arti COPY REPUBLIC OF THE PHILIPPINES ENERGY REGULATORY COMMISSION Pacific Center Building San Miguel Ave., Ortigas Center Pasig City ENERGY Y REGULATORY COMMISSION A IN THE MATTER OF THE APPROVAL OF THE POWER PURCHASE AGREEMENT (PPA) BETWEEN AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. AND ASIGA GREEN ENERGY CORPORATION, WITH PRAYER FOR THE ISSUANCE OF PROVISIONAL AUTHORITY. ERCCASENO: 20147 0636 ASIGA GREEN __ ENERGY CORPORATION (AGEC) AND AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. (ANECO), Applicant. coo x APPLICATION Applicants, ASIGA GREEN ENERGY CORPORATION (AGEC) and AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. (ANECO), by and through the undersigned Firm, unto this Honorable Commission, most respectfully aver: That - 1. Applicant AGEC is a corporation duly organized and existing under the laws of the Philippines to, among others, engage in the exploration, development, utilization, operation and maintenance of new and renewable energy resources. It has principal office at P-3 Ambangan, Ambago, Butuan City. AGEC shall install, construct, operate, and maintain the 8 MW Asiga Hydro Electric Power Plant Page tof wi ‘ppetin(the “Asiga Power Plant”) in Barangay Pangaylan, Municipality of Santiago, Province of Agusan Del Norte, Mindanao; 2. Applicant ANECO is an electric cooperative created under Philippine laws, with office address at Kilometer 2, Zamora Street, Butuan City, Province of Agusan del Norte. It is licensed to operate and maintain an electric distribution system in the City of Butuan and the Municipalities of Buenavista, Cabadbaran, Carmen, Tubay, Jabonga, Kitcharao, Las Nieves, Magallanes, Nasipit, Santiago, and R.T. Romualdez, all in the Province of Agusan del Norte (collectively, the “ANECO’s Franchise Area”). A copy of ANECO’s Certificate of Franchise is herein attached as Annex “A” to form an integral part hereof; 3. Applicants may be served with orders, notices and other legal processes of this Honorable Commission through the address of the undersigned Firm; 4. On 18 June 2013, Applicants ANECO and AGEC entered into a Power Purchase Agreement (PPA); 5. _ Byand pursuant to Sections 25, 43 (u) and 45 (b) of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), its Implementing Rules and Regulations, in relation to Rule 20 (B) of the ERC Rules of Practice and Procedure, and other pertinent rules and regulations, Applicants submit the instant Application to this Honorable Commission for its due consideration and approval of their PPA, particularly the rate structure embodied therein. A copy of the subject PPA is hereto appended as Annex “B” to form an integral part hereof; L STATEMENT OF FACTS 6. AGEC shall install, construct, operate, and maintain the Asiga Power Plant with an installed capacity of 8 MW. The proposed development is a run-of-the-river type project utilizing two (2) units of Horizontal Francis Hydraulic Turbine Generator Sets. The technical characteristics and aspects of the Asiga Power Plant are shown in herewith attached Annex “C” made an integral part hereof; Page 2 of 12 Application i7. Copies of pertinent documents showing AGEC’s due registration and permit to operate as a generation company are appended herein as follows: Articles of Incorporation “p” Securities and Exchange Commission (SEQ)! “E” Certificate of Registration of said Articles General Information Sheet for 2013 MEE Certification from the Board of Investment] “G” (BON) stating that AGEC has shown its intention to register therein the 8 MW Asiga Power Plant Amended Environmental Compliance | “H” | Certificate (ECC) for the 8 MW Asiga Power Plant issued by the Department of Environment and Natural Resources (DENR) Certification from the DOE upgrading the capacity of Asiga Hydroelectric Power Project to ay 8MW Certificate of Registration issued by the Bureau] “J” of Internal Revenue (BIR) : Latest Audited Financial Statement “kK” 8. Meanwhile, ANECO currently sources its energy requirements from NPC/PSALM (mix), APC-TMI (diesel), and CONAL-MPC (diesel). By 2015, ANECO will have additional power supply from Sarangani Energy Corporation (coal) and Lake Mainit Hydro-APC (hydropower). A copy of ANECO’s Power Suppliers is attached herewith to form an integral part hereof as Annex “L”; 9. One of ANECO’s current power suppliers, the Power Sector Assets and Liabilities Management Corporation (PSALM) confirmed that it has insufficient capacity to supply additional power requirements beyond the contracted energy and equivalent demand of its existing Contract for the Supply of Electric Energy (CSEE) with ANECO. A copy of the letter of Confirmation of Insufficient Power Supply in Mindanao is attached herewith as Annex ”“M” to form an integral part; 10. Accordingly, the generating capacity is no longer sufficient to meet the required capacity of ANECO. Thus, deficit in power supply in the Province of Agusan del Norte is certain to ‘aches {Y7worsen over time. In view of the foregoing, Applicant ANECO deemed it necessary to procure additional power to address the anticipated shortage in supply; 11. Further, ANECO desires to ensure continuous, reliable, efficient, and affordable supply of power in the Province of Agusan del Norte with the use of renewable sources of energy; 12. By and pursuant to this Honorable Commission's Resolution No. 21, Series of 2006, which suspended in the meantime bidding as a method of selecting a power supplier, ANECO directly negotiated with AGEC for the construction of 8 MW hydropower plant for the supply of electric energy that will complement ANECO's base load capacity from other suppliers to complete the total energy requirements thereof as forecasted beginning 2015; 13. After negotiation meetings and a careful evaluation of the terms and conditions of a supply contract, on 18 June 2013, ANECO and AGEC entered into a Power Purchase Agreement (PPA) providing, among others, for AGEC’s construction, operation, maintenance and ownership of the 8 MW Asiga Power Plant in Santiago, Agusan del Norte, and for the terms and conditions of the supply of electricity by AGEC and ANECO’s payment therefor; Il. ABSTRACT OF THE PPA AND OTHER RELATED (ORMATIO! 14. The following are the salient features of the PPA: 14.1 Term of Contract - The PPA shall remain in full force and effect for a period of twenty five (25) years from the Delivery Period Commencement Date, unless extended or otherwise renewed by ANECO and AGEC in accordance with the PPA; 14.2 Obligations of the Parties ~ AGEC, subject to the terms and conditions of the PPA and for the duration of the PPA, shall sell and deliver, and ANECO shall purchase and receive, the electric capacity and energy produced by Facility (“the Product”) at the Delivery and Receiving Page 4 of 12 Application i14.3 144 14.5 14.6 Point, and ANECO shall pay AGEC the Contract Price which is provided for in the PPA, Further, ANECO agrees to receive and purchase all the capacity and energy allocated by AGEC to ANECO. AGEC may, however, at its own option, sell and deliver power to the Wholesale Electricity Spot Market (WESM) or any third party during the term of the contract. For the avoidance of doubts, AGEC shall not be under any obligation to sell and deliver the Product, and ANECO shall not be under any obligation to Take and Pay the Product, in the event of force majeure as defined in the PPA. Neither shall AGEC be obliged to sell or deliver nor ANECO be obliged to Take and Pay, during scheduled maintenance period which period shall be scheduled by the parties conformably to each party's requirements or as may be mutually agreed upon between the parties; Take and Pay Contract - ANECO shall, subject to the terms and conditions in the PPA, accept all deliveries allocated by AGEC and ANECO shall pay for the kWh delivered by AGEC as measured by ANECO’s Billing Meter based on the Contract Price; Interconnection - ANECO agrees to interconnect with AGEC for purposes of delivery and receipt of the electric capacity and energy produced by the Asiga Power Plant in accordance with the Interconnection Agreement executed between them, a copy of which is hereto attached as Annex “N” to form an integral part hereof; Delivery and Receiving Point - Power will be delivered by AGEC and received by ANECO at the former's substation in Barangay Pangaylan, Municipality of Santiago, Province of Agusan del Norte. It is the point where title to, and risk in respect of, the Product shall pass from AGEC to ANECO; Electricity Fees - Applicants agree on the following fees: Page § of 12 Application Iv14.6.1 Contract Price - ANECO shall pay for the kWh delivered by AGEC at a rate of PhP6.50 per kWh, plus all governmental and WESM charges, where applicable; 14.6.1.1 14.6.1.2 14.6.1.3 Governmental charges ~ All value added taxes, sales taxes, goods and service taxes, excise taxes, import duties, stamp taxes and similar taxes imposed by any government authority on or with respect to the Product, or the transactions contemplated in the PPA, shall be for the account of ANECO and shall form part of the Contract Price. AGEC’s own income taxes, property taxes and local business taxes are for its own account. In the event AGEC is required by applicable laws to remit or pay any such governmental charges, such amounts will be set forth in the Invoice for the next subsequent Billing Period and shall be due and payable by ANECO according to the provisions in the PPA. WESM Charges - Except for market fees, all other fees and charges imposed by the WESM, where applicable, on or with respect to the Product that are approved to be collected from the end-users shall be for the account of ANECO and shall form part of the Contract Price. Market fees shall be for the sole account of AGEC and shall not be charged to ANECO as part of the Contract Price. The Contract Price shall be subject to adjustments to allow the pass-through of local inflation rate variations as reflected in the Consumer Price Index (CPI). The adjustment, however, shall only apply to the operations and maintenance (O&M) cost component of the Contract Price using the following formula: Page 6 of 12, Application WyPrice Adjustment Base O&M x (PhP CPI Current/PhP CPI Base) Where: Base O&M PhP1.71 PhP CPI Current Philippine Consumer Price Index for all items for the current month as published by the National Statistics Office (NSO) PhP CPI Base Philippine Consumer Price Index for all items for the Month applicable to the Delivery Period 14.7 Prompt Payment Discount ~ ANECO shall be entitled to a discount equivalent to 2.5% of the billing for a particular month whenever ANECO pays AGEC the monthly invoice in full within ten (10) days from receipt of such billing; Ill. COMMERCIAL ADVANTAGES OF THE ELECTRICITY FEES AND IMPACT ON ANECO’S OVERALL RATES 15. ANECO’s franchise area, like most of Mindanao, has been suffering from insufficient power supply resulting in frequent power outages to the detriment of its customers and local businesses; 16. ANECO desires to guarantee its member-consumers the delivery of reliable but inexpensive electric power that will supplement the increasing electricity requirement in its franchise area; 17. The PPA by and between Applicants ANECO and AGEC is in line with the Parties’ commitment of providing safe, quality, efficient and reliable electric services to the consumers of ANECO; Page 7 of 12 Application Irv18. Likewise, the cost of electricity generated by the Asiga Power Plant, being a renewable energy source, is less than the electricity produced from fossil fuels. Hence, the putting up of the Asiga Power Plant will safeguard the member-consumers from the rising petroleum prices; 19. Further, AGEC is embedded to ANECO’s sub- transmission system, which means that ANECO consumers will not be paying NGCP transmission charges, that is at an average of PhP1.20/kWh; 20. Moreover, pursuant to Republic Act No. 9513 or the Renewable Energy Act of 2008 and its Implementing Rules and Regulations, AGEC, being a developer of renewable energy facilities, is entitled to several tax incentives and/or other privileges which will ultimately redound to the benefit of ANECO in terms of lower generation rates; 21. To show the effect of the proposed PhP6.50/kWh to the generation component of the retail rate of ANECO, a rate impact simulation is shown below using ANECO’s projected late 2015 load profile and projected mix of suppliers. The tables below show the average generation rate of ANECO if additional supply is procured from an oil-based plant, which is the next readily available power source absent AGEC, vis-a-vis its rate when AGEC is included in its generation mix: Projected Late 2015. | Percent | Average Weighted ‘Average Monthly Share Rate Average Rate ‘Quantity (kWh) (% | (eewn) (e/kWh) [OIL-BASED 2,102,400.00 | __7.10% 9.29 SUPPLIER 1 2,956,500.00 | __9.99% 9.29 ‘SUPPLIER 2 4,025,765.00| 13.60% 9.12 5.2152 ‘SUPPLIER 3 6570,000.004 | ~22.20% 479 ‘SUPPLIER 4 13,938,911.67 [__ 47.10% 3.01 Projected Late 2015 | Percent | Average Weighted ‘Average Monthly Share Rate Average Rate ‘Quantity (kWh) (| (kWh) (P/kWh) AGEC 2,102,400.00 | —__7.10% 6.50 [ SUPPLIER1 2,956,500.00 | 9.99% 9.29 ‘SUPPLIER 2 4,025,765.00| 13.60% 9.12 5.2143, ‘SUPPLIER 3 6,570,000.008 | 22.20% 479 ‘SUPPLIER 4 __13,938,911.67 | 47.10% 3.01 Effective Rate Reduction (0.0009) Page &of 12 Application I22. A Rate Impact Simulation is herewith attached as Annex 40" and forms an integral part hereof; 23. In support of the Application for the approval of the PPA, Applicants attach the following documents to form integral parts hereof, to wit: ANECO’s Load Forecast Projections aba Details of the PPA including Executive “Q" Summary, Sources of Funds and Financial Plans, Breakdown of the base prices of Operation and Maintenance, and Sample Computation of | Power Rates i ANECO’s Distribution Development Program “R” Computation of AGEC’s Weighted Average Cost|_“S” of Capital (WACC) ANECO Board Resolution No. 011 Series of 2014 les authorizing the Board of Directors (BOD) President Dioscoro P. Boco and General Manager Horacio T. Santos to filing before the ERC an application for approval of the PPA ANECO Board Resolution No. 091 Series of 2013 “ur” | authorizing BOD President Dioscoro P. Boco and General Manager Horacio T. Santos to enter into an Interconnection Agreement and Power | Purchase Agreement with AGEC ANECO Board Resolution No. 012 Series of 2014 ave authorizing BOD President Dioscoro P. Boco and General Manager Horacio T. Santos to sign the Verification and Certification of Non-Forum Shopping : AGEC Board Resolution —_-2014-02-0006| “W” authorizing Ronnie Vicente C. Lagnada, President, to enter into and sign the PPA with ANECO AGEC Board Resolution 2014-02-0005 “x” authorizing Ronnie Vicente Lagnada to file an application for approval of the PPA with ERC and to be represented by Diccion Law Firm in | such filing Page 9 of 12 Application: Ww24. Applicants are reserving the right to submit other documents in support of the approval of the instant Application, either in the course of the hearing or as may be required by the Honorable Commission; IV. COMPLIANCE WITH PRE-FILING REQUIREMENTS 25. Applicants manifest compliance with the pre-filing requirements mandated under the Implementing Rules and Regulations of the EPIRA and Rule 6 of the ERC Rules of Practice and Procedure, as established by the following: 25.1 Certificates acknowledging receipt of the instant Application with annexes to be issued by the Legislative Bodies of the City of Butuan and the Province of Agusan del Norte, to be appended as Annexes “Y” and “Z”, respectively, to form integral parts hereof; 25.2 Notarized Affidavit of Publication stating that the instant Application had been published in a newspaper of general circulation within the Franchise Area of ANECO, to be appended herein as Annex “AA”; 25.3 A copy of the complete newspaper issue where the Application as published, appeared, to be appended hereto as Annex “BB”; V. ISSUANCE OF PROVISIONAL AUTHORITY 26. All the foregoing allegations are repleaded by reference in support of herein Prayer for the issuance of Provisional Authority, pending hearing on the merits; 27. Continuous and stable power supply is indispensable to the growth and development of a community and vital to the provision of needed services to the people. ANECO’s experience of having power supply shortages for the last four (4) years has resulted in revenue losses for ANECO, lost business opportunities within its Page 10 of 12 Application ivfranchise area and halted delivery of basic and social services to its member consumers; 28. Meanwhile, a provisional approval of the subject PPA will enable AGEC to obtain the necessary capital requirements to immediately commence the construction and installation of the Asiga Power Plant, ensuring that the project will be implemented as scheduled and the needed contracted capacity is delivered to ANECO on time; 29. The basis by which Applicants pray for the issuance of a Provisional Authority or interim relief prior to a final decision, is anchored on Rule 15 of the ERC Rules of Practice and Procedure, to wit: “Section 3, Action on the Motion. - Motions for provisional authority or interim relief may be acted upon with or without hearing. The Commission shall act on the motion on the basis of the allegations of the application or petition and supporting documents and other evidences that applicant or petitioner has submitted and the comments or opposition filed by any interested person, if there be any.” [Emphasis ours.] 30. To further support the grant of a Provisional Authority, a Judicial Affidavit emphasizing the necessity thereof, to be attached as Annex “CC” to form an integral part hereof; 31. _ In light of the foregoing and in recognition of the fact that a substantial amount of time will be spent in evaluating the documentary evidence attached to the instant Application, Applicants seeks the kind indulgence of this Honorable Commission to approve the instant Application, immediately, albeit provisionally, at the soonest opportune time. PRAYER WHEREFORE, premises considered, it is most respectfully prayed for of this Honorable Commission that pending hearing on the merits, a Provisional Authority be DULY ISSUED for the immediate implementation of the Power Purchase Agreement executed by and between Applicants AGEC and ANECO, and that after due reign fi alenotice and hearing, the instant Application be DULY APPROVED, subject to retroactivity to the date when AGEC starts actual delivery of power to ANECO, in the event that the Final Approval of the PPA be issued after said actual delivery. Other reliefs as may be just and equitable under the premises are, likewise, most respectfully prayed for. Pasig City, Philippines. 17 February 2014. DICCION LAW FIRM Unit 1912 Jollibee Plaza Building F, Ortigas Jr. Road, Ortigas Center Pasig City Tel. Nos. 633-5359; 683-0612 wenow.diccionlaofirm.com By: MARY ANN CASTRO DICCION, Roll No. 43713 IBP Lifetime No. 03244/01,02.03/Quezon City PTR No, 9829817/01.03.14/Pasig City MCLE Compliance No. IV - 0017990 iS ANNA TRICIA RADERO EVANGELISTA IBP No. 946149/ 12.17.13 / RSM Chapter PTR No. 9829816/ (11.03.14 / Pasig City MCLE Compliance No. IV - 0007309 Copy Furnished: Sangguniang Panlungsod of Butuan Sangguniang Panlalawigan of Agusan del Norte Page 12 of 12 ApplicationREPUBLIC OF THE PHILIPPINES) Jss VERIFICATION AND CERTIFICATION OF N‘ JM SHOPPING We, DIOSCORO P. BOCO and HORACIO T. SANTOS after having been duly sworn in accordance with law, depose and say: 1, That we are respectively, the BOARD PRESIDENT and GENERAL MANAGER of AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. (ANECO), the applicant-electric cooperative in the above-entitled case; 2. That we have caused the preparation and filing of the foregoing JOINT APPLICATION; 3. That we have read the same and that all allegations contained there are true and correct ‘of our own personal knowledge and on the basis of authentic documents in our possession; 4. That we hereby certify that ANECO,INC has not commenced any other action or proceeding involving the same issue/s with the Supreme Court, the Court of Appeals or any other tribunal or agency; 5. That to the best of our knowledge no such action or proceeding involving the same issue/s is/are pending with the Supreme Court, the Court of Appeals or any other tribunal or agency; 6. That should we, thereafter, learn that an action or proceeding is pending with the Supreme ‘Court, the Court of Appeals or any other tribunal or agency we hereby undertake to report such fact within five (5) days from knowledge of such action or proceeding with this Honorable Commission, FURTHER AFFIANTS SAYETH NONE. DIOSCOWAIP. BOCO. fant. Affiant‘SUBSCRIBED AND SWORN to before me this ast day of March vol} affiants respectively exhibited to me competent evidence of their identities: IDNo. Date Issued/Expiry Date/Place Issued P.BOCO Tc 29702920 1/15/2014/ Baleguian, Jabonga, ADN DLNo. k01-84-031086 December 14, 2015 crc 29696772 1/14/2014/ Butuan City ‘SSS No. 03-3588978-9 Doc. No. yg Page No. ; Book No. Xxx]; Series of 2014. ACLE CC: 621 99-23-17 THN 7eS-897/BTCVERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING 1, RONNIE VICENTE C. LAGNADA, the President of ASIGA GREEN ENERGY CORPORATION (AGEO), a corporation duly organized and existing under by the virtue of the laws of the Republic of the Philippines with principal office and business address at P-3 Ambangan, Ambago, Butuan City, Agusan del Norte, Philippines, after having been duly swom in accordance with law, hereby depose and state that, 1. 1 am the duly authorized representative of ASIGA GREEN ENERGY CORPORATION (AGEC); In coordination with AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INCORPORATED (ANECO), I have caused the preparation of the foregoing application. I have read its contents and the allegations therein are true and correct, and of my personal knowledge and based on the authentic records in my possession; ar Thereby certify that ASIGA. GREEN ENERGY CORPORATION (AGEC) has not ‘commenced any aetion or filed any claim involving the same issue(s) in any other court, tribunal, or quasi-judicial agency, and to the best of my knowledge, no such other action of claim is pending therein. Should | thereafter learn that the same or a similar action or claim has been filed or is pending, | shall report such fact to this Honorable Commission within five (5) days therefrom. IN WITNESS WHEREOF, I have signed this Verification and Nertification of Non- Forum-Shopping on this 18th day of February 2014 at Butuan City. Philifhi ACKNOWLEDGMENT SUBSCRIBED AND SWORN to before me this 18 February 2014, who has satisfactorily proven to me his identity through his Passport No. EB3535201 issued on 02 September 2011 in Butuan City, Philippines, that he is the same person who personally signed before me the foregoing Sworn Statement and acknowledged that he, executed the same. Doe. No. te Page No. : Book No. Luu: Series of 2014,