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Republic of the Philippines ( ,.:;::::';~.;:~.

ENERGY REGULATORY COMMISSION b','.EC.,"'P'
San Miguel Avenue, Pasig City \

IN THE MATfER OF THE

APPLICATION FOR
AUTHORITY TO OWN,
OPERATE, AND MAINTAIN
A DEDICATED POINT TO
POINT LIMITED
TRANSMISSION FACILIlY
TO CONNECT TO THE
SALONG SWITCIIING
STATION IN BRGY.
SALONG, CALACA,
BATANGAS

ERC CASE NO. 2014-114 MC

SOIJrll LUZON THERMAL

ENERGY CORPORATION
u 0 CKE1~El1
(SLTEC), nat.: QAu..LIL~
Applicant. R" tJL -
x- - - - - - - - - - - - - - - - - - - - - - -x

DECISION

Before this Commissioo for resolution is the Application dated

3 November 2014 (Application) filed on 4 November 2014 by South
Luzon Thermal Energy Corporatiou (SLTEC) for authority to own,
operate, and maintain a dedicated point-to-point limited
transmission facility to connect to the Salong Switching Station in
Barangay Salang, Calaca, Batangas.

FACTS OF TIoIECASE

I1aving found said Application sufficient in form and in

substance with the required fees baving been paid, an Order and a
Notice of Public Hearing, both 4 December 2014 (Order) (Notice of
Public Hearing), were issued by the Commission selling the case for
determination of compliance with tbe jurisdictional requirements,
expository presentation, Pre-trial Conference, and presentation of
evidence on 14 ,January 2015.
 ERC Case No. 2014-114 MC
"
.... t.',

DECISION/28 June 2016

Page 2 of 19

In the same Order, SLTEC was directed to cause the publication

of the Notice of Public Hearing, at its own expense, once (IX) in a
newspaper of general circulation in the Philippines at least ten (10)
days before the date of the scheduled initial hearing. It was also
directed to inform the consumers, by any other means available and
appropriate, of the filing of the instant application, its reasons
therefor, and of the scheduled hearing thereon.

The Office of the Solicitor General (OSG), the Commission on

Audit (COA) and the Committees on Energy of both Houses of
Congress were furnished with copies of the Order and Notice of
Public Hearing and were requested to have their respective duly
authorized representatives present at the initial hearing.

Likewise, the Offices of the Governor of Batangas and the

Mayor of Calaca, Batangas were furnished with copies of the Order
and Notice of Public Hearing for the appropriate posting thereof on
their respective bulletin boards.

During the 14 January 2014 initial hearing held at ERC Hearing

Room, 15th Floor, Pacific Center Building, San Miguel Avenue, Pasig
City, only SLTEC appeared. No intervenor or oppositor appeared nor
was there any intervention or opposition registered.

At the said hearing, SLTEC presented proofs of its compliance

with the Commission's posting and publication of notice
requirements, which were duly marked as Exhibits "U" to "CC-l",
inclusive. Thereafter, the Engr. Roland R. Cabasa, SLTEC's Plant
Manager, delivered the Applicant's expository presentation of its
application. The Commission propounded clarificatory questions on
the presentor after he was done with his exposition.

Subsequently, Engr. Cabasa, was presented as SLTEC's witness.

In his direct examination, he identified and affirmed the Judicial
Affidavit which he executed on 8 January 2015 as well as several
documents adduced as evidence in support of the Application. After
the ,,~tness addressed clarificatory questions, the witness was
excused. Subsequent thereto, the Commission directed the Applicant
to submit its Benefit - Cost Analysis.

On 13 February 2015, Applicant SLTEC filed its Formal Offer of

Evidence of even date.

On 9 November 2015, SLTEC submitted its Supplemental

'.
,
;.' . ERC Case No. 2014-114 MC
DECISION/28 June 2016
Page 3 of19

Application dated 29 October 2015 (Supplemental Application)

praying that SLTEC be granted the authority to develop and own or
operate dedicated point-to-point limited transmission facilities
consisting of:

a) One (1) kilometer 230kV line and other equipment

connecting SLTEC's generation plant to the 230kV
Salong Switching Station; and

b) The 230kV Salong Switching Station.

On 21 March 2016, the Commission issued an Order of even

date setting the hearing on 19 April 19 2016 at two o'clock in the
afternoon (2:00 P.M.) at the ERC Hearing Room.

On 11 April 2016, National Grid Corporation of the Philippines

(NGCP) filed Comment (to SLTEC's Supplemental Application) dated
8 April 2016 (NGCP Comment).

During the hearing for the Supplemental Application held on 19

April 2016, applicant SLTEC appeared. Likewise, NGCP entered its
appearance and moved for the admission ofNGCP as an intervenor in
the case, citing its NGCP Comment. The intervention was premised
on NGCP's interest in acquiring the six (6)-kilometer Salonga-Calaca
230kV line and the 230kV Salonga Switching Station which SLTEC
owns, operates, and maintains on the ground that said assets are
deemed transmission assets.' On the basis of NGCP's interest in the
subject matter of the application, the Commission gave due course to
NGCP's motion to intervene. Apart from NGCP, there were no other
appearances either as intervenor or oppositor.

At the said hearing, SLTEC presented proofs of its compliance

with the Commission's posting and publication of notice
requirements, which were duly marked as Exhibits "E" to "M-1",
inclusive. Thereafter, Engr. Raymond L. Gaballo, Senior Electrical
Engineer of SLTEC, who is also the Applicant's witness, delivered the
expository presentation of its application under oath.

At the presentation of evidence, Engr. Gaballo identified and

affirmed the Judicial Affidavit which he executed on 13 April 2016 as
well as several documents adduced as evidence in support of the
Application. Thereafter, the Commission propounded clarificatory

1The application for the acquisition of said transmission assets filed by NGCP with the
Commission is docketed as ERe Case No. 2014.111 Me.
.,. . ERC Case No, 2014-114 MC
DECISION/28 June 2016
Page 4 of 19

questions which the witness addressed. Subsequent thereto, the

Commission directed the Applicant to submit proof of NGCP's
approval of SLTEC's Facilities Study of the 230kV Salong Switching
Station.

On 3 May 2016, SLTEC submitted its Supplemental Formal

Offer of Evidence (FOE).

On 21 June 2016, finding the documents adduced into evidence

by SLTEC to be material and relevant in the resolution of the instant
application, the Commission issued an Order admitting SLTEC's
FOI'mal Offer of Evidence and Supplemental Formal Offer of
Evidence.

FACTS RELEVANT TO THE MERITS OF THE APPLICATION

In support of the Application, SLTEC alleged the following:

1. SLTEC is a corporation duly organized and existing under
the laws of the Philippines with principal office at kilometer (km)
117 National Road, Phoenix Industrial Park Phase II, Barangay
Putting Bato,\Vest, Calaca, Batangas;

A copy of SLTEC's Certificate of Registratinn, Articles of

Incorporation, By-Laws, latest General Information Sheet, and
latest Audited Balance Sheet which incorporate the latest incomes
are hereto attached to the application and made an integral part
hereof;

2. This Application is filed pursuant to Republic Act 9136,

otherwise known as the "Electric Power Industry Reform Act of
2001," Section 9 (f) of which states that:

Section 9 (f) - A generation company may develop

and own or operate dedicated point-ta-point limited
transmission facilities that are consistent with the
TDP; P1'Ovided, that such facilities are r"equired only
for the purpose of connecting to the transmission
system, and are used solely by the generating
facility, subject to pr"io1"autho1"ization by the ERe:
Provided, further, that in the event that such assets
are required for competitive purposes, ownership of
the same shall be trallsferred to the TRANSCO at a
fair market pr"iee: Provided, finally, that in the case
of disagreement on the fair market price, the ERe
shall determille thefair market value of the asset.
.- .." ERC Case No. 2014-114 MC
.' DECISIONj28 June 2016
Page 5 of 19

Background

3. The Department of Energy, in an article published by the

Philippine Star on February 1, 2013, stated that Peak demand in the
Luzon grid is expected to increase at an annual average of 4.13
percent to 16.477 MW in 2030 from only 7,969 MW in 2012 and
that the Luzon grid will require an additionalsoo MW by 2016 and
8,100 MW by 2030;

4. The government, through the Department of Energy, called

on the private sector to invest on power plant projects to address
the critical power situation in Luzon;

5. To address the dire need of power generation, SLTEC

officially commenced the construction of the Putting Balo 2X135
MW Circulating Fluidized Bed Power Plant located at the Brgy.
Putting Bato West, Calaca, Batangas (the "Generation Plant") in
December 2011 with the commercial operation expected to
commence by year-end 2014 for its first unit, and one year for its
second unit.

Statement of Facts

6. The proposed Project subject of this Application will allow

the interconnection of SLTEC to the National Grid Corporation of
the Philippines (NGCP)'s Transmission System. The
interconnection facility will extend from the Generation Plant to the
Salong Switching Station, approximately lkm in distance towards
an existing 230kV line in NCCP Calaca Substation, a distance of
approximately 6 km. The Proposed Connection Line Layout
containing a more detailed description of the Project is attached
and made an integral part hereof, as Annex "F".

The connection will be done via a one kilometer 230kV line

and other equipment collectively known as "Connection Assets";

7. Under Section 2.0 of Resolution No. 16, Series of 2011,

Connection Assets are defined as "those assets that are put in place
primarily to connect a Customer/s to the Grid and used for the
purposes of Transmission Connection Services for the conveyance
of electricity which, if taken out of the System, will only affect the
Customer connected to it and will have minimal effect of the Grid,
or other connected Customers";

8. Section 4.2 of the same resolution provides that Connection

Assets for Generation Customers of Transmission Providers include
those assets from the last Single Mechanical Connection of a User
System or Equipment of a Generator, at its Connection Point, to the
last Single Mechanical Connection which is not shared with other
Generator within the Grid. The same provision likewise states that a
generation company may develop and own or operate a dedicated
point to point limited facilities, provided, that such facilities are
required only for the purpose of connecting to the transmission
system, and are used solely by the generating facility, subject to
prior authorization by the Energy Regulatory Commission;
...' ERC Case No. 2014-114 MC
DECISION/28 June 2016
Page 6 Of19

9. SLTEC's Connection Assets shan be used solely to connect

the Generation Plant to the Salong Switching Station. The following
are the general description of the Connection Assets:

I.Operating Voltage 230 KV

2. Number of Circuits Double
3. Size of Conductor 795 MCM ACSR
(condor)
4. Number of Single (ACSR) with
Conductors OPGW
5. Line/Post Composite Type
Insulators
6. Structure Type: Steel Pole, One sided,
270 kph Wind velocity,
self-supported
7. Foundation Spread footing,
base plate
Maximum of 2-meters
8. Length of Approximately 1-
Transmission Line kilometer

The List of Physical Assets and its pictures are attached

herein as Annex "G";

10. NGCP conducted a System Impact Study (SIS) to determine

the impact of connecting SLTEC's facility to NGCP's Transmission
System. From the SIS, NGCP determined that the project would:

a. Cause no degrading impact on the voltage profile of the

existing system;

b. Cause no overstress or will not exceed the rated

interrupting capacity of the existing power circuit breaker
at Calaea Substation; and

C. Cause no transient instability to the NGCP Grid.

The SIS shows that the proposed connection is the Project's

most viable and practical option considering the distance from the
Generation Plant to the Switchyard Station in Brgy. Salong, and the
impact of such distance to the cost of the Project.

11. In addition, the SIS laid down the following conditions:

a. Construction and/or installation of Connection Asset

Facilities, including Transmission Line Facilities,
Protection System, Communication System, and Control
System;

b. The Parties shall enter into a Metering Semce Agreement

to govern NGCP's provision of metering senrices to
Customer and a Transmission Semces Agreement to
govern NGCP's provision of transmissions services to
Customer;
 ERC Case No. 2014-114 MC
.' . DECISIONj28 June 2016
Page 7ofI9

c. SLTEC shall comply with all the technical requirements

of the Grid Code, including provisions that may be
promulgated by the ERC.

12. The Project is also consistent with the Transmission

Development Plan (TDP) of the NGCP. A copy of the TDP portion
showing the project is hereto attached and made integral part
hereof as Annex "I". The Project has likemse been issued a
Certificate of Endorsement by the Department of Energy;

13. The Benefits to Cost Ratio projection of the Project, on the

other hand, is 1.43x. The highlights of the financial projections of
the Project for the next five (5) years is hereto as Annex "K";

14. Due to the viability of the proposed connection, SLTEC and

NGCP entered into a Connection Agreement. The Connection
Agreement between SLTEC and NGCP is likewise attached herein
as Annex "L". A copy of the Detailed Drawings showing the Single
Line Diagram is likewise hereto attached and made integral part
hereof as Annex "M";

15. On 28 September 2012, SLTEC entered into a Contract for

the Design and Build of 230KV Double Circuit Transmission Line in
Calaca, Batangas with PXI Power Solution Inc. (the "Construction
Contract"). The Total Project cost, per the Construction Contract, is
Thirty Five Million Philippine Pesos (P35,OOO,ooo). The Foreign
and Local Peso Combined Project Cost Breakdown is illustrated in
Annex "0";

16. When completed, SLTEC shall be responsible for the

operation and maintenance of the Connection Assets in accordance
with the Philippine Grid Code. A copy of the Compliance Plan to the
Philippine Grid Code is attached herein as Annex uP". The technical
capability of SLTEC to operate and maintain the Connection Assets,
on the other hand, is attested to by the profiles of the persons
responsible for the supervision of its operation and maintenance,
hereto attached as Annex "Q". SLTEC's financial capacity to
maintain and operate the Project is reflected on the General
Information Sheet and the Audited Balance Sheet, attached herein
as Annexes D and E, respectively;

17. SLTEC will apply for a Certificate of Compliance (COC) prior

to the Generation Plant's commencement of oeprations in
compliance with the Commission's requirements;

18. The Department of Environment and Natural Resources

(DENR) has already issued an Environmental Compliance
Certificate (ECC), numbered ECC-CO-100I-0002 for the Plant, and
R4A-1212-0486 for the Switchyard. The Project has likewise been
granted a Mayor's Permit and Licensing Office of the Municipality
of Calaca, Province of Batangas.

19. In summary, SLTEC hereby submits copies of the following

documents which are either identified as Annexes above or are
additional documents in support of the application:
, . ERC Case No. 2014-114 MC
DECISION/28 June 2016
Page 8 of19

ANNEX DOCUMENT
REFERENCE
A Certificate of Registration
B Articles of Incorporation
C By-Laws
D General Information Sheet
E Audited Balance Sheet
F Connection Line Layout
G List of Physical Assets
H System Impact Study
I Transmission Development Plan
J Certificate of Endorsement from the DOE
K Financial Ratios / Projections
L Connection Agreement Between SI:fEC and
NGCP
1\1 Detailed Drawings (Single Line Diagram
N Contract for the Design and Build of 230KV
Double Circuit Transmission Line in Calaca,
Batangas between SLTEC and PXl Power
Solution Inc. (Construction Contract)
0 Project Cost Breakdown
P Compliance Plan to the Grid Code
Q Comprehensive Profiles of the Persons in
Charge of the Supervision of the Operation and
Maintenance of the Connection Assets
R Environmental Compliance Certificate for the
Generation Plant
S Environmental Compliance Certificate for the
Switchyard
T Mayor's Permit

WHEREFORE, premises considered, it is most respectfully

prayed unto this Honorable Commission that after hearing on its
merits, a Decision be rendered approving the instant Application
granting to SLTEC the authority to own, operate, and maintain the
Dedicated Point to Point Transmission Facilities.

In its Supplemental Application, SLTEC sought to extend the

interconnection from 230 kV Salong Switching Station towards the
NGCP Calaca Substation through the existing 230 kV Salong - Calaca
Line. SLTEC stated the following:
.... ERC Case No. 2014-114 MC
DECISIONj28 June 2016
Page 9 of 19

1. On 03 November 2014, Applicanl SLTEC filed an

Application for authority to own, operate, and maintain a dedicated
point to point limited interconnection facility involving
approximately one (1) kilometer of 230 kV Line and other
equipment, that will connect its 2X135 MW Circulating Fluidized
Bed Coal-Fired Power Plant located in Barangay Puting Bato West,
Calaca, Batangas (hereinafter, "Generation Plant") to the
transmission system of the National Grid Corporation of the
Philippines (NGCP);

2. The Applicotion was filed pursuant to Section 9 (f) of

Republic Act No. 9'36, otherwise known as the Electric Power
Industry Reform Act of 2001 (EPIRA);

A gener'atiorl company may develop and own or'

operate dedicated point-to-point limited
transmission facilities that are consistent with the
TDPj Provided, that Sl1chfacilities are required only
for the purpose of connecting to the transmission
system, and are l1sed solely by the generating
facilin), subject to prior authorization by the ERe:
Provided, fl1rther, that in the event that such assets
are required for competitive purposes, ownership of
the same shall be transferred to the TRANSCO at a
fair market price: Provided, finally, that in the case
of disagr'eement on the jail' market pr'ice, the ERe
shall deter'mine thefair' market value of the asset.

3. However, the interconnection scheme subject in the

Application will run from the Generation Plant going to the 230kV
Salong Switching Station only. Thus, to completely connect the
Generation Plant to the Luzon Grid, the interconnection should
extend from the 230kV Salong Switching Station towards the NGCP
Calaca Substation, via the existing 230 kV Salong-Calaca Line,
approximately six (6) kilometers in distance;

+ The development and operation of the 230 kV Salong

Switching Station is also consistent with the NGCP's System Impact
Study (SIS) dated February 2012. Nonetheless, it must be
authorized by the Honorable Commission, as well;

5. Thus, the instant docketed Application is hereby

supplemented such that the proposed interconnection scheme that
is submitted for approval by the Honorable Commission shall
consist of the following: (a) one kilometer 230 kV Line and other
equipment connecting the Generation Plant to the 230 kV Salong
Switching Station through the existing 230 kV Salong-Calaca Line.
This proposed interconnection scheme is illustrated by the Single
Line Diagram below:
 ERC Case No. 2014-114 MC
.' -. DECISION/28 June 2016
Page 10 of 19

-'''-
(

.,.•,-"",-
--_ .._.
----
---
....
- ~,':.:;,'::-:.,--
'iLl .""'''',••••T<.- 0_""", .•
_
<e>e
AC •• _""""_ ••••••• __

.... ~ i,..,_.
-~.,~••
- j_.~"~'
--2....-lr-:..... ..."<~~..,.".,
.•. <--
! "
'--13 ._.':..~

Sltll,GLE LIN~ OIAGRAM

6. The table below provides the description and composition of

the 230 kV Salong Switching Station:

Area 1 hectare

Perimeter Approximately 410 meters

Voltage Level 230,000 Volt (230 kV)
Classification of Voltage High Voltage
Number of Bay 2, with spare for future expansion

Number of Bus 2
Components of • Switchyard
Switching Station
• Control House
• Pump house for firefighting system
• Standby emergency diesel
generator set
• Guard House

7. The details of the components of the 230 kV Salong

Svvitching Station are shown in Annex "Supplement - A",
herewith attached and made integral part hereof;

8. Meanwhile, the construction and development of the 230 kV

Salong Switching Station require a cost of PhP396,420,868.20. This
amount includes the cost of the design, construction and
installation of equipment, equipment costs, and costs for the
variation orders on the additional work and installations required
by the NGCP. In addition, SLTEC purchased parcels of land for the
Switching Station, and incurred costs in the total amount of
PhP41,627,065.53. A breakdown of the costs is presented in
herewith attached Annex "Supplcnlcnt - B", which is made
integral part hereof;

9. The operation and maintenance of the 230 kV Salong

Switching Station was previously undertaken by Hansei
Corporation at a monthly fee of PhP721,350,OOO.00. Currently, PXI
 ERC Case No. 2014-114 MC
.",
DECISIONj28 June 2016
Page 11 of 19

Pawer Solution, Inc. operates and maintains the same, including

the 230 kV Salong Calaca Line, at a monthly fee of PhP1,214,251.36;

10. The foregoing costs notwithstanding, the 230 kV Salong

Switching Station is not booked as part of the fixed assets of SLTEC,
and the costs for the development and construction of the Switching
Station and related assets are not intended to form part of the
generation rate to be charged for producing power from SLTEC's
Generation Plant;

11. The 230 kV Salong Switching Station is covered by

Environmental Compliance Certificate (ECC) No. R4A-1212-0686
issued by the Department of Environment and Natural Resources
(DENR). A copy of the ECC is herewith attached to form an integral
part hereof as Annex "Supplement - C";

12. The one (1) kilometer 230 kV line and other equipment
connecting the Generation Plant to the 230 kV Salong Switching
Station is covered by ECC No. R4A-1507-0556 issued by the DENR.
A copy of the ECC is herewith attached to form an integral part
hereof as Annex "Supplement - D";

'3. All other allegations in SLTEC's Application dated 03

November 2014 under the same docket, including all annexes
thereto, whenever relevant to this Supplemental Application, are
considered part hereof.

PRAYER

\VHEREFORE, in view of the foregoing, it is most

respectfully prayed of this Honorable Commission that after due
notice and hearing on the merits, a Decisiol1 be DULY ISSUED,
granting SLTEC the authority to develop and own or operate
dedicated point-to-point limited transmission facilities consisting
of: (a) one kilometer 230 kV Line and other equipment connecting
SLTEC's Generation Plant to the 230 kV Salong Switching Station;
and (b) the 230 kV Salong Switching Station that will connect to the
NGCP Calaca Substation through the existing 230 kV Salong-Calaca
Line.

Other reliefs that are just and equitable under the premises
are, likewise, prayed for.

Considering the foregoing, SLTEC seeks the Commission's

approval of its authority to develop and own or operate dedicated
point-to-point limited transmission facilities consisting of: (a) one
kilometer 230 kV Line and other equipment connecting SLTEC's
Generation Plant to the 230 kV Salong Switching Station; and (b) the
230 kV Salong Switching Station that will connect to the NGCP
Calaca Substation through the existing 230 kV Salong-Calaca Line.
.. ERC Case No. 2014-114 MC
DECISION/28 June 2016
Page 12 ofl9

As mentioned m the Application, the proposed project will

allow interconnection to NGCP's Transmission System. The
interconnection facility will extend from the Generation Plant to the
Salong Switching Station, approximately one kilometer (I km.) in
distance, towards an existing 230 kV line in NGCP's Calaca
Substation, a distance of approximately six kilometer (6 km.). The
project intends to connect the Puting Bato 2Xl35 MW Circulating
Fluidized Bed Power Plant located at Brgy. Puting Bato West, Calaca,
Batangas to the Grid through the Salong Switching Station.

Table below provides the general description of the SLTEC line

from the Generation Plant to the 230 kV Salong Switching Station:

Operating Voltage 230 KV

Number of Circuits Double
Size of Conductor 795 MCM ACSR (condor)
Number of Conductors Single (ACSR) with OPGW
Line/Post Insulators Composite Type
Structure type Steel Pole, One sided
270kph Wind velocity,
self-supported
Foundation Spread footing, base plate
Maximum of 2-meters
Lcngth of Approximately 1-
Transmission line kilometer

Table below provides the description and composition of the

230kV Salong Switching Station as stated in the Supplemental
Application:

Operating Voltage 230 KV

Number of Circuits Double
Size of Conductor 795 MCM ACSR (condor)
Number of Conductors Single (ACSR) with
OPGW
Line/Post Insulators Composite Type
Structure type Steel Pole, One sided
270kph Wind
velocity ,self-su ppOlted
Foundation Spread footing, base plate
Maximum of 2-meters
Length of Approximately 1-
Transmission line kilometer
 ,.. ERC Casc No. 2014-114 MC
',"
DECISION/28 Junc 2016
Page 13 of 19

ISSUES

The Commission is confronted with the following issues:

I. Whether or not under the prevailing circumstances

and applicable laws, rules. and regulations, SLTEC
is entitled to a prior authorization by the
Commission to own, operate, and maintain the
proposed dedicated point-to-point limited
connection facilities that will connect its Generation
Plant to the transmission system of NGCP.

2. Whether or not under the prevailing circumstances

and applicable laws, rules, and regulations, SLTEC
is entitled to an authorization by the Commission to
own, operate, and maintain the 230 kV Salong
Switching Station as part of SLTEC's proposed
dedicated point-to-point limited transmission
facility that will connect the Generation Plant to the
Luzon Grid.

DISCUSSION

In the Commission's review and evaluation of the Application,

the Commission studied the System Impact Study (SIS) and Facility
Study (FS) conducted by NGCP, the technical configuration of the
proposed project, technical and financial capability of SLTEC, and the
project cost. The results are as follows:

I. Result of System Impact Study (SIS) and Facility Study

(FS) conducted by NGCP

SLTEC proposed the connection of 2X135MW Puting Bato

Greenfield CFB Coal Plant to the Luzon Grid through the existing
Calaca-Steel Asia 230kV line. The power plant involves the
development of a 230kV substation which will serve as the common
station for Puting Bato Plant and for Steel Asia. The plant will be
implemented in two (2) stages: the first generator unit in 2013 and
the second unit in 2015. The generator units will be equipped with
individual 230kV/138kV 170MVA step-up transformer units.
Incidentally, the existing Calaca Power Plant which is also delivering
power to the grid through Calaca 230kV substation will have a 2X150
MW Capacity expansion in 2013 and a 2X150 MW capacity expansion
111 2015.
,', ERC Case No. 2014-114 MC
DECISIONj28 June 2016
Page 14 of 19

Overall, the connection of the proposed power plant IS

technically feasible but would necessitate grid reinforcements m
order to allow the full dispatch of Puting Bato Plant.

In addition, an FS was likewise conducted and has been

approved by NGCP. Subsequently, a Connection Agreement was
executed by NGCP and SLTEC which laid down the terms and
conditions for the connection of the Plant to the transmission system.

II. Technical Configuration

The proposed transmission line is a 230 kV, Double Circuit

transmission line approximately 1 km in length and consists of 795
MCM ACSR or equivalent conductor. It will be equipped with Optical
Fiber Ground Wire (OPGW). The pole structure and design is based
on standard National Transmission Corporation (TransCo)jNGCP
230 kV transmission lines.

The proposed 230kV Salong Switching station has a perimeter

of 410 meters with two (2) bays and two (2) buses. The components of
the switching station include the switchyard, control house, pump
house, standby emergency diesel generator set, and guard house.

However, the single line diagram submitted by SLTEC shows

that the proposed Salong Switching Station will connect one (1) power
plant and one (1) end-user. Thus, it does not fall under the category of
dedicated point-to-point limited transmission facility anymore. On
the other hand, the proposed line from SLTEC to Salong Switching is
to be used solely by the applicant and no other user is connected in
compliance with Rule 5 Section 5a(i) of the Implementing Rules and
Regulations of the Electric Power Industry Act of 2001, to wit:

Such dedicated point-to-point limited transmission

facilities are required only for the purpose of connecting
to the Grid which will be used solely by the Generation
Facility, and are not used to serve End-users or Suppliers
directly.

The Salong Switching Station is necessary to connect the

existing NGCP's directly connected customer, Steel Asia, and the
proposed generator, thus, it is classified and functions as a
Transmission Asset (TA) from the start. However, NGCP did not file
any application for such construction. It is SLTEC who constructed
the subject switching station and the authority to construct is
ERC Case No. 2014-114 MC
DECISION/28 June 2016
Page 15 of19

included in this application. Relative thereto, NGCP filed a

reclassification case under ERC Case No. 2014-111 MC which was
decided by the Commission on 19 January 2016. In the said Decision,
the Commission ruled that SLTEC's New Salong Switchyard is a
Transmission Asset from the start.

III. Technical and Financial Capability of SLTEC

The construction of the project was undertaken by PXI Power

Solution, Inc. SLTEC claimed that it is technically capable of
operating and maintaining the proposed Connection Assets.
Attached to the Application as Exhibit "Q" are the comprehensive
profiles of SLTEC's key employees, Engr. Roland Cabasa and Engr.
Raymond Gaballo. They will be responsible for the supervision and
maintenance of the Generation Plant and Connection Assets.

SLTEC has shareholders with considerable financial resources,

namely AC Energy Holdings, Inc. which owns fifty percent (50%) of
the common and preferred shares of SLTEC, and Trans-Asia Oil and
Energy Development Corporation, owner of the other 50% of the
common and preferred shares.

SLTEC is a 50:50 joint venture project undertaken by Trans-

Asia Oil and Energy Development Corporation, a PHINMA company,
and AC Energy Holdings, Inc., a wholly-owned subsidiary of Ayala
Corporation.

It must be noted that SLTEC claimed that it will ensure that it

will have the capability to fully operate the said point-to-point
transmission facilities. SLTEC, likewise, alleged that the chosen
operations strategy will also ensure that the point-to-point
transmission facility will be run in compliance with all Philippine
Grid Code and NGCP requirements as well as all other applicable
standards. However, SLTEC did not submit how it will be
implementing the said operations strategies.

Considering the absence of a definite assurance that the subject

facilities will be operated without any adverse effect to the reliability
of the grid, the Commission deems it appropriate that the operation
and maintenance of the said facilities be through NGCP which was
granted the exclusive franchise to operate and maintain the
transmission system. TransCo, now NGCP, is mandated in Section 9
of RA 9136 to:
, . ERC Case No. 2014-114 MC
DECISION/28 June 2016
Page 16 of19

c) Ensure and maintain the reliability, adequacy,

security, stability and integrity of the nationwide
electrical grid =

Section 8 of RA 9136 also provides that no person, company or

entity other than TransCo (now NGCP) shall own any transmission
facilities. The only exception is when it recognizes that a generation
company may construct, own, and operate a dedicated point-to-point
limited transmission facilities. This exemption, however, is bounded
by numerous strict limitations.

The Commission's ruling is akin to the dedicated point-to-point

limited transmission facility of EDC Burgos Wind Power Corporation
(EBWPC) under ERC Case No. 2014-104 MC where EBWPC was to
develop and own the project, while the operation and maintenance of
the dedicated point-to-point limited transmission facility were
transferred to NGCP.

IV. Project Cost

The total estimated cost of the Transmission Line

Project/Connection Asset is Thirty-Five Million Pesos
(PHP35,000,000.00) while the construction and development of the
230kV Salong Switching Station is Four Hundred Thirty Eight Million
Forty-Seven Thousand Nine Hundred Thirty Three Pesos and 73/100
(PhP438,047,933.73).

The Project Cost is based on the contract executed by SLTEC

with PXI Power Solution, Inc. The latter will design and build, and
provide the equipment, materials, supplies, and labor, and perform
all works necessary for the completion of the project.

It is worthy to note that the estimated project cost is just for the
purpose of computing the permit fee. It should not be used for rate
making purposes for this is not yet the actual cost nor the Optimized
Depreciated Replacement Cost (ODRC). It should also be emphasized
that the aforementioned amounts are not necessarily the fair market
value that should be used when the subject assets are actually
transferred to NGCP/TransCo.

V. Prescribed Fees

Permit fees for the construction of SLTEC's dedicated point-to-

point transmission facilities are prescribed under Commonwealth Act
'. ERC Case No. 2014-114 MC
DECISION/28 June 2016
Page 17of 19

No. 146, as amended, and computed based on the existing ERC

Schedule of Fees and Charges, as follows:

Permit Fee = Total Project Cost X 0.75

100

= 438,047,933.73 X 0.75
100

Permit Fee PhP 3,547,859.50

From the foregoing, the permit to be imposed on SLTEC's

dedicated point-to-point transmission facilities is Three Million Five
Hundred Forty - Seven Thousand Eight Hundred Fifty - Nine Pesos
and 50/100 (PhP 3,547,859.50).

WHEREFORE, the foregoing premises considered, the

application filed by the South Luzon Thermal Energy Corporation
(SLTEC) for authority to own, operate, and maintain a dedicated
point-to-point limited transmission facility to connect to the Salong
Switching Station in Barangay Salong, Calaca, Batangas is hereby
APPROVED subject to the following conditions:

1. The operational control of 230Kv Salong Switching

Station shall be transferred to NGCP;

2. The National Grid Corporation of the Philippines

(NGCP) shall operate and maintain the subject
dedicated point to point limited transmission
facilities subject to applicable charges;

3. The metering point shall be as close as possible to

the connection point in accordance with the
Philippine Grid Code (PGC);

4. The subject facilities shall be developed and

constructed in accordance with the System Impact
Study (SIS) and Facility Study (FS) requirements so
as not to result in the degradation of NGCP's
transmission systcln;

5. The dedicated point-to-point limited facility shall be

used solely by the generating facility;
 ERC Case No. 2014-114 MC
----.---
DECISION/28 June 2016
Page 18 Of19

6. Any portion of the dedicated point-to-point limited

transmission facilities required for competitive
purposes or connect any other user, ownership of
the same shall be transferred to TransCo/NGCP at
fair market price; and

7. SLTEC is required to secure from The Department

of Environment and Natural Resources (DENR) an
Environmental Compliance Certificate (ECC) for its
Point- To-Point Transmission Facility.

Further, the Commission authorizes the construction of the

Salong Switching Station as a Transmission Asset (TA) and not as a
dedicated point-to-point limited transmission facility.

Relative to the foregoing, SLTEC is hereby DIRECTED to remit

to the Commission, within fifteen (15) days from receipt hereof, a
total permit fee in the amount of Three Million Five Hundred
Forty - Seven Thousand Eight Hundred Fifty - Nine Pesos
and 50/100 (PhP 3,547,859.50) as payment of permit fee for the
approval of its application.

SO ORDERED.

Pasig City, 28 June 2016.

- ~ ERe
nO I, JOSE VICEN'~E B:-SAlAZAR
ChaIrman Iff
iiiii.iiiiiii
A.2017.Q04..0C-07558

ALF~~N G~j{~im1~~,jTARUC
Commissioner Commissioner

(On Leave) (On OfficialTravel)

JOSEFINA PATRICIA A. MAGPALE-ASIRIT GERONIMO D. STA. ANA
Commissioner
commiWi1o ci.iiiilulU
A.2017..Q04.0C-07558

;
.'. ERC Case No. 2014-114 MC
DECISIONj28 June 2016
Page 19 Of19

Copy furnished:

1. Diccioll Law Firm

Counselfor Applicant SLTEC
Unit 1912 Jollibee Plaza Building
F. Ortigas Jr. Road, Ortigas Center,
Pasig City

2. South Luzon Thermal Energy Corporation (SLTEC)

Kilometer 117(km 117)National Road,
Phoenix Industrial Park Phase II,
Barangay Puting Bato, West Calaca, Batangas

3. Office of the Solicitor General

134 Amorsolo Street, Legaspi Village
Makati City, Metro Manila

4. Commission on Audit
Commonwealth Avenue
Quezon City, Metro Manila

5. Senate Committee on Energy

GSIS Building, Roxas Boulevard
Pasay City, Metro Manila

6. House Committee on Energy

Balasan Hills
Quezon City, Metro Manila

7. Office of the Provincial Governor

Province of Batangas

8. Office ofthe Municipal Mayor

Municipality of Calaca, Batangas

9. The National Grid Corporation of the Philippines (NGCP)

NGCP Building, Quezon Avenue corner BIR Road
Diliman, Quezon City