ae eee Le “aes Le (et 2 Republic of the Philippines SUNG ENERGY REGULATORY COMMISSION‘ = im San Miguel Avenue, Pasig City aa — IN THE MATTER OF THE APPLICATION FOR AUTHORITY TO DEVELOP, OWN AND OPERATE DEDICATED POINT TO POINT LIMITED TRANSMISSION FACILITIES (DEDICATED LIMITED EXPRESS FEEDER LINE) TO CONNECT THE 8.0 MW _ DIESEL — _ FIRED POWER PLANT (DPP) TO THE TAWI-TAWI ELECTRIC COOPERATIVE, INC. 13.2 KV LOAD CENTER, WITH PRAYER FOR PROVISIONAL AUTHORITY ERC CASE NO. 2019-011 MC KALTIMEX RURAL ENERGY CORPORATION (KREC), : ‘Applicant. ia x “x JUN 0.4 219 ORDER On 7 May 2019, Applicant Kaltimex Rural Energy Corporation (KREC) filed an Application dated 3 May 2019, seeking the Commission's approval of the authority to develop, own and operate dedicated point to point limited transmission facilities which is the dedicated limited express feeder line to connect the 8.0 MW Diesel Fired Power Plant (DPP) to the Tawi-tawi Electric Cooperative, Inc.’s (TAWELCO) 13.2 kV load center, with prayer for provisional authority. ‘The pertinent allegations of the said Application are hereunder quoted as follows: 1.0 KREC is a corporation duly formed, organized, and existing under the laws of Republic of the Philippines, with principal office address Unit A 6! Floor Glass Tower Building, No. 115 Carlos Palanea Jr. Street, Legaspi Village, Makati City. KRECERC CASE NO. 2019-011 MC. ORDER/23 MAY 2019 PAGE 2 OF 10 2.0 3.0 4.0 5.0 6.0 is herein represented by its Director, Mr. Oscar A. Torralba, as evidenced by a Secretary's Certificate herewith attached and marked as ANNEX “A” of this Application. For purposes of this Application, KREC may be served with summons, orders, pleadings, and other processes of this Honorable Office through the address of the undersigned counsel hereunder stated. KREC is a New Power Producer (NPP) pursuant to Republic ‘Act (R.A.) No. 9136 otherwise known as the “Electric Power Industry Reform Act of 2001" (EPIRA law) registered as Pioneer Enterprise granted by the Autonomous Region for Muslim Mindanao (ARMM)-Board of Investment as per its Certificate of Registration No. PE-61-16 for its new 8 megawatt (MW) Diesel Power Plant (DPP) in Bongao, Tawi Tawi. On 26 January 2017, KREC filed with this Honorable Office for approval its Power Supply Agreement (PSA) with Tawi Tawi Electric Cooperative (TAWELCO), with prayer for confidential treatment and issuance of Provisional Authority (PA). The provision of a Dedicated Limited Express Feeder Line is part of the original design and construction of the DPP intended for efficiency in the service of TAWELCO as sole off-taker. Thus, the Dedicated Limited Express Feeder Line was embedded in its PSA pursuant to this Honorable Office’s policy for efficient operation of NPP. This Honorable Office granted the Provisional Authority (PA) for the implementation of the PSA between TAWELCO and KREC as per ERC Order dated July 25, 2017 promulgated September 17, 2018 (ERC Case No. 2017-005 RC). A copy of said Order dated July 25, 2017 is herewith attached and marked as ANNEX “B” of this Application. Section 9 of R.A. No. 9136 or the EPIRA Law of 2001 expressly provides that: transmission facilities that are consistent with the_IDP: 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 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: Provided, finally, That in the case of disagreement on the fair market price, the ERC shall determine the fair market value of the asset.” The Application is for the consideration and approval of KREC's own, developed, and currently operating DedicatedERC CASE NO. 2019-011 ORDER/23 MAY 2019 PAGE 3 OF 10 7.0 8.0 9.0 10.0 1.0 Limited Express Feeder Line purposely intended to connect the DPP at Brgy. Pahut, Municipality of Bongao, Province of Tawi-tawi, Autonomous Region of Muslim Mindanao (ARMM) to the TAWELCO’s 13.2kV load center, pursuant to icle IV of 2014 Revised Rules for Issuance of, i fi neration Companies, to wit: “A generation company which develops and owns or operates a dedicated point -to point limited transmission or distribution facilities for the purpose of connecting to the transmission or distribution system, respectively, should secure prior authorization by the ERC” The Dedicated Limited Express Feeder Line was already an integral part of the DPP original engineering design and construction submitted to this Honorable Office in December 2016 as part of documents in support of its application for approval of the PSA between TAWELCO and KREC intended for DPP efficiency in compliance with the technical recommendations by the National Power Corporation (NAPOCOR) and the underlying Grid/System Impact Study, The Dedicated Limited Express Feeder Line is utilized only by KREC’s DPP to connect and deliver its generated power directly through the Load Center of Tawelco being the sole offtaker. There are no connections with any end user of electricity. The entire DPP and Dedicated Limited Express Feeder Line successfully completed testing and commissioning and passed all technical standards issued by this Honorable Office as well as all criteria under the Phase-In Phase-Out (PIPO) Agreement amongst the NAPOCOR, TAWELCO and KREG, and has been in commercial operation since July 25, 2018. A certificate of successful testing and commissioning was issued jointly by the NAPOCOR, Tawelco, Kaltimex, and third-party experts/consultants. The Dedicated Limited Express Feeder Line part of the DPP is comprised of approximately 5.5km single circuit 13.2kv overhead line using 336.4 MCM ACSR conductors extending from the DPP that was constructed by KREC thru Threefold Cord General Engineering and Services that connects to TAWELCO’s Load Center. Below is the actual configuration, to wit: (The actual configuration is illustrated on the next Page.)ERC CASE NO. 2019-011 MC ORDER/23 MAY 2019 PAGE 4 OF 10 12.0 13.0 13.2 KV EXPRESS FEEDER LINE * Bongao, TaviTev The single-line diagram of the proposed Dedicated Limited Express Feeder Line shows that the same will be exclusively used by KREC and is not designed and configured to serve end-users. A copy of the Single-Line Diagram is herewith attached and marked as Annex “C” of this Application. The actual cost of construction of the Dedicated Limited Express Feeder Line is PhP27,440,000.00 with the following major components: PROJECT COMPONENTS Amount (PhP) Construction, Installation, Testing and Commissioning 19,600,000.00 Metering, Protection, Grounding 7,840,000.00 and Take off from Substation TOTAL PROJECT COST 27,440,000.00 14.0 The Dedicated Limited Express Feeder Line cost is 15.0 included in the total CAPEX of KREC of the project. An ocular inspection has already been executed by the Technical Team of this Honorable Office wherein it confirmed that the metering point of KREC’s DPP is located near the connection point of the DPP and the Dedicated Limited Express Feeder Line to Tawelco’s Load CenterERC CASE NO. 2019-011 MC ORDER/23 MAY 2019 PAGE 5 OF 10 16.0 16.2 17.0 ANNEX | NATURE OF in compliance with Section 8 of the Philippine Small Grid Guidelines (PSGG) particularly Section 8.1.3.1, to wit: “Section 8.1.3.1 Active Energy and Active Revenue metering shall be required at every Connection Point. The metering point shall be as close as possible to the Connection Point, otherwise as separate procedure shall be established to adjust energy loss between point of metering and Connection Point.” KREC identified other options for connection of the DPP to TAWELCO's grid, as follows: Tap-connection and piggy-back at TAWELCO's very old primary line circuit which length is about 5okms. From the DPP, the distance to farthest 3 phase line is 11.9kms at Brgy. Lakit-lakit and the distance to farthest single line 19kms at Brey. Luuk Siabon.; There is no transmission facility in Bongao, TawiTawi. After careful review of other options and considering further the technical recommendation from NAPOCOR as well as the independent Grid Impact/System Study, KREC resolved to develop, own and operate its own Dedicated Limited Express Feeder Line as the most efficient, cost-effective and viable option for the immediate connection of the DPP to the TAWELCO load center; In support of the above assertion, KREC submitted copies of the following documents: }CUMENT ‘Additional information ‘System Impact Study Existing and Projected Load Demand (MW) of TAWELCO in Bongao ARMM-BOI Certificate zo] |) | Letter dated 01 February 2019 issued by TAWELCO expressing their conformity and appreciation regarding the connection of TAWELCO to the load center of KREC's express feeder line for technical efficiency. Also, it was mentioned therein that KREC’s express feeder line will not be connected to any end-users or customers of TAWELCO. a KREC Organizational Chart evidencing the capacity of the company to operate and maintain the dedicated express feeder line. 18.0 Moreover, TAWELCO passed its Board Resolution expressing its appreciation of new feeder lines. (Annex M-1); and its approval and confirmation for inter-connection with KREC Dedicated Limited Express Feeder Line which is NOT for connection to distribution system of any end user.ERC CASE NO. 2019-011 MC ORDER/23 MAY 2019 PAGE 6 OF 10 19.0 KREC is herewith attaching the foregoing documents in support of this Application, thus: NATURE OF DOCUMENT Projected Financial and Economic Cost Analysis. ‘Conceptual Engineering Designs and Drawings Construction Contract ‘Statement of Payment from Threefold PIPO Agreement ‘TAWELCO Board Resolution KREC Board Resolution Environmental Compliance Certificate (ECC) from DENR-ARMM KREC GIS 2018 Compliance to PDC ‘Audited Financial Statement = | Proof of COC Application and ERC OR for payment of fees T Letter to ERC Chairman 20.0 KREC in its letter to this Honorable Office on December 2018 further emphasized that the Dedicated Limited Express Feeder Line is expected to reduce technical losses being incurred by TAWELCO over the years owing to its old feeder lines and such Dedicated Line Facility is solely and purposely to connect the DPP and TAWELCO at the dedicated load center and NOT for connection to any end user. 21.0 Considering the belated filing of this Application, KREC is imploring on Article 9, EXCEPTION CLAUSE, of 2014 Revised Rules for Issuance of Certificates of Compliance (COC) for Generation Companies which states that: “Where good cause appears, the ERC may allow an exception from any provision of these Rules, if such is found to be in the public interest and is not contrary to aw or any other related rules and regulations.” P R A Y E R WHEREFORE, premises considered, Applicant KREC most respectfully prays that this Honorable Commission issue an Order granting Provisional Authority for its Dedicated Limited Express Feeder Line being part of the original design and construction of the DPP connected to the TAWELCO load center successfully tested and commissioned together and operational since July 25, 2018 pursuant to the Phase-In Phase-Out Agreement with NAPOCOR succeeded by KREC as the only supplier and generating company in Bongao, Tawi-Tawi. After due notice and hearing, issue an order making the provisional authority a permanent authority to develop, own and operate the said Dedicated Limited Express Feeder Line.ERC CASE NO. 2019-011 MC ORDER/23 MAY 2019 PAGE 7 OF 10 Further, KREC most respectfully prays for meritorious consideration for this belated application in the interest of public service to stakeholders in the remote island of Bongao, TawiTawi being served by the first NPP in Tawi Tawi and in the ARMM Other reliefs, just and equitable under the premises, are likewise being prayed for. Finding the said Application to be sufficient in form and substance with the required fees having been paid, the same is hereby set for determination of compliance with the jurisdictional requirements, expository presentation, Pre-trial Conference, and presentation of evidence on 10 July 2019 at two o’clock in the afternoon (2:00 P.M.), at the ERC Hearing Room, 15" Floor, Pacific Center Building, San Miguel Avenue, Pasig City. Accordingly, KREC is hereby directed to: 1) Cause the publication of the attached Notice of Public Hearing once (1x) in a newspaper of nationwide circulation in the Philippines at its own expense, with the date of publication to be made not later than ten (10) days before the date of scheduled initial hearing; 2) Furnish with copies of this Order and the attached Notice of Public Hearing the Offices of the Governors and Municipal Mayor, and the Local Government Unit (LGU) legislative bodies within the affected areas, for the appropriate posting thereof on their respective bulletin boards; 3) Inform the consumers within the affected areas, of the filing of the Application, the reasons therefor, and of the scheduled hearing thereon, by any other means available and appropriate; 4) Furnish with copies of this Order and the attached Notice of Public Hearing, 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; and 5) Furnish with copies of the Application and its attachments all those making requests therefor, subject reimbursement of reasonable photocopying costs.ERC CASE NO. 2019-011 MC ORDER/23 MAY 2019 PAGE 8 OF 10 On the date of the initial hearing, KREC must submit to the Commission its written compliance with the aforementioned jurisdictional requirements attaching therewith, methodically arranged and duly marked the following: 1) The evidence of publication of the attached Notice of Public Hearing consisting of affidavit of the Editor or Business Manager of the newspaper where the said Notice of Public Hearing was published, and the complete issue of the said newspaper; 2) The evidence of actual posting of this Order and the attached Notice of Public Hearing, consisting of certifications issued to that effect, signed by the aforementioned Governors, Municipal Mayor, and LGU legislative bodies or their duly authorized representatives, bearing the seals of their offices; 3) The evidence of other means employed by KREC to inform the consumers of the filing of the Application, its reasons therefor, and of the scheduled hearing thereon; 4) The evidence of receipt of copies of this Order and the attached Notice of Public Hearing by the OSG, the COA, and the Committees on Energy of both Houses of Congress; 5) The evidence of receipt of copies of the Application and its attachments by all those making requests therefor, if any; and 6) Such other proof of compliance with the requirements of the Commission. KREC and all interested parties are also required to submit, at least five (5) days before the date of the initial hearing and pre-trial conference, their respective Pre-trial Briefs containing, among others: 1) A summary of admitted facts and proposed stipulation of facts; 2) The issues to be tried or resolved; 3) The documents or exhibits to be presented, stating the purposes and proposed markings therefor; andERC CASE NO. 2019-011 MC ORDER/23 MAY 2019 PAGE 9 OF 10 4) The number and names of the witnesses, with their written testimonies in a Judicial Affidavit form attached to the Pre- trial Brief. Failure of KREC to comply with the above requirements 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 the said date of cancellation. KREC must also be prepared to make an expository presentation of the instant Application, 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, the nature of the Application with relevant information and pertinent details substantiating the reasons and justifications being cited in support thereof. SO ORDERED. Pasig City, 23 May 2019. FOR AND BY AUTHORITY OF THE COMMISSION: JOSEFINA PATRIC » MAGPALE-ASIRIT Commissioner. rsAlsnincey sid Copy furnished: 1, VIVERO TORIO & ASSOCIATES LAW OFFICE Counsel for Applicant KREC Unit 1104, Pacific Center Building, San Miguel Avenue, Ortigas Center, Pasig City 2, Kaltimex Rural Energy Corporation (KREC) Applicant Unit A, 6 Floor, Glass Tower Building, No. 115 Carlos Palanea Je. Street, Legaspi Village, Makati City 3. Office of the Solicitor General (OSG) 1g4 Amorsolo Street, Legaspi Village, Makati City 4. Commission on Audit (COA) ‘Commonwealth Avenue, Quezon CityERC CASE NO. 2019-011 MC ORDER/23 MAY 2019 PAGE 10 OF 10 10. 12, % 4. Senate Committee on Energy GSIS Building, Roxas Boulevard, Pasay City House of Representatives Committee on Energy Batasan Hills, Quezon City Philippine Chamber of Commeree and Industry (PCCD) 3° Floor, Chamber and Industry Plaza 1030 Campus Avenue comer Park Avenue MeKinley Town Center, Fort Bonifacio, Taguig City Office of the Governor Province of Tawictawi Olfice of the LGU legislative body Province of Tawi-tawi Office of the Municipal Mayor Bongzo, Tawi-tawi Office of the LGU legislative body Bongzo, Tawi-tawi Office of the Governor Autonomous Region in Muslim Mindanao (ARMM) Office of the LGU legislative body Autonomous Region in Muslim Mindanao (ARMM) Regulatory Operations Service (ROS) Standards and Compliance Monitoring Division (SCMD) 17% Floor, Pacific Center Building, San Miguel Avenue, Pasig City