Mindanao Energy Forum

Power/Electrification Sector
Waterfront Insular Hotel, Davao City 8 November 2011

OUTLINE
I. Mindanao Power Sector Situation 
   Power Supply and Demand Draft 2011 Mindanao Power Development Plan Update Private Sector Initiated Power Projects Major Transmission Projects

II. Action Plans for Mindanao III. Electrification Program 
Barangay Electrification  Benefits to Host Community (ER 1-94)  Private Sector Participation in Missionary Areas

II. Mindanao Power Sector Situationer
2011 Mindanao Grid Profile, Generation Capacity
Solar 0.001 Coal 12%

Hydro 53%

Oil Based 30%

Geothermal 5%

1,971 MW Installed Capacity

Mindanao Power Sector Situationer
2011 Power Supply-Demand Supply-

Agus Complex = 727 MW Installed Capacity 36.89 % of Mindanao Total Installed Capacity

Load Centers: South Eastern Mindanao = 431 MW (34.5% Total Load) South Western Mindanao = 185 MW (14.8 % Total Load)

Mindanao Power Sector Situationer
Comparative Gross Generation 2011 and 2010 (January - September)
FUEL TYPE 2011 2010 % MWh 17.94 1,303,087 15.48 1,811,479 9.75 624,738 56.82 2,506,452 0.01 946 6,246,701 % 20.86 29.00 10.00 40.12 0.02 Difference MWh % (212,063) (16.27) (870,329) (48.05) (31,994) (5.12) 948,552 37.84 (78) (8.22) (165,912) (2.66)

MWh Coal 1,091,024 Oil-based 941,150 Geothermal 592,743 Hydro 3,455,004 Solar 868 Total Generation6,080,790

Note: Preliminary data for the January-September 2011 ‡ Excludes generation from embedded and off-grid for the January - September 2011

Mindanao Supply-Demand Situation
JanuaryJanuary-September 2011
1,600

2011/2010 Max Peak Difference = +0.79%
2010 Max Demand = 1,240 MW

Min Capacity (Holyweek) = 1,057 MW

2011 Max Demand = 1,250 MW

Max Capacity = 1,416 MW

1,400

1,200

1,000 2011 Min Demand = 835 MW Max TO = 572 MW

800

2010 Min Demand = 808 MW

600

Max MO = 478 MW

Max FO = 202 MW

400

200

0 W1 W2 W3 W4 W5 W6 W7 W8 W9W10 W12 W14 W16 W18 W20 W22 W24 W26 W28 W30 W32 W34 W36 W38 W11 W13 W15 W17 W19 W21 W23 W25 W27 W29 W31 W33 W35 W37 W39

JAN
Geothermal Coal

FEB
Hydro Oil-based

MAR

APR

MAY

JUN

JUL

AUG

SEP

Source of data: DOR of NGCP
MO = Maintenance Outage FO = Forced Outage 2011 System Peak Demand 2010 System Peak Demand TO = Total Outages

MINDANAO GRID
SupplySupply-Demand Assumptions
‡ New capacities
‡ ‡ ‡ ‡ Minergy Oil-based Power Plant (2x13.75 MW) by 2011 Cabulig HEP (8 MW) by 2011 Mt. Apo Geothermal (50 MW) by 2014 Conal Coal-fired 200 MW Unit 1 (100 MW) by 2014 and Unit 2 (100 MW) by 2015

‡ Normal hydro condition ‡ No retirement of existing power plants ‡ Electricity Demand projected at 4.56 % Annual Average Growth Rate (AAGR) ‡ Required Reserve Margin
‡ 4 % Load Following and Frequency Regulation ‡ Spinning Reserve ( Largest Generating Unit, 105 MW) ‡ Back-up Reserve (Largest Generating Unit, 105 MW)
Note: Assumptions in the Draft PDP 2011 Update

Mindanao Supply-Demand Outlook
Needs total additional capacity of 1,950 MW onwards to 2030
4500 4000 3500 3000 2500 2000 1500 1000 500 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Required Additional Capacity 100 Committed Capacity Existing Capacity Required Reserve Margin Peak Demand 28 50 8 100 150 100 300 100 100 100 100 200 100 100 100 200 100 100 100

Minergy (28 MW) 2011 Cabulig HEP (8 MW) 2012

Mt. Apo 3 (50 MWW) 2014 Conal 1 (100 MW) 2014

Required Reserve Margin

Conal 2 (100 MW) 2015

MW

Projected Demand AAGR % = 4.56

DRAFT 2011 PDP

1658 1685 1693 1693 1843 1943 1943 1943 1943 1943 1943 1943 1943 1943 1943 1943 1943 1943 1943 1943 269 272 275 277 280 283 286 289 293 297 300 304 309 313 318 322 327 333 338 344

1484 1550 1616 1686 1755 1829 1906 1987 2071 2163 2259 2360 2465 2575 2690 2811 2937 3069 3207 3351

Private Sector-Initiated Power Projects
Mindanao Grid
EDC Camiguin Wind (5 MW)=September 2015 CEPALCO Cabulig HEP (8 MW)=December 2012 Minergy Bunker Fired (27.5 MW)=Dec. 2011 AGUS 3 HEP (225 MW)=2015 Tagoloan HEP (20 MW)=2016 Steag Expansion (200 MW)=2014

Green Power Bukidnon Biomass (35 MW)=2013

Conal CFTPP (200 MW) Unit I=2014 Unit II=2015 Legend:
HEP Oil-based Coal-Fired Geothermal Biomass

Aboitiz Coal Davao (300 MW)=2014

EDC Mindanao Geothermal 3 (50 MW)=2014

HEDCOR Tamugan. (12 MW)=July 2018

- Indicative Projects = 797 MW - Committed Projects = 286 MW

Prospects of LNG Power Generation in Mindanao
22-million people, <400 kWh per year annual power consumption Not enough powergen capacity, and half is hydro and vulnerable to drought

MINDANAO

Why Mindanao?
At least two locations in South Mindanao with good prospects for siting a terminal Locational advantage to major sources of LNG supply, sits astride trade routes

World Bank Study shows that South Mindanao has multiple terminal siting possibilities

ERC Approved Major Transmission Projects
Mindanao Grid
Mindanao Substation Expansion-2005 (2011) Abaga (Baloi) Abaga (Baloi) Kirahon (Villanueva) Kirahon (Villanueva) 230 kV Transmission 230 kV Transmission Project (2011) Project (2011) 120 km Aurora-Polanco 138 kV Aurora-Polanco 138 kV Transmission Project Transmission Project (2012) (2012) 79 km Kirahon (Villanueva) Maramag 230 kV Transmission Line (2011) 108 km

Nuling (Sultan Kudarat) & Tindalo (Nabuntaran) Substation Expansion (2012)

Mindanao Shunt Mindanao Shunt Reactors & Capacitors Reactors & Capacitors (2012) (2012)

Source: Draft TDP 2011

Gen. Santos-Tacurong 138 kV Transmission Project (2011)

80 km

ERC Approved Major Transmission Projects
Mindanao Grid
Butuan Placer 138kV T/L (2013) Mindanao Substation Reliability Project I (2013) 275 MVA Pulangi (Maramag) Kibawe Line 3 (2013) 21 km 100 km

Mindanao Substation Expansion Project II (2014) 100 MVA

Source: Draft TDP 2011

Matanao Gen. Santos 138 kV T/L (2013) 70 km

Action Plans for Mindanao
Action Plans Develop Mindanao Energy Plan Status
The DOE is currently finalizing the Mindanao Energy Plan incorporating the comments, suggestions of the Mindanao stakeholders derived from the meetings/consultations conducted. The draft Plan is expected to be completed by December 2011 and the consultations in the first Quarter 2012. The Philippine Electricity Market Corporation was tasked by the DOE to conduct a study on the feasibility of establishing a modified WESM in Mindanao. PEMC created an internal Committee to undertake the said study. The draft has been initially discussed with the DOE but will still be further reviewed. The previous study conducted in 2003 commissioned by Transco to JICA has to be updated particularly on the cost component of the project. The ERC approved on 15 August 2011 the application of NGCP to conduct a Php 91.42 million study on LMIP. NGCP can now proceed with the first phase of the Php 24 Billion LMIP.

Study the appropriate electricity model for Mindanao

Revisit the economic viability of the LeyteMindanao Interconnection Project (LMIP)

Action Plans for Mindanao
Action Plans Dredging of Pulangui IV Rehabilitation of PB 104 Status
In January 2011, an inception report on the Sediment Control and Reservoir Management Plan was submitted to NPC. The final report is expected to be submitted by November 2011. The funding for this project will depend on the result/outcome of the study. Rehabilitation is an option in order to upgrade its present derated capacity and thereby extend its economic life. However, PSALM decided to sell this asset and on 18 May 2011, the PSALM Board has approved to commence the bidding of PB 104. Publishing of invitation to bid is scheduled on November 2011.

Uprating of Agus VI The rehabilitation of the two units of Agus VI will increase the HEP Units 1 and 2 installed generating capacity from 50 MW to 62 MW and extend the
units economic life to another 30 years. Based on the 14 September 2011 letter of NEDA to NPC, the Investment Coordinating Committee-Cabinet Committee (ICC-CC) has already approved the implementation of this project. NPC is ready for the tendering process once NEDA Board s endorsement/approval is received.

Action Plans for Mindanao
Action Plans Status In terms of privatization, the PSALM Board has approved to commence the bidding of PBs on 18 May 2011. The approval of the Board requires the winning bidder to transfer PBs 101-103 from Visayas to Mindanao with costs of transfer and rehabilitation, if any, to be shouldered by the winning bidder. The issuance of invitation to bid is scheduled in the last quarter of 2011.

Transfer of Power Barges in Visayas to Mindanao

Operate Iligan Diesel The City of Iligan conducted a pre-bid conference on 17 August 2011. The interested bidders are currently Power Plant (IDPP)
conducting due diligence. The bids are supposed to be submitted on 13 October 2011 but was re-set to a later date since the City of Iligan has yet to receive the COA approval for the sale of IDPP. It is expected that the award of the facilities to the winning bidder will be by December 2011.

Action Plans for Mindanao
Action Plans Status PSALM submitted on 25 August 2011 to ERC the renewal of CSEE s of 23 DU s for approval. (ANECO,ASELCO,BUSECO,CAMELCO,COTELCO,DANECO, DASURECO,DORECO,ILPI,LANECO,MAGELCO,MOELCI I and II, MORESCO II, SIARELCO, SOCOTECO II, SURNECO,SURSECO I and II, SUKELCO,ZANECO, ZAMSURECO I and II) Most of the supply contracts were reduced by 31% from the previous contract due to privatization of 200MW NPC generating asset. Hired transaction supply advisor (Indra Phils.) for the 300MW baseload power supply. Currently being bidded out to any local or international supplier.

Renewal of Contract of Mindanao Customers with PSALM/NPC

AMRECO Proposed Power Supply Aggregation

Electrification Program

Electrification Status
(As of 31 October 2011)

LUZON 20,466 --------- = 99.90% 20,486 27 Unelectrified Barangays VISAYAS 11,442 --------- = 100% 11,442 0 Unelectrified Barangays MINDANAO 10,031 --------- = 99.84% 10,047 18 Unelectrified Barangays

PHILIPPINES
41,939 --------- = 99.91% 41,975 41,975*
Potential Barangays Based on DOE s Target

36
Unelectrified Barangays

Electrification Commitment 
100% barangay electrification;  90% household electrification by 2017

Energy Regulations No. 1-94 (ER 1-94) 1It is the implementing rules and regulations of Section 5 (i) of R. A. No. 7638, or the DOE Act of 1992  Sec. 5(i) of R.A. 7638 provides, 

That the Department shall devise ways and means of giving direct benefits to the province, city, or municipality, especially the community and people affected, and equitable preferential benefit to the region that hosts the energy resource and/or energy-generating facility:Provided, however, that the other provinces, cities, municipalities, or regions shall not be deprived of their energy requirements . 

Sec. 66 of R.A. 9136 provides, 

That the provision of financial benefits to host communities and the obligations of the power generating facilities and/or energy resource developers as defined in R.A. 7638 and its IRR shall continue.

ER 1-94 is part of the rate imposed on the electricity end-users, duly approved by the ERC.

Application/Allocation Scheme of P0.01/kWh
( Non-Highly Urbanized City ) NonFor DLF & RWMHEEF

DLF EF

Resettlement Area

Host Municipality/City

25% 50% 25%
RWMHEEF
Note:

Host Barangay

5% 20%

35%

30% 10%
Host Province Host Region

EF ± Electrification Fund DLF ± Development and Livelihood Fund RWMHEEF ± Reforestation, Watershed Management, Health and/or Environment Enhancement Fund 20

Application/Allocation Scheme of P0.01/kWh
( Highly Urbanized City )

For DLF & RWMHEEF

DLF
Resettlement Area

12.5%

RWMHEEF

12.5% 10% 60% 30%
Host Barangay Host City

12.5%
EF

75%

Note:

EF ± Electrification Fund DLF ± Development and Livelihood Fund RWMHEEF ± Reforestation, Watershed Management, Health and/or Environment Enhancement Fund 21

Summary of Financial Benefits - Mindanao
(In Million Pesos) as of 31 October 2011

26 June 1994 25 June 2011 ( Validated Electricity Sales ) Total Accrued Financial Benefit Obligated Available/ Collectible Balance 943.35 515.61 427.74 EF 440.69 269.87 170.82 DLF 233.46 105.47 127.99 RWMHEEF 269.2 140.27 128.93

22

Missionary Electrification Program
Private Sector Participation(PSP) in NPC-SPUG Areas NPCthe take over of the supply of electricity to any existing NPC-SPUG areas, either through outright purchase or lease of existing NPC-SPUG assets, and/or installation of new power generating facilities including associated power delivery systems;

PSP Program in SPUG Areas in Mindanao Basilan
Background ‡ Basilan Island Power, Inc. (Bi Power) was chosen in 2008 as a New Private Provider through negotiation due to high risk in security ‡ Bi Power will supply 11.8 MW at PhP11/kWh Status ‡ Power Supply Agreement (PSA) has yet to be filed with ERC ‡ Power Station has yet to be constructed ‡ Effective date of PSA was February 2009 but was not achieved due to non-compliance to Condition Precedents: ‡ Site acquisition ‡ Conduct of Distribution Impact Study ‡ ERC s approved of Power Supply Agreement

PSP Program in SPUG Areas in Mindanao Basilan
Way Forward
Reinstatement of PSA will be done with the intervention of DOE, NEA and NPC to comply with the Condition Precedents.

End of Presentation

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