generated from
its mini hydropower plant at Panicuason, Naga City at a
price based on the average basic energy and demand
charge per KWH that the National Power Corporation
(NPC) sells to CASURECO II excluding adjustment, less
4%) discount on such average basic energy and demand
charge, and 3% prompt payment discount if bill is paid
within 15 days from receipt of the power bill. The contract
had a term of ten (10) years, which commenced on
February 23, 1998 until February 23, 2008;
8. In the year 2005, CASURECO II submitted the Supply
Contract for approval to the Energy Regulatory
Commission (ERC) in compliance with the EPIRA Law
(R.A. 9136) docketed as ERC Case No. 2005-049-RC;
9. On December 6, 2006, the ERC approved the Supply
Contract but with modification in the base rate
specifically, the ERC amended the price reference rate,
the dispositive portion of said ERC Decision reads:
"WHEREFORE, the foregoing
premises considered, the application filed by
Camarines Sur II Electric Cooperative, Inc.
(CASURECO II) for the approval of its
Electric Power Supply Contract (EPSC) with
Sicol Hydropower Corporation (SHPC) is
hereby APPROVED subject to the
following conditions:
1. That the reference rate to be used
should be the total generation cost
charged by NPC to CASURECO II for
the current billing month divided by the
total kWh purchased on the said billing
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 4 of 12
month plus TRANSCO's rate which shall
include but not limited to:
a. Power Delivery service Charge;
b. System Operator Charge;
c. Metering Service Charge; and
d. Ancillary Service Charge
2. That if the NPC's rate is no longer
available due to its privatization, both
parties shall renegotiate the new pricing
scheme subject to the approval of the
Commission.
The said approval does not, however,
preclude the enforcement of any accrued
obligations on either party, arising from the
specific terms and conditions provided under
the ESPC.
It must be emphasized that the subject
contract between CASURECO II and BHPC is
the law between them, albeit subject to review
and approval by the Commission under its rate-
fixing authority.
SO ORDERED. II
10. The foregoing EPSC approved by ERC last December 6,
2006 had already expired and there is a need to renew
the supply contract in compliance with Energy Renewable
Act",
11. After series of negotiations, the parties have formally
agreed to renew the EPSC, as in fact they have already
impliedly renewed said contract since February 2007
when CASURECO II's previous Board of Directors issued
Board Resolution No. 2007-146 dated February 25,2007;
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 5 of 12
12. The new set of Board of Directors issued another
Resolution No. 2013-189, "Approving the proposal to
renew the Electric Power Supply Contract of BHPC with
CASURECO II and authorizing Director Rey A.
Hemandez, Board President, to represent (CASURECO
II) and sign, on its behalf, in the said Electric Power
Supply Contract subject to the provisions of Republic Act
No. 10531, otherwise known as the "National
Electrification Administration (NEA) Reform Law and its
Implementing Rules and Regulations."
II. ABSTRACT OF THE EPSC AND OTHER RELATED
INFORMATION
13. The following are the salient features of the EPSC:
a. TERM. This agreement shall be for a period of five
(5) years commencing on 25 October 2013 and to end
on 25 October 2018; any renewal of this agreement
shall be made and perfected within sixty (60) days prior
to expiration of this contract; should there be no
agreement by the parties within the aforesaid period,
CASURECO II shall automatically elevate the same to
the ERC for resolution after proper process and
procedures;
b. ACTUAL RATE. The BHPC shall sell to CASURECO II
at a price of four pesos and seventy-five centavos
(PhP4.75) per kilowatt hour;
c. BilLING. BHPC shall send its monthly power
Billing to CASURECO " within fifteen (15) days after the
photograph of electric power reading has been taken from
the kWh meter, or before the 15
th
day of the month
following the next billing period, and such billing shall be
due and payable without further notice, within ten (10)
days from the time the billing shall have been served;
d. PAYMENT. CASURECO II shall pay at the principal
office of BHPC at Naga City or to its authorized agent,
provided further that in case of failure of CASURECO II
to pay within thirty (30) days upon receipt of the billing,
such billing shall be subject to three (30/0)percent penalty
interest per month'
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 6 of 12
e. APPROVAL. Parties agree that this EPSC shall be
submitted to ERC for its approval prior to implementation;
and
f. OTHER PROVISIONS. Parties agreed that
CASURECO II shall install a kilowatt hour meter at
BHPC Plant site or wherever applicable to measure
any power consumption of BHPC taken from
CASURECO II subject to monthly reading and billing by
the latter;
III. ADVANTAGES OF BHPC'S SUPPLY OF POWER AND
IMPACT ON CASURECO II's OVERALL RATES
14. At present, CASURECO II buys its power supply from
AES Philippines in its coal plant in Masinloc, Zambales,
from Bacman Geothermal, Inc. in its geothermal plant
located between Albay and Sorsogon, while 10% to 20%
are from Wholesale Electricity Spot Market (WESM);
15. By reason of price. volatility in WESM, CASURECO II
opted to renew its supply contract with BHPC with fixed
price to be able to reduce at least the volume of purchase
from WESM;
16. BHPC provides clean and renewable energy to area
coverage of CASURECO II without charging Value
Added Tax (VAT) making the overall rate per kilowatt
hour being passed on. to consumers of the latter;
17. There is no charge of line rental from BHPC because it is
an off-Grid System of distribution unlike the above-
mentioned power suppliers;
IV. OTHER DOCUMENTS ATTCHED HERETO IN SUPPORT
OF THE INSTANT APPLICATION FOR THE APPROVAL
OF THE RENEWED EPSC BETWEEN CASURECO II &
BHPC
DOCUMENT ANNEX
Copy of Transmission Service Agreement
uH"
between TRANSCO and CASURECO II
ERC CASE NO. 2013-215 RC
ORDER/February 10,2014
Page 7 of 12
General description showing .all relevant
"In
technical and economic characteristics of the
hydroplant
CASURECO II Demand Side Management
uJ "
(DSM ) Program
CASUREO II Board Resolution No. 2013-189
UK "
authorizing the Board President to represent
CASURECO II and sign in its behalf the
EPSC Between CASURECO II & BHPC
BHPC's Secretary's Certificate authorizing
uL"
Mr. Romeo Y. Tan to represent BHPC and to
sign in its behalf the EPSC between BHPC &
CASURECO II
CASURECO II's Secretary's Certificate "M"
proving the filing of an application with ERC
for the approval of renewed EPSC thru its
counsel, Atty. Victor C. Reyes
CASURECO II's Load Profile for five (5)
UN"
years with graphical presentation and load
forecast operations
v. COMPLIANCE WITH PRE-FILING REQUIREMENTS
18. It manifests compliance with the pre-filing requirements
mandated under Rule 3, Section 4 (e) of the
Implementing Rules and Regulations of the Electric
Power Industry Reform Act of 2001 (EPIRA) and Ruie 6
of the 2006 ERC Rules of Practice and Procedure as
established by the attachments appended to the
Application as follows:
a. Copies of the Certificate acknowledging receipt of
the instant Application with annexes issued by the
Legislative Bodies of the Province of Camarines
Sur, the City of Naga, Municipalities of Canaman,
Magarao, Bombo'n, Calabanga, Tinambac, Siruma,
Milaor, Minalabac and Pili, appended to the
application as Annexes "CC" to "MM", respectively;
b. Notarized Affidavit of Publication stating that the
instant Application was published in a newspaper of
general circulation within its franchise area,
appended therein as Annex "AA"; and
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 8 of 12
c. A copy of the complete newspaper issue where the
Application was published appeared, appended to
the Application as Annex "BB";
VI. ISSUANCE OF PROVISIONAL AUTHORITY
19. All the foregoing allegations are re-pleaded by reference
in support of their prayer for the issuance of provisional
authority;
20. Pertinently, the surrounding circumstances warrant the
provisional approval of the instant Application,
considering the advantages CASURECO II may derive
from the supply of electric power from BHPC;
21. The Commission is authorized to issue a provisional
authority or interim relief under Rule 14 of the ERC Rules
of Practice and Procedure prior to a final decision,
provided that, the facts and circumstances would justify
the Commission's exercise of discretion, to wit:
"Section . 3. Action on the Motion.-
Motions for provisional authority or interim relief
may be acted upon with or without hearing.
The Commission shall act on the motion on the
basis of the allegations of the application or
petition and supporting documents and other
evidences that applicant or petitioner has
submitted and the comments or opposition filed
by any interested person, if there be any."
22. It prays that pending hearing, a provisional authority be
duly issued authorizing the immediate implementation of
the subject EPSC, including the proposed rate, and that
after due notice and hearing, the instant Application, the
EPSC and the rate structure contained therein be finally
approved.
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 jurisdictional hearing, pre-trial conference, expository
presentation and evidentiary hearing on February 28, 2014 (Friday)
ERC CASE NO. 2013-215 RC
ORDER/February 10,2014
Page 9of 12
at nine 0' clock in the morning (9:00 A.M.) at CASURECO II's
principal office at Del Rosario, Naga City.
CASURECO II and BHPC are hereby directed to cause the
publication of the attached Notice of Public Hearing, at their own
expense, twice (2x) for two (2) successive weeks in two (2)
newspapers of general circulation in the Philippines, with the date of
the last publication to be made not later than ten (10) days before the
date of the scheduled initial hearing. They are also directed to inform
the consumers within CASURECO II's franchise area, by any other
means available and appropriate, of the filing of the instant
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 Committees 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 the Offices of the Provincial Governor of
Camarines Sur and the Mayors of the City and the Municipalities
within the franchise area of CASURECO II for appropriate posting
thereof on their respective bulletin boards.
CASURECO II and BHPC 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, CASURECO II and BHPC
must submit to the Commission their written Compliance with the
jurisdictional requirements attaching therewith, methodically arranged
and duly marked, the evidences on 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 the 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.
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 10 of 12
CASURECO II and BHPC and all other interested parties are
directed to submit, at least five (5) days before the date of initial
hearing and pre-trial 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 therefore; 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.
Failure of CASURECO II and BHPC to submit the required Pre-
Trial Brief and J udicial 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, CASURECO II and BHPC
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, February 10, 2014.
FOR AND BY AUTHORITY
OF THE COMMISSION:
tf/tAW~ ;}, (~
~ENAIDA G. CRUZ-DUCUT
Chairperson :
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 11 of 12
Copy Furnished:
1. Atty. Victor C. Reyes
Robertson International Phils., Inc
Roxas Ave., Diversion Road, Naga City
2. Office of the Solicitor General (OSG)
134 Amorsolo Street, Legaspi Village,
City of Makati 1229
3. Commission on Audit (COA)
Commonwealth Avenue,
Quezon City 1121
4. Senate Committee on Energy
GSIS Building, Roxas Boulevard,
Pasay City 1300
5. House of Representatives Committee on Energy
Batasan Hills, Quezon City 1126
6. Philippine Chamber of Commerce and Industry (PCel)
3
rd
Floor, ECC Building,
Sen. Gil Puyat Ave., Makati City
7. The Municipal Mayor
Canaman, Camarines Sur
8. The Municipal Mayor
Magarao, Camarines Sur
9. The Municipal Mayor
Bombon, Camarines Sur
10. The Municipal Mayor
Calabanga, Camarines Sur
11. The Municipal Mayor
Tinambac, Camarines Sur
ERC CASE NO. 2013-215 RC
ORDER/February 10, 2014
Page 12 of 12
12. The Municipal Mayor
Siruma, Camarines Sur
13. The Municipal Mayor
Milaor, Camarines Sur
14. The Municipal Mayor
Minalabac, Camarines Sur
.15. The Municipal Mayor
Pili, Camarines Sur
16. The City Mayor
Naga City, Camarines Sur
17. The Provincial Governor
Province of Camarines Sur