Republic of the Philippines. ENERGY REGULATORY COMMISSION ‘San Miguel Avenue, Pasig City INTHE MATTER OF THE APPLICATION FOR APPROVAL “& OF AN ADJUSTMENT IN RATES 4 UNDER THE RULES FOR SETTING ELECTRIC COOPERATIVES’ —_ WHEELING RATES (RSEC-WR), WITH PRAYER FOR PROVISIONAL AUTHORITY ERC CASE NO. 2009-118 RC TARLAC " ELECTRIC COOPERATIVE, INC, (TARELCO 1), Applicant. x ORDER On November 6, 2009, Tarlac II Electric Cooperative, Inc. (TARELCO Il) filed an application for approval of an adjustment in rates under the Rules for Setting Electric Cooperatives’ Wheeling Rates (RSEC-WR), with prayer for provisional authority. In the said application, TARELCO II alleged, among others, the following 1. Section 43(f) of Republic Act No. 9136, otherwise known as the “Electric Power Industry Reform Act of 2001 (EPIRA)" and Section 5 (a), Rule 15 of its Implementing Rules and Regulations (IRR) authorize the Commission to establish a methodology for setting distribution wheeling rates; 2. By virtue of said authority, as early as 2006, the Commission embarked on @ process to establish a new rate setting methodology for determining electric cooperatives’ (ECs) rates; 3. From 2006 to 2009, the Commission conducted several public consultations with the industry stakeholders to discuss the details of the new regulatory framework for setting the ECs’ wheeling rates; 4. Said regulatory framework is embodied in a document denominated as the Rules for Setting the Electric Cooperatives’ Wheeling Rates (RSEC-WR); defERC CASE NO. 2009-118 RC (TARELCO Il) ORDER/anuary 11, 2010 Page 2 of 14 The regulatory framework as embodied in RSEC-WR seeks to develop a regulatory regime that encourages efficiency in the operations of the ECs, provides incentives for their good performance on a regulatory perspective, eases the regulatory burden and can easily be implemented and monitored; On May 7, 2009, its Board of Directors passed Board Resolution Nos. 162 and 167 Series of 2009 imploring upon the Commission to implement the new rate setting methodology embodied in RSEC-WR; After holding another round of public consultations nationwide, particularly in the locality where the ECs operate, on September 24, 2009, the Commission promulgated and caused the publication of RSEC-WR; Under RSEC-WR, it was categorized as Group "E”; As a Group “E” EC, its Operating Revenue Requirement (ORR) per kWh is PhP1.3200; 10. itis required to implement new customer classes as shown below: Existing Customer Class and New Customer Class ‘EXISTING CUSTOMERS [NEW CUSTOMER SEGMENTATION Residential Residential Customers Industrial [Small Commercial Large Commercial Public Buildings | Low Voltage Customers Street Lights Industrial Large Commercial Higher Voltage Customers 11, After functionalizing and_ allocating customer classes, its initial Distribution, Supply and Metering (DSM) rate caps are as follows’ Initial DSM Rate Caps per Customer Class its ORR and using the new GROUP: Residential Low Voltage Higher Voltage . phemwh | phe/meter/me. | pre/kwh | phe/cusyimo | preaw | ph/cust/mo Distributio | 0.5782 0.7595, 219.6800 - n ‘Supply _ | 0.6001 : = 42.9200 = 42.9200 Motoring | 0.4326 | 5.0000 =| 35.9400 35.9400 f 4ERC CASE NO. 2009-118 RC (TARELCO Il) ORDER/January 11, 2010 Page 3 of 14 12, As a Group “E" EC, it is also authorized to collect a Member's Contribution for Capital Expenditure (MCC) Rate in the amount of PhP0.2904/kWE 13. Considering the above mentioned rates, its rate caps would be as follows: a.) DSM — PhP1.3200/kWh; and b.) MCC PhPO.2904/kWh; GROUP: Resider __tow Voltage Higher Voltage £ ehekwh | hr/meter/mo. |_Phe/twn | pre/cusvio |_phevkwn | phevkw | enP/cust/mo Distribution | 0.5782 - 0.7595, - | = [219.68 Smee Supply | 0.6001 | - [42.92 _ - 42.92 Metering | 0.4326 | 5.0000 - 35.94 Sie ee 35.94 moc 0.2904 | 0.2904 : 2904 | | 14. It intends to move to the rate caps during the transition period as follows Proposed Transition Rates Rates Billed | Current | Startof | Endof End of I PARTICULARS Transition | _Yearone Transition | Percentage 1.0000 ‘Cust. Type: Residential Hi Distribution (kWh) 05782 0.57820 6782 Supply (kWh) 0.6001 0.6001 «0.6001 Metering (Customer) 5.0000 5.0000 8.0000 Metering (kWh) 0.4326 = 0.4326 (0.4326 cc 0.2904 0.2904 0.2004 Final Loan Condonation (kWh) oS Cust. Type: Small Commercial ion (kWh) 0.7595 0.7595, 0.7595 | Distribution (kW) - : supply (kWh) : : : | ‘Supply (Customer) 42.9203 42.9203 42.9203 Metering (Customer) 35.9431 35.9431 36.9431 Metering (kWh) : - : 7 ce 0.2908 0.2904 0.2804 Final Loan Condonation (kWh) _ (0.4255).ERC CASE NO. 2009-118 RC (TARELCO I!) ORDER/January 11, 2010 Page 4 of 14 Final Loan Condonation (Customer) Cust. Type: Large Commercial Distribution (kWh) Distribution (kW) Supply (kWh) & Supply (Customer) 24.7300 Metering (Customer) 213.6600 Metering (kWh) oY mec : Final Loan Condonation (kWh) (0.2234) Final Loan Condonation = (Customer) ‘17.3008) Cust. Type: Industrial Distribution (kWh) 1.0949 Distribution (kW) 22.00 Supply (kWh) cee ‘Supply (Customer) Metering (Customer) Metering (kwh) cc Final Loan Condonation (kWh) Final Loan Condonation . (Customer) Cust. Type: Public Building Distribution (kWh) Distribution (kW) Supply (kWh) Supply (Customer) Metering (Customer) Metering (kWh) mcc Final Loan Condonation (kWh) (0.1309) Final Loan Condonation as (Customer) (9.0803) Cust. Type: Street Lights Distribution (kWh) Distribution (kW) 2 ‘Supply (kWh) i + Supply (Customer) 4.2200 ‘Metering (Customer) . Metering (kWh) 7 mec : Final Loan Condonation {kWh) Final Loan Condonation (Customer) 09786 0.7595 42.9203 35.9431, 0.2904 0.7595 42.9203 35.9431 0.2908 0.7598 42.9203, 35.9431, 0.2904 0.7595 42.9203 35.9431 0.2908 0.7595 42.9203, 35.9831 0.2904 0.7595 42.9203 35,9431, 0.2908 0.7595 42.9203 © 35.9431 0.2904 0.7595 42.9203 35.9431 0.2904 0.7595 42.9203 359431 0.2904 0.7595 42.9208 35.9431 0.2904 0.7595 42,9203 35431 0.2904 0.7595 42,9203 35.9031 0.2904ERC CASE NO. 2009-118 RC (TARELCO Il) ORDER/January 11, 2010 Page 5 of 14 ‘Cust. Type: Industrial Distribution (kWh) 1.0949. Distribution (kW) = 219.6807 219.6807 219.6807 Supply (kWh) : : Supply (Customer) 42.9203 42.9203 42.9203 Metering (Customer) Metering (kWh) mec Final Loan Condonation (kWh) Final Loan Condonation z (customer) (7.1539) ‘Cust. Type: Large Commercial Distribution (kWh) B22 Distribution (kW) Supply (kWh) Supply (Customer) Metering (Customer) } Metering (kWh) Soe cc Final Loan Condonation (kWh) Final Lean Condonation {Customer 35.9431 35.9431 95.9494 0.2904 0.2904 0.2908 219.6807 219.6807 219.6807 42.9203 42.9203 "42.9203 35.9431 35.9431 86.9431 0.2904 0.2904 0.2904 <-47.3004) 15. It submits that the implementation of the proposed rates would be to the best interest of its consumers as it would reflect more appropriately the charges on the customer classes; 16. The proposed rates for Distribution, Supply and Metering as well as CAPEX will be implemented 100%. With the proposed implementation, it will be able to sustain its current operational efficiency in delivering prompt service and reliable power supply to its consumers; and 17. It prays that the new rate schedule, as shown below, be approved by the ‘Commission and that it be provisionally authorized to implement the said rates pending hearing and final evaluation of the instant application l RATE DESIGN Type of Customer Unit D s M Mec Residential PhP/kWh_ 0.5782 | 0.6001, 0.4326 | 0.2904 PhP/Meter/Month : = |__ 5.0000 : lLow Voltage PhP / kWh 0.7595 : =| 0.2904 +hP/Customer/Month - [42.9200 | 35.9400 - PhP / kw. 219.6800 - : - Higher Voltage PhP/Customer/Month - [42.9200 | 35.9400 : PhP/ kWh 7 : =| 0.2904ERC CASE NO. 2009-118 RC (TARELCO Il) ORDER/January 11, 2010 Page 6 of 14 Relative thereto, on November 11, 2009, an Order was issued directing TARELCO II to file an amended application and to comply with Section 4 (e), Rule 3 of the IRR of EPIRA on the basis of the following findings: 1) the rates for Metering for Low Voltage and Higher Voltage customer segmentations, including the sub-table, are not reflected in peso per meter per month (PhP/meter/mo.); 2) the components of the rates for the different customer classes, such as Distribution, Supply, Metering, MCC and Final Loan Condonation are not reflected in peso per kilowatt hour (PhP/KWh) or peso per kilowatt (PhP/KW) or peso per customer per month (PhP/cust/mo.) or peso per meter per month (PhP/meter/mo.); and 3) the new rate schedule as prepared did not reflect the unit peso per meter per month (PhP/meter/mo.) for the different types of customers. In compliance therewith, on November 20, 2009, TARELCO II filed an “Amended Application with Manifestation” alleging that there were some amendments on the initial DSM Rate Caps per Customer Class, the Rate Caps, the Proposed Transition Rates, and the New Rate Schedule, as follows: Initial DSM Rate Caps per Customer Class RESIDENTIAL LOW VOLTAGE HIGHER VOLTAGE Particulars [PRPHWs | PhPiMeters | PreRWn | PRPIGusMe PRPIRA | PRP/CUstiMo | PHEIMeIeTM Distribution | 05782 =| 07596 = ~ | 218.6800 5 = Supply 0.6007 = = [42.8200 = =| 42.9200 Metering | 04326| 5.0000 > =| 38.8400 : =| 35.9400ERC CASE NO. 2009-118 RC (TARELCO Il) ORDER/January 11, 2010 Page 7 of 14 Initial DSM and MCC Per Customer Class RESIDENTIAL LOW VOLTAGE HIGHER VOLTAGE Darna | PoPImerno | Panriwh | ProvGavive | pabitarms | Poriwm | Pork | Poifcux/no | BrbNater Particulars TaTaE aes oy Toor a0 BRD aaa on 3a 305 08 TF : ~[ oar : : Proposed Transition Rates Startof}endof | Endof PARTICULARS Unit Gurrent_|_transition_| Yearone | Transition Cust, Type: Residential citer Papa Tone] vere arse] ar Supply _ PhP/Wh T2575 ial head TOOT | Motering PhPimeterimo ha ee tee ed Metering PhP/KWh al ac ae bial Mcc PRPIKWh Final Loan Condonation PP/AWh T0200} a 5 ee ‘Cust. Typo: Small Commercial Distribution PRP/Wh oa eee T7585 | Distribution PAP/AW : z Supply PhP/kWh : : : j ae PhP/custimo eau bie bse Metering PhPimeterimo | SC [ SST SET oo Motering PhP/KWh z : z cc PhP IK = CaO | Oz0F T20O Final Loan Condonation Phen siheaael : Final Loan Condonation PhPfcustime » |__ =") Cust. Type: Large Commercial Distribution PhP/KWh oe Doe eae T7505 | Distribution PhP/KW coed = Supply PhP/KWh : i E ‘ ea PaaS 257300] areas} ar 8205 FEO Motoring PhPimeterimo | SO [ EST WSU BET | YERC CASE NO. 2009-118 RC (TARELCO Il) ORDER/anuary 11, 2010 Page 8 of 14 Motoring PhP/KWh McC. PhP/iWh cae ae inal Final Loan Condonation PhPskWh ine z i “ Final Loan Condonation PhPleustimo come ‘ a i Cust. Typo: Industrial Distribution PhP/Wh ee eee eee Lied Distribution PhPAW _ z z ‘Supply PhP/Wh j ; ‘Supply PhP/custimo was [as fou Metering PhPimeterimo | OT [ SSSRT | IMS cae = oy Ee = moe PRP /RWh, Final Loan Gondonation PhP/RWh, Cae i i inal Loan Condonation PhP/eustimo | _ 1 : ‘Cust. Type: Public Building Distribution PhP/AWh oeee ie ers mera Distribution PhP/AW : : - : z Supply PhP/iwh : i : i Sie Te:3600 | aren | — area zzUDT| Metering ee eral Motering PRP/Wh : : é McC. PhP/RWh ‘ foe | eeeieaaeen oa inal Loan Condonation PhPKWh oe : ‘ Final Loan Condonation PhP/custimo one : : Cust. Type: Street Lights Distribution PhP/kWh eo eae Distribution PhPIW : i Suppl PhemKWh é z zl ae PProusuimo e200} arses | aero EWE] Metering PhPtmeterimo eee eae ‘Metering PhP/kWh : - - = Mcc PhPIKWh eae neat Final Loan Condonation PhP”KWh Uae Final Loan Condonation PhP/custimo, . i Cust. Type: Industrial Distribution PHP ie z i Distribution PHPIW cool eemeee liane nee Supply PhP/KWh : z : : ‘Supply PhP/custimo Secs seater ieee aoe Metering PhPimeterimo |__| SST] IAT anal Metering PhP/iWh ; z ‘ moc PhP/kWh eee [eee nana OKERC CASE NO. 2009-118 RC (TARELCO II) ORDER/January 11, 2010 Page 9 of 14 Final Loan Condonation Phe/KWh Aiea) Final Loan Condonation PhPicustme | C7 Cust. Type: Large Commercial Distribution PhP/KWh wera : : Distribution PhP Saeco ae Supply PhPrRWh : : Supply PhPeustimo Sees |ieeeeenare bid Metering PhPimeterimo |” : Metering PhPIieWh : cc PhPriWh ene) asia Final Loan Condonation PhP/iWh eel Final Loan Condonation PhP/eustimo am New Rate Schedule PROPOSED RATE TYPE OF CUSTOMERS UNITS | Distribution | Supply | Metering | McC RESIDENTIAL __| PhPAWh o57e2| 06007] oaaae| 07804 PhP/meterimo = =f 80000 = LOW VOLTAGE | PhP/KWh 0.7595 7 =o 280e PhPicustmo =f 228200 : : PhP/meter/imo : = [353400 HIGHER VOLTAGE PAP/KWh - : =| 02008 PhPAW. PEGE z 5 : PhP/custmo = #3200 . PhP/meterimo : =] 355400 Finding the original and amended applications to be sufficient in form and in substance with the required fees having been paid, the same are hereby set for jurisdictional hearing on February 9, 2010 (Tuesday) at ight-thirty in the morning (8:30 A.M.) at the ERC Hearing Room, 15" Floor, Pacific Center Building, San Miguel Avenue, Pasig City.ERC CASE NO. 2009-118 RC (TARELCO Il) ORDERManuary 11, 2010 Page 10 of 14 TARELCO Il is hereby directed to cause the publication of the attached Notice of Public Hearing, at its 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 Its also directed to inform the consumers within its franchise area, by any other means available and appropriate, of the filing of the instant applications, its reasons therefor and of the scheduled hearing thereon. Let copies of the applications, this Order and the attached Notice of Public Hearing be fumished 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 Office of the Provincial Governor of Tarlac and the Offices of the Mayors of the Municipalities within TARELCO I's franchise area for the appropriate posting thereof on their respective bulletin boards. TARELCO II is hereby directed to furnish all those making requests therefor with copies of the applications and their attachments, subject to reimbursement of reasonable photocopying costs. (On the date of the initial hearing, TARELCO II must submit to the Commission its written compliance with the jurisdictional requirements attaching therewith, methodically arranged and duly marked, the evidence on the actual posting and publication of the Notice of Public Hearing consisting of certifications issued to that effect, signed by the 4ERC CASE NO. 2009-118 RC (TARELCO I!) ORDER/January 11, 2010 Page 11 of 14 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 will be published together with the complete issues of the said newspapers, and such other proofs of compliance with the requirements of the Commission TARELCO II and alll other interested parties are directed to submit, at least five (6) 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 TARELCO Il to submit the required Pre-Trial Brief and Judicial Affidavits of its 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, TARELCO II must also be prepared to make an expository presentation on its applications, aided by whatever communication ‘medium that it 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 applications are all about and the reasons and justifications being cited in support of the Hy 4 ‘ate adjustments prayed for.ERC CASE NO. 2009-118 RC (TARELCO I!) ORDER/January 11, 2010 Page 12 of 14 Acting on the prayer for the issuance of a provisional authority, the Commission finds that the instant applications are consistent with the RSEC-WR and the proposed rates are just and reasonable based on the documents submitted by TARELCO Il WHEREFORE, the foregoing premises considered, the Commission hereby PROVISIONALLY AUTHORIZES Tarlac II Electric Cooperative, Inc. (TARELCO Il) to implement its proposed Revised Rate Schedule with modification. In the event that the rate adjustment provisionally authorized herein is found to be excessive or insufficient after final evaluation, the amount corresponding to the difference shall be accordingly refunded or collected in a manner to be determined by the Commission. Accordingly, TARELCO I is hereby directed to adopt the provisionally-approved Revised Rate Schedule to be implemented effective its January 2010 billing period, as follows: Start of Transition January 2010 fron hares: Demand Gage Pe noo] 1100 ~ [oss [ans Ditton sien Charge | PPh over | 07360| a7 | os72| soa] osm] asers| oaost fsopyCarges: Rea Customer Guage Prefuse so] 33a3[a533[ sass] zas7] sas ‘Sup Ste Charge PAP 0.087 metering cogs Real Canoe Cue brwimeterino [sooo [ 3126] t2aa0| sesss| 3007] i797] sas] _inaao| MetengSoten charge | riPhin 03460 MCC roman Torso] onsos|ozs0s | o200e]o2sot] see] asca] 02908ERC CASE NO. 2009-118 RC (TARELCO Il) ORDER/January 11, 2010 Page 13 of 14 End of year 1 January 2011 [Beton cor: Demand age oh 7968] 1968 OnvextenSytenCare | HORNE osraz| —o7se5| —orses| oses] arses] 075i sre: Fett Catone Gage [Penn eel axl an! an| an| on] as Susp Sten hae Eom Dont ring Charges: fwiCutone Gage [rivimewino | sooo] s59e) 2658] soar] soe] suo) 550] 000 erry tee Owe | Pt oan SC ew oases] ozs0e] ozsoi] ozsoe] anon] oxsor] _oxsoa] 0208 End of Transition january 2012 Tao TOW VOLTAGE TecneRvoTTGe Diente Gs, en Cree ema Cage nen 7se6| a9 Dtivin ptm Cage | ah asma| —a7ss5| arse] ones] arses] ones ay ag feuicutone Gane | eaino aul axl an| en) axl asl ean Sapien Gage [mv 26001 ting as Aealtwioneiage [rivingefno | sooo] 3598| s508] 898] sou] 500] _m508| 550 etre syten Cpe kwh 04805 fcc oo o2oe|aas0e[ aasoe| ozsoe] — o2soa] —aaa0e] —ozwi] _ozsee SO ORDERED. Pasig City, January 11, 2010 Wee foal oR oot Chairperson gaat Goad) a. (On Leave) RAUMA. TAN ALEJANDRO Z. BARIN Commissioner CommissionerERC CASE NO. 2009-118 RC (TARELCO I) ORDER/January 11, 2010 Page 14 of 14 Copy Furnished: 4. ATTY. ZENON A. SUARES Counsel for TARELCO Room 303, Web-Jet Bidg., Quezon Avenue, Comer BMA St., Quezon City 2 ENGR. JOSE F. BOGNOT, JR. General Manager Tarlac Il Electric Cooperative, Inc. (TARELCO I!) San Nicolas, Concepcion, Tarlac 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 Bldg. Roxas Blvd., Pasay City Metro Manila 6. House Committee on Energy Batasan Hills, Quezon City, Metro Manila 7. Office of the Provincial Governor Province of Tarlac Office of the Provincial Governor Province of Nueva Ecija 9. Office of the Municipal Mayor Municipality of Bamban Province of Tarlac 10. Office of the Municipal Mayor Municipality of Capas Province of Tarlac 11. Office of the Municipal Mayor Municipality of Concepcion Province of Tarlac 12. Office of the Municipal Mayor Municipality of Zaragoza Province of Nueva Ecija