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Republic of the Philippines PD3f:il'lg Z

ENERGY REGULATORY COMMISSI~ vr:iw~.'~'Ph

San Miguel Avenue, Pasig City ~

IN THE MATTER OF THE

APPLICATION FOR THE
APPROVAL OF THE
PROPOSED THREE (3) YEAR
CAPITAL EXPENDITURE
PROJECTS

ERC CASE NO. 2015-101 RC .

CEBU I ELECTRIC
COOPERATIVE, INC.
(CEBECO I), DOr::~TlIj)
Applicant. tJJIlte: ,•.•.. _..~..~ ~.
11;'3 ~. ......_ .... __ _
x- - - - - - - - - - - - - - - - - - - - - - x

ORDER

On May 21,2015, Cebu I Electric Cooperative, Inc. (CEBECO I)

filed an application for the approval of its proposed three (3) year
capital expenditure projects.

In the said application, CEBECO I alleged, among others, the

following:

1. CEBECO I is an electric cooperative created and existing

pursuant to the provisions of Presidential Decree No. 269,
as amended, with principal office located at Bito-on,
/"
Dumanjug, Cebu, Philippines, represented by its General
Manager, Marlou M. Rendon, duly authorized by virtue of
Resolution No. 36, Series of 2015 dated April 11, 2015 of
the Board of Directors, a copy of which is attached to the
application as annex "N.

The filing of the said application is likewise authorized

under the afore-mentioned Resolution;
",

ERC CASE NO. 2015-101 RC

ORDER/OCTOBER 12, 2015
Page 2 of 14

2. CEBECO I has been granted by the National Electrification

Administration (NEA) an authority to operate and distribute
electric light and power within the coverage area
comprising the City of Carcar and the Municipalities of
Barili, Dumanjug, Ronda, Alcantara, Moalboal, Badian,
Alegria, Malabuyoc, Ginatilan, Samboan, Santander,
Sibonga, Argao, Dalaguete, Alcoy, Boljo-on, and Oslob, all
in the Province of Cebu;

THE APPLICATION AND ITS PURPOSE

3. This application is filed in compliance with ERC Resolution

No. 26, Series of 2009 (A Resolution Amending the Rules
for Approval of Regulated Entities' Capital Expenditure
Projects) adopted pursuant to the mandate of Section 43 of
Republic Act No, 9136, otherwise known as the Electric
Power Industry Reform Act of 2001 (EPIRA) and its
implementing Rules and Regulations, which categorically
provides that all capital expenditure projects (CAPEX) shall
be submitted to and for the approval of the Commission
prior to its implementation, in relation to ERC Resolution
No. 20, Series of 2011 which sets the timelines for the filing
of the application;

4. The aforecited amended rules were issued by the

Commission to ensure that the projects are timely,
appropriate, necessary and cost efficient; to ensure that the
proposed capital projects are consistent with the
Distribution Development Plan (DDP), the Philippine Grid
Code (PGC), the Philippine Distribution Code (PDC), and
other relevant government issuances; and to ensure that
the procurement of equipment, materials and services are
transparent, competitive and compliant with the applicable.
laws and regulations;

THE PROJECTS

5, In accordance with the Amended CAPEX Rules, consistent

with the Distribution Development Plan and the PDC,
CEBECO I shall acquire, construct and implement the
following three (3) year capital expenditure projects with a
total approximate cost of Four Hundred Forty-Four
Million Fifty-Three Thousand Seventy-Six and 31/100
Pesos (PhP444,053,076.31);
, ,
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 3 of 14

5.1. DESCRIPTION OF THE PROJECTS:

5.1.1 Network CAPEX Projects

Capacity Capital Projects

Amount per Year of

Project Total Cost
Project Description Implementation (P'OOO)
Code (P'OOO)
2016 2017 2018
Installation of 10 MVA
DSC-01 Moalboal Substation and 69 146,515 146,515
kV Line

Installation of 5 MVA Argao

DSC-02 35,420 35,420
Substation and 69 kV Line

Total Cost (P'OOO) 146,515 35,420 181,935

Power Quality Capital Projects

Amount per Year of

Project Total Cost
Project Description Implementation (P'OOO)
Code (P'OOO)
2016 2017 2018
Line Conversion from Single
Phase to Three Phase from
PDQ-01 4,070 4,070
Basdiot to Saavedra,
Moalboal
Line Conversion from Single
Phase to Three Phase from
PDQ-02 8,865 8,865
Tapon to Tubod-Dugoan,
Dumanjug
Total Cost (P'OOO) 4,070 8,865 12,936
.,
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 4 of 14

5.1.2 Other Network CAPEX Projects

Distribution Transformers

Amount per Year of

Project
Project Description Implementation (P'OOO) Total Cost
Code
2016 2017 2018 (P'OOO)
15 KVA Distribution
DTX-01 1,046 1,046 1,046 3,139
Transformers
25 KVA Distribution
DTX-02 1,190 1,190 1,190 3,569
Transformers
37.5 KVA Distribution
DTX-03 622 622 622 1,866
Transformers
50 KVA Distribution
DTX-04 533 533 533 1,599
Transformers .

Total Cost (P'OOO) 3,391 3,391 3,391 10,173

Low Voltage Distribution Lines

Amount per Year of

Project Total Cost
Project Description Implementation (P'OOO)
Code (P'OOO)
2016 2017 2018
LVD- Open Secondary Low
6,354 6,354 6,195 18,903
01 Voltage Distribution Lines
LVD- Under Build Low Voltage
881 881 867 2,629
02 Distribution Lines
Total Cost (P'OOO) 7,235 7,235 7,062 21,533

Customer Service Drops and Metering Equipment (Add-Ons)

Amount per Year of

Project Implementation (P'OOO) Total Cost
Project Description
Code (P'OOO)
2016 2017 2018
Customer Service Drops &
SDM 7,531 7,433 6,890 21,854
Metering Equipment
."
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 5 of 14

Replacement Projects

Amount per Year of

Project Total Cost
Project Description Implementation P'OOO)
Code (P'OOO)
2016 2017 2018
Replacement of 60Amp rated
OCR-01 1,685 1,685 1,685 5,056
KWH Meters
Replacement of 100Amp
OCR-02 33 33 33 99
rated KWH Meters
Replacement of 3-Phase
OCR-03 KWH Meters with Load 456 456 399 1,312
Profilina features
Replacement of aging poles
with Concrete poles
OCR-04 1,060 1,060 1,060 3,179
preferably along 3-Phase
System
Replacement of aging poles
OCR-05 with Steel preferably along 3- 6,195 6,195 6,195 18,586
Phase System
Replacement of Distribution
OCR-06 3,174 3,174 3,174 9,522
Transformers
Total Cost (P'OOO) 12,603 12,603 12,546 37,753

Rural Electrification Projects

Length of Lines (Kms.) Total Project

Year
1PH OS US Cost (P'OOO)

2016 30.52 38.60 29.58 29,424

2017 39.35 40.92 37.81 34,224

2018 41.03 43.40 36.24 36,068

Total Cost (P'OOO) 99,716
."
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 6 of 14

5.1.3 Non - Network CAPEX Projects

Amount per Year of

Project Total Cost
Project Description Implementation (P'OOO)
Code (P'OOO)
2016 2017 2018
Geographical Information
GIS System (Hardware & 1,256 638 168 2,061
Software)
Tools, Instruments & Test
HE 2,974 4,072 1,424 8,470
Equipment
Boom Trucks & Other
VHL 12,980 20,800 9,760 43,540
Vehicles
Building and Lot Acquisition
BLDG 4,084 4,084
for Oslob Area Office

Total Cost (P'OOO) 17,210 29,594 11,352 58,155

Summary of Projects

Amount per Year of Total

Item Project Implementation (P'OOO) Amount
2016 2017 2018 (P'OOO)
NETWORK PROJECTS

5.1.1 Capacity Capital Projects 146,515 35,420 181,935

Power Quality Projects 4,070 8,865 12,936
Sub-Total 150,585 8,865 35,420 194,871
OTHER NETWORK PROJECTS

Distribution Transformers 3,391 3,391 3,391 10,172

Low Voltage Distribution Lines 7,235 7,235 7,062 21,533
Customer Service Drops and 7,531 7,433 6,890 21,854
5.1.2
Metering Equipment
Replacement Projects 12,603 12,603 12,546 37,753
Rural Electrification Projects 29,424 34,224 36,068 99,716
Sub-Total 60,185 60,887 65,956 191,028

5.1.3 NON-NETWORK PROJECTS 17,209 29,593 11,352 58,155

GRAND TOTAL (P'OOO) 227,979 103,345 112,729 444,053

'.
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 7 of 14

TYPE OF THE CAPITAL EXPENDITURE PROJECTS IN

ACCORDANCE WITH SECTION 2.3 OF RESOLUTION
NO. 26, SERIES OF 2009

5.2.1 As described above in Section 5.1.1, the projects are

categorized as Network CAPEX which will address
capacity, power quality and reliability of the distribution
system of the electric cooperative;

5.2.2 The Other Network CAPEX projects as shown in 5.1.2

are necessary in terms of additional distribution
transformers, meters and extension of lines due to
annual customer growth as forecasted including
replacement;

5.2.3 And the Non-Network CAPEX projects of the

cooperative as categorized and indicated in 5.1.3 will
enhance its capability in responding customer requests
and concerns for better and efficient electric service.
Further, its facilities and equipment will be responsive
to the quality service that the consumers deserve;

JUSTIFICATION OF THE CAPITAL PROJECTS

6. With the prevailing situation in the electric power industry

vis-a-vis the consumers' demand, CEBECO I deems
appropriate to embark on asset development and
expansion in order to meet the growing demands;

7. The procurement of the aforementioned projects is of great

necessity in the schedules herein provided, otherwise
service decline is eminent, to the prejudice of the
consumers;

8. If a Force Majeure or Fortuitous event, as the case may be,

occurs, CEBECO I shall seek the ERC's confirmation of
the implementation of the capital projects arising from such
event;
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 8 of 14

RELATED AND INDISPENSABLE DOCUMENTS

9. Consistent with the requirement of the filing of applications

for approval of capital projects, CEBECO I attached and
made an integral part of the. application the justifications,
related and indispensable documents chronologically
arranged and contained in Annex "B" of the same;

BOARD APPROVAL
OF THE PROPOSED PROJECTS

1O. Finding the proposed capital expenditure projects.

reasonable, appropriate, necessary and beneficial to the
consumers, it being envisioned to further their interests;
there being no adverse effects on its implementation, but
rather results to service decline if not achieved and
implemented on the periods it is projected to occur,
CEBECO I's Board of Directors passed Resolution No. 35,
Series of 2015 dated April 11, 2015 approving the
proposed CAPEX, a copy of which is attached as Annex
tiC";

11. Information on the proposed capital projects had been

widely disseminated through posting in the conspicuous
places in the City of Carcar and the Municipalities of Barili,
Dumanjug, Ronda, Alcantara, Moalboal, Badian, Alegria,
Malabuyoc, Ginatilan, Samboan, Santander, Sibonga,
Argao, Dalaguete, Alcoy, Boljo-on and Oslob as certified to
by Franknowen F. Marcellones, CEBECO I's employee.
tasked to undertake such dissemination, copy of which is
attached as annex "D". The Notices posted in the areas
aforementioned specifically contained the following:

a. the proposed projects;

b. the reasons for proposing said projects;
c. the source of fund for the said projects; and
d. indicative rate impact of the said projects;

~
. '.
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 9 of 14

SOURCES OF FUNDS FOR THE PROJECTS

12. In the implementation of the proposed projects, CEBECO I

shall partly utilize its internally generated funds out of the
Reinvestment Fund For Sustainable Capital Expenditures
(RFSC), and part of the fund shall be sourced through a
financing program from the interested lender that shall
charge the least interest. A separate application for
authority to secure loan shall be filed with the Commission;

13. The implementation of the proposed CAPEX shall bring

forth an indicative rate impact as follows (at 5% inflation
rate):

Fund Source Year2016 Year2017 Year2018 Total

NEAlOther Banks 153.840,604 0 41,003,406 194,844,010
NEA (Subsidy) 30,895,576 37,732,440 41,752,861 110,380,877
RFSC 54,642,154 76,205,327 47,741,407 178,588.888
Total 239,378,334 113,937,767 130,497,674 483,813,775

Cash Flow Year2016 Year2017 Year2018 Total

NEAlOther Banks 29,383555 29,383,555 37,215,206 95982317
RFSC 54,642154 76,205,327 47,741,407 178,588,888
Total 84,025,710 105588882 84,956,613 274,571 205
ERC Approval Fee 1,795338 854,533 978,733 3628603
Total CAPEX Plan Cost to Consumers 85,821 047 106443,415 85,935,346 278,199,808

Projected Revenue Year2016 Year2017 Year2018 Total

Proiected KWh Sales 173049,097 181,025,698 189,617 310 543692105
Rate RFSC (0.2904 + 0.1181) 004085 004085 004085 004085
Revenue from RFSC 70690556 73948,998 77,458671 222,098,225
CAPEX Plan (Intemal FinancinQ IRFSC) 54,642,154 76205,327 47,741407 178,588,888
CAPEX Plan Amortization 29383,555 29383555 37215,206 95,982,317
CAPEX Approval Fee 1 795,338 854533 978,733 3,628,603
Sub-Total CAPEX Plan Cost 85821,047 106,443,415 85,935,346 278,199,808
Previous Loan Amortization 56366,901 56366,901 56,366,901 169,100,702
Total CAPEX Plan Cost 142,187,948 162,810,316 142,302246 447300,510
Net Cash Flow 171,497,392\ 188,861,318 (64,843,575 (225,202,285
Indicative Rate Impact 0.4132 0.4909 0.3420 0.4142

COMPLIANCE
WITH PRE-FILING REQUIREMENTS

14. In compliance with Section 2, Rule 6 of the ERC Rules of

Practice and Procedure, copies of the instant application
together with all its annexes and accompanying documents
had been furnished to the Legislative Body of the
Municipality of Dumanjug, Cebu where CEBECO I
principally operates and the Legislative Body of the

4
Province of Cebu. Likewise, the same was pUblishe
, ,
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 10 of 14

The Freeman, a newspaper of general circulation within its

franchise area;

15. As proof of such compliances is the Affidavit of Service

executed by Doven Lynvic J. Cantila, an associate under
the Office of the General Manager, and the first page of the
instant application bearing the stamp "RECEIVED",
attached as Annex "E", "F" and "G" to said application.
Likewise, a copy of the said application was published in
the Freeman, a newspaper of general circulation in
CEBECO I's franchise area and the Province of Cebu, as
evidenced by the Affidavit of Publication executed by the
Editor, and original copy of the issue showing the published
application, copies of which are attached as Annexes "H"
and "I", respectively;

16. Moreover, prior to the filing of this application, a pre-filing

conference with the concerned staff of the Commission
was conducted on April 21, 2015 pursuant to Section 4 of
Rule 6, and for purposes of determining completeness of
the supporting documents attached to it; and

PRAYER

17. CEBECO I prays that the Commission:

a. After due notice and hearing, approve and declare the

capital projects/expenditures subject of CEBECO I's
application as just, reasonable, and equitable pursuant
to the provisions of ERC Resolution No. 26, Series of
2009, and other related laws, rules and regulations; and

b. Allow/ authorize the recovery of CEBECO l's

expenditures/costs incurred in the implementation of the
Capital Expenditure Projects from its members-
consumers.

Finding the said application to be sufficient in form and in

substance with the required fees having been paid, the same is
hereby set for jurisdictional hearing, expository presentation,
pre-trial conference and evidentiary hearing on November 25, 2015
(Wednesday) at ten o'clock in the morning (10:00 A.M.) at the
Principal Office of CEBECO I, Bito-on, Dumanjug, Cebu.
.. ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 11 of 14

CEBECO I 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. It is also directed to inform the consumers within its
franchise area, by any other means available and appropriate, of the
filing of the instant application, its reasons therefor, and of the
scheduled hearing thereon.

Let copies of the application, this Order and the attached Notice
of Public Hearing be furnished 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 Offices of the Governor of the
Province of Cebu and the Mayors of the City/Municipalities within
CEBECO I's franchise area for the appropriate posting thereof on
their respective bulletin boards.

CEBECO I is hereby directed to furnish all those making

requests therefor with copies of the application and its attachments,
subject to reimbursement of reasonable photocopying costs.

On the date of the initial hearing, CEBECO I must submit to the

Commission its written Compliance with the jurisdictional
requirements attaching therewith, methodically arranged and duly
marked, the evidences on the actual posting and publication of the
Notice of Public Hearing consisting of certifications issued to that
effect, signed by the afore-mentioned 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 were published together with
the complete issues of the said newspapers, and such other proofs of
compliance with the requirements of the Commission.

CEBECO I and all interested parties are directed to submit, at

least five (5) days before the date of initial hearing and pre-trial
conference, their respective Pre-trial Briefs containing, among others:
••
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 12 of 14

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 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 CEBECO I 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, CEBECO I must also be

prepared to make an expository presentation of its 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, what the
application is all about and the reasons and justifications being cited
in support thereof.

SO ORDERED.

Pasig City, October 12, 2015.

FOR AND BY AUTHORITY

OF THE COMMISSION:

- - --".r
JOSE VICENTE B. SALAZAR
Chairman V r-
ER-C
Office o/the Chairman

lilin~lil!I"!I!I"!lli~III~""
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, <

ERC CASE NO. 2015-101 RC

ORDER/OCTOBER 12, 2015
Page 13 of 14

Copy Furnished:

1. A.C. GAVIOLA LAW OFFICE

Counsel for CEBECO I
Rm. 203, 2/F Crown Plaza Building
3'd Ave., North Reclamation, Cebu City

2. CEBU I ELECTRIC COOPERATIVE, INC. (CEBECO I)

Bito-on, Dumanjug, Cebu

3. THE OFFICE OF THE SOLICITOR GENERAL

134 Amorsolo Street, Legaspi Village
City of Makati 1229

4. THE COMMISSION ON AUDIT

Commonwealth Avenue
Quezon City 1121

5. THE SENATE COMMITTEE ON ENERGY

GSIS Building, Roxas Boulevard
Pasay City 1307

6. THE HOUSE COMMITTEE ON ENERGY

Batasan Hills, Quezon City 1126

7. OFFICE OF THE PRESIDENT OF PCCI

Philippine Chamber of Commerce and Industry (PCCI)
3'd Floor, ECC Building, Sen. Gil Puyat Avenue
Makati City

8. Office of the City Mayor

City of Carcar, Cebu

9. Office of the Municipal Mayor

Barili, Cebu

10. Office of the Municipal Mayor

Dumanjug, Cebu

11. Office of the Municipal Mayor

Ronda, Cebu

12. Office of the Municipal Mayor

Alcantara, Cebu

13. Office of the Municipal

Moalboal, Cebu
Mayor /
/ r
, . ,
,
..
ERC CASE NO. 2015-101 RC
ORDER/OCTOBER 12, 2015
Page 14 of 14

14. Office of the Municipal Mayor

Badian, Cebu

15. Office of the Municipal Mayor

Alegria, Cebu

16. Office of the Municipal Mayor

Malabuyoc, Cebu

17. Office of the Municipal Mayor

Ginatilan, Cebu

18. Office of the Municipal Mayor

Samboan, Cebu

19. Office of the Municipal Mayor

Santander, Cebu

20. Office of the Municipal Mayor

Sibonga, Cebu

21. Office of the Municipal Mayor

Argao, Cebu

22. Office of the Municipal Mayor

Dalaguete, Cebu

23. Office of the Municipal Mayor

Alcoy, Cebu

24. Office of the Municipal Mayor

Boljo-on, Cebu

25. Office of the Municipal Mayor

Oslob, Cebu

26. Office of the Provincial Governor

Province of Cebu