Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City IN THE MATTER OF THE APPLICATION 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 ERC CASE NO. 2014-114 MC SOUTH LUZON THERMAL ENERGY CORPORATION (SLTEC), Applicant. promulgated: Kocecreeeeecescrs src x JUN 28 2019 ORDER Before the Commission for resolution is the Omnibus Motion {for Partial Reconsideration and Issuance of Status Quo Ante Order [Re: Decision dated 28 June 2016] dated 2 February 2017 filed by South Luzon Thermal Energy Corporation (SLTEC) on even date. FACTUAL ANTECEDENTS SLTEC is a corporation duly organized and existing under the laws of the Philippines with principal office address at Km_117 National Road, Phoenix Industrial Park Phase I, Brgy. Puting Bato West, Calaca, Batangas. On 3 November 2014, SLTEC filed the instant Application seeking the Commission’s approval of its authority to own, operate, and maintain its own dedicated point-to-point limited transmission facility to connect to the Salong Switching Station in Brgy. Salong, Calaca, Batangas.ERC CASE NO. 2014-114 MC ORDER/25 June 2019 PAGE2OF8 On 28 June 2016, the Commission rendered its Decision: (a) approving the instant Application filed by SLTEC 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, subject to certain conditions; (2) authorizing the construction of Salong Switching Station as a Transmission Asset (TA) and not as a dedicated point-to-point limited transmission facility; and (3) directing SLTEC to remit to the Commission, within fifteen (15) days from receipt of the decision, a total permit fee in the amount of Three Million Five Hundred Forty — Seven Thousand Eight Hundred Fifty - Nine Pesos and 50/100 (PhP3,547,859.50) as payment of permit fee for the approval of its application, viz: WHEREFORE, the foregoing premises considered, the application filed by the South Luzon Thermal Energy Corporation (SLTEC) for authori 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: i The operational control of 230 KV Salong Switching Station shall be transferred to NGCP; . 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; . The metering point shall be as close as possible to the connection point in accordance with the Philippine Grid Code (PGC); . The subject facilities shall be a 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 system; . The dedicated point-to-point limited facility shall be used solely by the generating facility; . 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 . 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.ERC CASE NO. 2014-114 MC. ORDER/25 June 2019 PAGE 30F8 2 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 (PhP3,547,859-50) as payment of permit fee for the approval of its application. On 2 February 2017, SLTEC filed the subject Omnibus Motion for Partial Reconsideration of the Decision praying for the following: WHEREFORE, premises considered, SLTEC respectfully prays unto the Honorable Commission to: 1. RECONSIDER and SET ASIDE a portion of its Decision dated 28 June 2016 insofar as its directive for SLTEC to pay the Permit Fees for. NGCP’s Switching Station in the amount of PhP3,285,359-50; 2. A new order or decision be rendered REQUIRING NGC to pay the Permit Fees for said Switching Station in the amount of PhP3,285,359.50, as the same has been classified as a Transmission Asset from the beginning pursuant to existing laws, rules and regulations; 3. DIRECTING SLTEC to pay instead only the amount of PhP262,500.00 as Permit Fee for the dedicated point- to-point limited transmission facility approved by the Honorable Commission; and 4. Pending resolution of herein Motion for Partial Reconsideration, a Status Quo Ante Order be immediately issued ALLOWING SLTEC to observe the status prevailing prior to the directive to pay the Permit Fees for the Switching Station required under the assailed Decision dated 28 June 2016. On 27 March 2018, SLTEC filed a Manifestation with Motion for Urgent Resolution praying for the following: (1) for the ‘Commission to reconsider and set aside a portion of its Decision dated 28 June 2016 insofar as its directive for SLTEC to pay the Permit Fee for NGCP’s 230 kV Salong Switching Station in the amount of PhP3,285,359.50; (2) that a new order or decision be rendered requiring NGCP, a Party-Intervenor in the instant case, to pay the Permit Fee for said 230kV Salong Switching Station in the amount of PhP3,285,359.50, as the said facility has been classified as a transmission asset pursuant to existing laws, rules and regulations, the Honorable Commission’s Decision in the instant case, and its [6ERC CASE NO. 2014-114 MC ORDER/25 June 2019 PAGE 4OF8 # Decision dated 19 January 2016 for ERC Case No. 2014-111 MC;! and (g)directing SLTEC to pay, instead, only the amount of PhP 262,500.00 as Permit Fee for its dedicated point-to-point limited transmission facility as approved by the Honorable Commission. ISSUES The issue for the Commission’s resolution are the following: 1. Whether or not to reconsider and set aside a portion of its Decision dated 28 June 2016 insofar as its directive for SLTEC to pay the Permit Fee for NGCP’s Switching Station in the amount of PhP3,285,359.50- 2. Whether or not a new order or decision should be rendered requiring the NGCP to pay the Permit Fee for said Switching Station in the amount of PhP3,285,359.50, as the same has been classified as a transmission asset from the beginning pursuant to existing laws, rules and regulations; 3. Whether or not to direct SLTEC to pay instead only the amount of PhP262,500.00 as Permit Fee for the dedicated point-to-point limited transmission facility approved by the Honorable Commission; and 4. Whether or not pending resolution of herein Motion for Partial Reconsideration, a Status Quo Ante Order be immediately issued allowing SLTEC to observe the status prevailing prior to the directive to pay the Permit Fee for the Switching Station required under the assailed Decision dated 28 June 2016. THE COMMISSION’S RULING After due deliberation and evaluation of all evidence submitted and all information gathered by the Commission pursuant to its regulatory powers, the Commission resolves to DENY the instant Omnibus Motion for Partial Reconsideration and Issuance of Status Quo Ante Order [Re: Decision dated 28 June 2016]. "im the Matter of the Petition for Approval of the Reclassification of the New Salong 230kV Substation and the Salong - Calaca 230k line into Transmission Assets a -ERC CASE NO. 2014-114 MC ORDER/25 June 2019 PAGE50F8 ¥ DISCUSSION I. Payment of the Permit Fee for NGCP’s Switching Station in the amount of PhP3,285,359-50 should be paid by SLTEC. The payment of Permit Fee was mandated by Section 40 (g) of Commonwealth Act (C.A.) No. 146,2 which provides that the Commission is authorized and ordered to charge and collect from the applicant a Permit Fee authorizing the increase of equipment, the installation of new units or authorizing the increase of capacity, or the extension of means or general extensions in the services, to wit: “SEC 40. The Commission is authorized and ordered to charge and collect from any public service or applicant, as the case may be, the {following fees as reimbursement of its expenses in the authorization, ‘supervision and/or regulation of the public services: (g) For each permit fee authorizing the increase of equipment, the installation of new units or authorizing the increase of capacity, or the extension of means or general extensions in the services xxx.” Thus, it is clear from the above-cited provision that the payment of the Permit Fee, which is a reimbursement of the expenses in evaluating the case, should be paid by the applicant SLTEC. Hence, the Motion of SLTEC praying for the Commission to reconsider and set aside the portion of its Decision dated 28 June 2016 insofar as its directive for SLTEC to pay the Permit Fee for NGCP’s Switching Station in the amount of PhP3,285,359.50, is hereby DENIED. Il. SLTEC’s motion for a new order or decision be rendered requiring NGCP to pay the Permit Fees for — said Switching Station is DENIED. The required Permit Fee of PhP3,547,859.50 is for the total amount of the projects of PhP438,047,933-73 (PhP35,000,000.00 for the point-to-point limited transmission facility and 2 An Act To Reorganize the Public Service Commission, Prescribe its Powers and Duties, Define and Regulate Public Services, Provide and Fix the Rates and Quota of Expenses to be Paid by the same, and for Other Purposes. fe £ERC CASE NO. 2014-114 MC ORDER/25 June 2019 PAGE60F8 PhP403,047,933-73 for the transmission assets), computed 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 Considering that the instant project was filed solely by applicant SLTEC (it was never a joint application with the NGCP), the Commission resolves to DENY SLTEC’s motion in so far as it moves for the issuance of a new order or decision requiring NGCP to pay the subject permit fees. In fact, NGCP is not even a party-intervenor, although part of the project is transmission by function. Hence, the denial of the motion. Furthermore, the Commission notes that the request of SLTEC should be addressed internally between SLTEC and NGCP, considering that the construction of the Salong Switching Station was an internal agreement between them. However, the Decision directed SLTEC to transfer the 230kV Salong Switching Station to NGCP because it connects other user, specifically Steel Asia. It is imperative to note that Section 9 of the EPIRA provides 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, viz: “Such dedicated point-to-point limited transmission facilities are required only for the purpose of connecting to the transmission system, and are used solely by the generation facility, subject to prior authorization by the ERC: Provided, further, 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: =" Ill. SLTEC’s motion to reduce the amount of the Permit Fee is DENIED. 5 Section 9, R, A, No. 9136, entitled "Electric Power Industry Reform Act of 2001" (EPIRA).ERC CASE NO. 2014-114 MC ORDER/25 June 2019 PAGE7OF8 ¥ ‘The request of SLTEC to render a new Decision requiring NGCP to pay the Permit Fee for the subject switching station and directing SLTEC to pay instead only the amount of PhP262,500.00, is denied as previously discussed. Iv. SLTEC’s Motion for the issuance of a Status Quo Ante Order is DENIED. The issuance of a Status Quo Ante Order allowing SLTEC to observe the status prevailing prior to the directive to pay the permit fees for the Switching Station, is denied. WHEREFORE, the foregoing premises considered, the Omnibus Motion for Partial Reconsideration and Issuance of Status Quo and Ante Order filed by SLTEC is hereby DENIED. SLTEC is hereby DIRECTED to immediately pay the permit fee amounting to Three Million Five Hundred Thousand Forty-Seven Thousand Eight Hundred Fifty-Nine Pesos and 50/100 (PhP3,547,859-50). Therefore, the case is considered CLOSED and TERMINATED. SO ORDERED. sn Pasig City, 25 June 2019. “avT0-200-06-510-0020 AGNES VS} D io Chairperson and CEO JOSEFINA PATRIC! .. MAGPALE-ASIRIT ALEXIS M) MBATAN Conrhissioner Commissioner (on official business) CATHERINE P. MACEDA Commissioner sy y ve Ros: Beta / L1G / Fai (on official business) PAUL CHRISTIAN M. CERVANTES. CommissionerERC CASE NO. 2014-114 Mt ORDER/25 June 2019 PAGES OF8 Copy furnished: 1 ‘Atty. Anna Tricia P. Evangelista and Atty. Mailyn Pacifico Caspe DICCION LAW FIRM Counsel for Applicant SLTEC Unit 1708 Jollibee Plaza Bldg,, F. Ortigas Jr. Road Ortigas Center, Pasig City South Luzon Thermal Energy Corporation (SLTEC) Brgy. Puting Bato West, Calaca, Batangas ENERGY REGULATORY COMMISSION Standards Division (SD) 17 Floor, Pacific Center Building San Miguel Avenue, Pasig City 1600 ENERGY REGULATORY COMMISSION Legal Service (LS) 15" Floor, Pacific Center Building ‘San Miguel Avenue, Pasig City 1600