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THURsDay | march 28, 2013
REPUBLIC OF THE PHILIPPINES ENERGY REGULATORY COMMISSION SAN MIGUEL AVENUE, PASIG CITY IN THE MATTER OF THE APPLICATION FOR APPROVAL OF THE POWER SALES AGREEMENT BETWEEN AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. AND MAPALAD POWER CORPORATION, WITH PRAYER FOR PROVISIONAL AUTHORITY, AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. AND MAPALAD POWER CORPORATION, Applicants. x-----------------------x
ERC CASE NO. 2013-__ RC
JOINT APPLICATION (WITH PRAYER FOR PROVISIONAL AUTHORITY) Joint Applicants Agusan del Norte Electric Cooperative, Inc. and Mapalad Power Corporation, by their respective counsel, respectfully state: THE APPLICANTS
distribution utilities in the Mindanao region, including ANECO. This has resulted in further widespread power shortages. 13.4. PSALM is expected to reduce further its firm supply by 2016 when its Energy Con version Agreements with Western Mindanao Power Corporation and Southern Philippines Power Corporation expire. 14. Insufficiency of ANECO’s power supply. ANECO’s total power supply is insufficient to meet its power requirements. 14.1. As with the rest of Mindanao, the bulk of ANECO’s power requirements is currently supplied by PSALM. However, as discussed above, PSALM has drastically reduced its supply commitments to ANECO, and is expected to make further reductions in the near future. 14.2. NPC Certification. ANECO has formally requested NPC for a certification on whether it will have available capacity and energy to supply ANECO during the term of the PSA. NPC has not yet formally responded to such request. ANECO undertakes to submit the certification to this Honorable Commission once it is obtained. A copy of the said request is attached hereto as Annex “F.” 14.3. Aside from the NPC, Therma Marine, Inc. (“TMI”) also supplies 15 MW of power to ANECO under an Energy Supply Agreement with a contract term effective until 2015. 14.4. ANECO has entered into long-term supply contracts with Agusan Power Corporation (“APC”) and Sarangani Energy Corporation (“SEC”). However, supply under these contracts is expected to commence in 2015 as the power plants are still being constructed. 15. Even with supply from TMI, ANECO’s power supply is still far from sufficient to meet its current total requirements.
1. Agusan del Norte Electric Cooperative, Inc. (“ANECO”) is a non-stock, non-profit electric cooperative organized and existing under and by virtue of Republic Act No. 6038, as amended, with office address at K.M. 2, J.C. Aquino Avenue, Butuan City, Agusan del Norte. ANECO has a franchise to distribute electricity in City of Butuan and the Municipalities of Buenavista, Cabadbaran, Carmen, Jabonga, Kitcharao, Las Nieves, Magallanes, Nasipit, R. T. Romualdez, Santiago and Tubay, all in the province of Agusan del Norte. A copy of ANECO’s certificate of franchise is attached hereto as Annex “A.”
16. Currently, ANECO’s power requirements stand at 48 MW. PSALM supplies ANECO only about 17.5 MW, while TMI supplies 15 MW. Thus, there is a very significant shortage of about 15.5 MW, almost one-third of ANECO’s power requirements.
2. Mapalad Power Corporation (“MPC”) is a generation company duly authorized and existing under and by virtue of the laws of the Republic of the Philippines, with principal address at 4th Floor, Alphaland Southgate Tower, 2258 Chino Roces Avenue corner EDSA, Makati City. Copies of MPC’s Certificate of Incorporation, Articles of Incorporation and By-Laws, and latest General Information Sheet are attached hereto as Annex “B” and series.
18. Consequently, ANECO will continue to experience outages due to the shortage of supply and to the steady increase in its power demand, to the detriment of its customers and local businesses.
3. Joint Applicants may be served orders and other processes through their respective counsel.
20. Immediate need for power supply. In view of the foregoing, it is clear that ANECO needs to procure additional power supply that can be available at the soonest possible time.
NATURE OF THE APPLICATION
21. Other than supply from MPC, there does not appear to be any other viable alternative for immediate power supply available to ANECO to address the current power crisis.
4. Pursuant to Rule 20 (B) of the ERC Rules of Practice and Procedure, approved by this Honorable Commission on 22 June 2006 in Resolution No. 38, Series of 2006, this Application is submitted to the Honorable Commission for its review and approval of the Power Sales Agreement between ANECO and MPC (the “PSA”). A copy of the PSA is attached hereto as Annex “C.” COMPLIANCE WITH PRE-FILING REQUIREMENTS 5. In compliance with Rule 6 of the ERC Rules of Practice and Procedure, Joint Applicants have furnished the legislative bodies of each of the local government units where they principally operate a copy of the present Application with all its annexes and accompanying documents. Proofs of receipt by the legislative bodies of the said local government units are attached hereto as Annexes “D” and series.
17. As a result, ANECO’s customers have to endure daily rotational brownouts of about two (2) to three (3) hours, adversely affecting all electricity customers, including local businesses. In addition, the shortage of power supply is expected to worsen due to the steady increase in ANECO’s power demand.
19. Moreover, as stated above, the available supply of power in the entire Mindanao Grid will be drastically reduced in the coming summer months, further worsening the power shortage.
22. Thus, in order to alleviate the current power shortage, ANECO executed with MPC the PSA subject of the present case. 22.1. MPC is capable of commencing supply of power to ANECO within a relatively short period from the effectivity of the PSA. 22.2. Thus, the PSA will serve as an immediate solution to reduce the power shortage and help alleviate outages currently suffered by ANECO’s customers. 23. Under the law, no contract for the supply of power can become legally effective unless approved by this Honorable Commission. Hence, this Joint Application. ABSTRACT OF THE POWER SALES AGREEMENT AND RELATED INFORMATION
6. Furthermore, Joint Applicants have caused the publication of the present Application in its entirety, excluding its annexes, in a newspaper of general circulation within ANECO’s franchise area.
24. The Generation Facilities. To supply power under the PSA, MPC shall own, operate, rehabilitate, manage and maintain a bunker C-fired diesel power station located in Sitio Mapalad, Barangay Dalipuga, Iligan City, Province of Lanao del Norte (the “MPC Power Plant”). 24.1. The MPC Power Plant was acquired from the City Government of Iligan City. The said plant was previously owned by NPC, and operated by an independent power producer.
Copies of the newspaper and the corresponding affidavit of publication are attached hereto as Annexes “E” and “E-1,” respectively.
24.2. MPC shall perform rehabilitation works on the MPC Power Plant to enable efficient operations for purposes of supplying power to the Mindanao Grid.
STATEMENT OF FACTS
25. After rehabilitation, the MPC Power Plant shall have a total net generating capacity of 98.5 MW. It consists of two (2) power stations. The first power station consists of 11 generating units, each with a net generating capacity of 5.2 MW. The second power station consists of 7 generating units, each with a net generating capacity of 5.9 MW. A copy of a certification on the Plant’s specific fuel oil consumption rate is attached hereto as Annex “G.” 25.1. Scheduled Commercial Operations. The MPC Power Plant shall commence com mercial operations within six (6) weeks from the Effective Date of the PSA, or on a later date agreed upon by the parties on which the first six (6) MW of Contracted Capacity will be made available.
7. Shortage of Power Supply in the Mindanao Grid. The Mindanao Grid is currently facing a deficit in its power supply, which is certain to worsen over time. 8. The generating capacity in the Grid is no longer sufficient to meet the power requirements of Mindanao. 9. The Power Sector Assets and Liabilities Management Corporation (“PSALM”), which took over all the power generation assets of the National Power Corporation (“NPC”) pursuant to Republic Act No. 9136, supplies the bulk of the power requirements of Mindanao. 10. As discussed in further detail below, PSALM has drastically reduced its supply commitments to distribution utilities in Mindanao, including ANECO. 11. As a result, Mindanao, including the franchise area of ANECO, is suffering from significant power outages, adversely affecting local businesses and the daily lives of all electricity consumers. The lack of sufficient and reliable power supply has long been a barrier to much needed capital investment that would spur the local economy, not only in the franchise area of ANECO, but in greater Mindanao as well. 12. The Mindanao Grid is heavily dependent on hydroelectric power. In fact, according to the DOE, fifty-three percent (53%) of the total dependable capacity in the Mindanao Grid as of 2009 consists of hydroelectric generating capacity. As a consequence, available power supply in the Grid will be drastically reduced in the coming summer months. 13. Drastic Reduction in PSALM’s supply. As mentioned earlier, the bulk of the power requirements of the Mindanao Grid is being supplied by PSALM. 13.1. However, Republic Act No. 9136 mandates the privatization of NPC’s generation assets and prohibits NPC from investing in new generation capacity. Thus, a number of NPC’s power plants in Mindanao have been or will soon be sold and turned over to private power producers. 13.2. As a result, PSALM is no longer able to supply the full requirements of the Grid, including ANECO. 13.3. In fact, PSALM has drastically reduced its firm supply commitments to all the
26. Salient Features of the PSA. 26.1. Supply of Peaking Power Requirements. Under the PSA, MPC shall supply or cause to supply to ANECO the latter’s peaking electric power requirements with the Contracted Capacity of up to 6 MW based on the following schedule, and the Dispatchable Energy as indicated in and subject to the terms and conditions of the PSA.
26.2. The Contracted Capacity increases as more capacity becomes available during the rehabilitation of the MPC Power Plant, after which the Contracted Capacity shall be fixed at 15 MW. 26.3. Term. The term of supply and purchase under the PSA shall be for three (3) years from the commencement of commercial operations, unless otherwise renewed by mutual agreement of the parties in writing. 26.4. On each anniversary of the Effective Date, ANECO shall have the option to terminate the PSA or to decrease the Contract Capacity, subject only to a sixty-day prior written no tice. In addition, the parties can agree to increase the Contracted Capacity and Dispatchable