ÿþO RDERERCCASENO . 2 0 1 5 - Energy Regulatory ...

IN THE MATTER OF THEAPPLICATION TO

..DEVELOP, OWN ANDOPERATE A DEDICATEDPOINT-TO-POINTTRANSMISSIONFACILITIES TO CONNECTHAWAIIAN PHILIPPINECOMPANY's (HPCo)BAGASSE-FIRED BIOMASSPOWER PLANT TO NGCP69Kv SILAY VMCTRANSMISSION LINE,WITH PRAYER FORPROVISIONAL AUTHORITY

ERC CASENO. 2015-101 MC

HAWAIIAN - PHILIPPINECOMPANY(HPCo),

Applicant.)( - - - - - - - - - - - - - - - - - - - - - )(

ORDER

On December 7,2015, Hawaiian - Philippine Company (HPCo)filed an application for authority to develop, own and operate adedicated point-to~point transmission facilities to connect the HPCoBagasse-Fired Biomasss Power Plant to Silay-VMC 69kVtransmission lines of. the National Grid Corporation of thePhilippines (NGCP),with prayer for provisional authority.

In the said application, HPCo alleged, among others, that:

1. It is a sugar milling company duly organized and existingunder and by virtue of the laws of the Republic of thePhilippines, with principal office address at Brgy.Haw"H'n,Sil.yCity,PhiliPPine4

ERC Case No. 2015-101 MCORDERlDecember 10,2015 of 13

2. It was organized and registered with the Securities andExchange Commission (SEC) to manufacture, refine,own, hold, buy, sell, import and export, and in anymanner acquire and dispose of, sugar, sugar-cane,molasses and other sugar-by-products. Consequently, asa sugar mill company, HPCo also owns a bagasse-firedpower plant utilized for self-generation during sugarcanemilling season when bagasse is readily available as fuelfor its plant;

3. Based on the 2012 Power Development Plan of theDepartment of Energy (DOE), the energy demand inVisayas is expected to grow from 1, 643 MW in 2013 to 2,331 MW by 2021. The demand in Negros, in particular,will grow from 273 MW by year 2013 to 387 MW by year2021. For the year 2014 (year of entry) and 2019 (5 yearlook-ahead), the demand for Visayas is forecasted to be1,723 MW and 2,147 MW respectively. Negros is expectedto have a demand of 286 MW by 2014 and 356 MW by2019. Out of the forecasted demand of 2,147MW forVisayas, the total generation capacity additions inVisayas is only 803MW, with 340MW as committedpower plants. Notably, most of the committed powerplants are located outside Negros Island;

4. In the Power Development Plan (2009-2030), it wasmentioned therein that one of the problems experiencedin northern Negros, particularly in Bacolod which is theload center of Negros, is low voltage. This is due to lackof inland generating plants since generators are locatedin southern part far from the load center. Thus, with theincreasing energy demand, tapping or maximizing everyavailable source of energy or power plant especially herenear the load center, will be most helpful as it willdefinitely alleviate the energy's situation in Negros;

5. Since the enactment of the Republic Act 9513, otherwiseknown as the "Renewable Act of 2008," HPCo has beencarefully studying how to be able to respond to thegovernment's call for clean energy considering itsavailable resources, particularly the bagasse duringmilling season that could be used as fuel for its bio:~~power plant. When the Energy Regulatory commi/V

ERC Case No. 2015-101 MCORDER/December 10, 2015 of 13

(ERC) issued the pertinent rules on Feed-In-Tariff ("FITRules"), HPCo finally decided to embark on a Co-genproject to expand the potential of its Bagasse-FiredBiomass Power Generation Plant to be able to exportexcess power to the grid under the FIT program of thegovernment, aside from supplying its internalrequirements;

6. In June 2010, when the need to change its aging turbogenerators arose, HPCo saw an opportunity to finallymaterialize its Co-gen project for power export. Thus,HPCo spent a substantial amount on the installation of anew and more efficient 8MW Shinn Nippon pass-outtype turbine, not only to replace the aging generators ofthe company for a more reliable and efficient operation,but also to generate excess power to be transported to thegrid. With the new 8MW installed capacity, SMWwill beavailable for its internal load requirements, 3MW (moreor less) as excess power to be transported to the grid, andwith 4MW as spare;

7. Thereafter, the company spent a considerable amount oftime and effort to secure all permits and licenses fromdifferent government agencies involved to materialize itsco-gen power export project as well as its eventualparticipation in the FIT program.

a. On 12March 2013, HPCo was granted Certificateof Registration by the Department of Energy(DOE) as a Renewable Energy ("RE") Developerunder Registration No. RE-B2013-02-060.Thereafter, HPCo was likewise awarded aBiomass Renewable Energy Operating Contract(BREOCNo. 2013-02-029), to generate electricalpower from Biomass Cogeneration System usingSugarcane Bagasse as feedstock in BarangayHawaiian, Silay City, Negros Occidental.Moreover, on 22 January 2014, HPCo was issueda Confirmation of Commerciality by the DOEwhich affirms HPCo to develop and operate itsBagasse-Fired Biomass Power GenerationprojectNf


b. HPCo likewise requested National GridCorporation of the Philippines ("NGCP") toconduct a grid impact study to assess the impactof the biomass power generation project on theVisayas grid. On 18 June 2014, the SystemImpact Study ("SIS") was officially released byNGCP. Moreover, upon compliance with theinter-connection requirements, NGCP and HPCoexecuted its Connection Agreement (CA),Transmission Service Agreement (TSA) andMetering Agreement (MA).

c. On 20 October 2015, HPCo was able to secure itsEnvironmental Compliance Certificate (ECC-R6-1510-0370-4220) for the inclusion of theBiomass Cogeneration Power Plant Project to theexisting Sugar Mill plant project located atBarangay Hawaiian, Silay City.

d. HPCo has been issued by the Energy RegulatoryCommission (ERC) its original Certificate ofCompliance (COC) for its self-generating facilitylast April 2006. On 23 February 2012, uponapplication of HPCo for renewal of its COC, theERC issued a new COC under COC no. 12-02-GXT-19266-19266M to be valid for a period offive (5) years or until 23 February 2017.

8. In order to export the excess energy generated by HPCo'sbiomass plant, HPCo proposed to connect their existing1x8 MW biomass generating plant to the grid by tappingalong the Silay - VMC69 kV transmission lines owned bythe National Grid of the Corporation of the Philippines("NGCP"). This connection scheme will requireconstruction of an approximately 2.9 km single circuitdedicated point-to-point transmission facilities that willconnect the power plant to NGCP's line.

9. Considering the need to develop and operate a dedicatedpoint-to-point transmission facilities, this application isbeing filed pursuant to Section 9 of the EPlRA whichexp,e"ly pmvide> fu~

ERC Case No. 2015-101 MCORDER/December 10,2015 of 13

"A generation company may develop andown or operate dedicated point-to-pointlimited transmission facilities that areconsistent with the TDP: Provided, thatsuch facilities are required only for thepurpose of connecting to the transmissionsystem, and are used solely by thegenerating facility, subject to priorauthorization by the ERC: Provided,further, that in the event that such assetsare required for competitive purpose,ownership of the same shall betransferred to the TRANSCO at a fairmarket price: Provided, finally, that inthe case of disagreement on the fairmarket price, the ERC shall determine thefair market value of the asset."

Allegation in Support ofthe Application

10. As stated earlier, the excess energy generated by HPCo'sbiomass plant will be exported to the grid by tappingalong NGCP's Silay - VMC69 kV transmission lines. Thisconnection scheme will require construction of anapproximately 2.9 km single circuit, 69 kV transmissionline that will connect the power plant to the point ofinterconnection using the 336-4 MCMACSRcables. Thededicated point-to-point transmission facilities extendsfrom HPCo's switchgear located in Barangay Hawaiian,Silay City to NGCP's existing 69kV Silay-VMCtransmission line and will be dedicated or exclusivelyused by HPCo to transport its 3MW excess power to thegrid. Below is a diagram showing the proposedoonnection'Che/:!


Figure 3.1: Proposed Connection Scheme SLD

BACOLOD TAUSA'f VMe CADIZ

2xSOMVA

COLOR LEGEND:

In 138kV

• "kv• l3.'kVm. de-energlled

SJLAYMT,VIEWBURGOS HPCo{poIJ

•,,,,3x100MVA I,,,

I •••••••••~•••••,••••,••••~•••••••••~............ j

i J:"'~\' ;<~! :! -~1" ..: , ,l I! SMWi':::.;'( • • . I. _:.•••: .'._:..:(i~r'.i;•.:.'.i_~2~_k~:~~:4_":C~_~C.S~~6~~~_~18'Mw;'fG.i;' ••'i,:'\;"',.~'!' ,n, -j

t~~;~:..~~:..:~~~~~..::2~.~':.~;:.:~.~~..,~.j

11. Basically, the dedicated point-to-point transmissionfacilities has the following components, among otherthings:

Com onents1. Construction of Three Kilometers 69kV transmission line,

which includes:a. SMVA,13.8 - 69kV substation (complete with remote

telecommunication System)b. 69kV Connection Asset or Disconnect Switch Yard

2. Power Transformers GSH (SMVA,69/13.8KV, Phase3,60HZ)

3. Ins ection and Servicin of GSH SMVATransformer4. Trans ortation Cost5. 3 sets Current Transformer for Meterin6. AVIAT Microwave Radio 7GHZ, MHSB Configuration 16E1

Ca aci S litT eRi htofWa

12. On June 13, 2013, HPCo entered into an Engineering,Procurement and Construction Contract (EPCC) withBussbarr Corporation ("Bussbarr") to undertake the Co-gen project. Bussbarr Corporation is an electricalengineering firm specializing in industrial facilityelectricalj control design, with major focus on the powerdistribution substation, food and beverage,pharmaceutical, malls and a bulk manufacturingenv'conments. B""b= i, a ,)"tem integ",to,y


diverse capabilities in Power, Control and AutomationSystems and consistently deliver services of high qualityand value such as power distribution substation designand installation, low and medium voltage switchgearfabrication and installation, synchronizing panelsfabrication and installation, SCADA system/processautomation/substation automation design andimplementation, variable speed drives and soft startersupplies and installation, equipment supply,maintenance and repairs and capacitor bank supply andinstallation. Thus, with excellent track record ofcompleted projects from Nueva Viscaya to Agusan, HPCohas awarded the Co-gen project to Bussbarr Corporation.

13. On the other hand, since HPCo is an existing companywith stable investors engaged in sugar milling, it is notamiss to state that it has the financial capacity toundertake the construction, development, operation andmaintenance of the Co-gen project, including theconstruction of the dedicated point-to-point limitedtransmission facilities. As a matter of fact, theshareholders of HPCo invested Seventy Million Pesos(Php 70,000,000.00) for the construction of point-to-point dedicated facilities which was funded throughinternally generated funds. After looking into theprojected economic and financial cost benefits of the Co-gen project, the shareholders willingly agreed toimplement the Co-gen project given its attractive returnsupon its participation in the FIT, which might likewisesupport HPCo in their sugar milling business consideringthe competitive environment in the sugar industry.

14. As regards to the operation and maintenance, HPCo hasan Electrical Department, who may be able to operateand maintain the said facilities in close coordination withNGCP District 3-VSO. Admittedly, however, HPCoexpertise maybe limited only with the operation of smalldistribution system within its area and not properlyequipped with the expertise needed in operating atransmission facilities, not to mention the regulatorystandards and compliance that needs to be met at alltimes. With this, HPCo is willing to enter into agreementwith NGCP for the operation and maintenance of saidline for reliability and safety purposes. As a matter offact, HPCo lliready wrote a Jette< to NGCP reg",ding ~


matter, and the latter already replied. In its reply dated 4November 2015, NGCP express willingness to extendtheir service in the operation and maintenance of thefacilities.

Allegations in Support of Prayer for ProvisionalAuthority

15. Rule 14 of the Honorable Commission's Rules of Practiceand Procedure authorizes the issuance of a provisionalauthority or an interim relief prior to a final decision,provided that the facts and circumstances warrant theissuance of the same.

16. Given the urgent need for additional capacity as demandfor energy continue to rise, and considering the readilyavailable excess clean energy coming from the Bagasse-Fired Power Plant of HPCo, it will be beneficial that theadditional capacity coming from HPCo power plant willbe transported and made available for the Visayas Gridimmediately. Thus, HPCo respectfully prays that theHonorable Commission provisionally approve the instantApplication to help alleviate the energy situation asprojected by the DOE.

17. Also, as mentioned earlier, HPCO Co-gen Plantis alreadyoperational and is ready to wheel its excess power to thegrid. All the necessary government permits and licensesare likewise complete. HPCo is likewise processing toobtain its Certificate of Compliance - FIT. In fact, all therequired documents for the COC-FIT are alreadycomplete except for the approval of this HonorableCommission of this instant application. Thus, to be ableto enjoy the benefits provided by FIT and any otherbenefits under the RA 9513 (Renewable Energy Act of2008), HPCo respectfully prays for the provisionalappmvalofthisapPlicatiO~


18. In support of the instant Application and allcomputations contained, Applicant hereto attached thefollowing annexes:

Documents Annex

Certificate of Incorporation AArticles of Incorporation BLatest General Information Sheet CDOE Certificate of Registration DBiomass Renewable Energy Operating EContractDOE Confirmation of Commerciality FSystem Impact Study GConnection Agreement HTransmission Service Agreement IMetering Agreement JEnvironmental Compliance Certificate KERC Certificate of Compliance LTechnical Specification of the Project MProject Component and Cost NHPCo Audited Financial Statement 0Economic and Financial Cost Analysis PNGCP's Letter dated 4 November 2015 QNGCP's Certificate dated 27 November RRequest for Certificate of Non-Coverage SSecretary's Certificate dated 20 November TJudicial Affidavit of Rodeo P. Suating U


PRAYER

19. Thus, HPCo prays, that the Commission:

19.1 Approve the instant application filed by HawaiianPhilippine Company (HPCo) for authority todevelop, own and operate dedicated point-to-pointtransmission facilities to connect HPCo Bagasse-Fired Biomass Power Plant to NGCP's 69 kV Silay-VMCTransmission Line;

19.2 Pending hearing on the merits of this application, aprovisional approval of the instant application beissued.

Finding the said application to be sufficient in form and insubstance with the required fees having been paid, the same ishereby set for jurisdictional hearing, expository presentation, pre-trial conference and evidentiary hearing on February 22, 2016(Monday) at ten o'clock in the morning (10:00 A.M.) at theERCHearing Room, 15th Floor, Pacific Center Building, SanMiguel Avenue, Pasig City.

HPCo is hereby directed to cause the publication of theattached Notice of Public Hearing, at its own expense, once (IX) in anewspaper of general circulation in the Philippines, at least ten (10)days before the scheduled date of initial hearing.

Let copies of the application, this Order, and the attachedNotice of Public Hearing be furnished the Office of the SolicitorGeneral (OSG), the Commission on Audit (COA)and the Committeeson Energy of both Houses of Congress. They are hereby requested, ifthey so desire, to send their duly authorized representatives at thescheduled hearings.

Likewise, let copies of this Order and the attached Notice ofPublic Hearing be furnished the Offices of the Governor of NegrosOccidental and the City Mayor of Silay City for the ppropriateposting thereof on their respective bulletin boardsA


HPCo is hereby directed to furnish all those making requeststherefor with copies of the application and its attachments, subject toreimbursement of reasonable photocopying costs.

On the date of the initial hearing, HPCo must submit to theCommission its written Compliance with the jurisdictionalrequirements attaching therewith, methodically arranged and dulymarked, the evidences of the actual posting and publication of theNotice of Public Hearing consisting of certifications issued to thateffect, signed by the afore-mentioned Governor and Mayor or theirduly authorized representatives, bearing the seals of their offices,and the affidavit of the Editor or Business Manager of the newspaperwhere said Notice of Public Hearing was published together with thecomplete issue of the said newspaper, and such other proofs ofcompliance with the requirements of the Commission.

HPCo and all interested parties are directed to submit, at leastfive (5) days before the date of initial hearing and pre-trialconference, their respective Pre-Trial Briefs containing, amongothers:

(a) A summary of admitted facts and proposed stipulation offacts;

(b) The issues to be tried or resolved;

(c) The documents or exhibits to be presented, stating thepurposes thereof and proposed markings therefore; and

(d) The number and names of the witnesses, with theirwritten testimonies in an individual affidavit form, to beattached to the Pre-Trial Brief.

Failure of HPCo to submit the required Pre-Trial Brief andJudicial Affidavits of its witnesses within the prescribed period shallbe a ground for cancellation of the scheduled hearing, and theresetting of which shall be six (6) months from said date ofcancellation.

As part of the pre-trial conference, HPCo must also beprepared to make an expository presentation of its application, ~:~~~~by whatever communication medium that it may deem approP/ i


for the purpose, in order to put in plain words and explain, for thebenefit of the consumers and other concerned parties, what theapplication is all about and the reasons and justifications being citedin support thereof.

SO ORDERED.

Pasig City, 10 December, 2015.

FOR AND BYAUTHORITYOF THE COMMISSION:

- ~_.. .. ... .....-" .-....JOSE VICENTE B. SALAZAR

Chairman ~

~

~HPco/point -to-point/ 2015-101MC/initial order

Copy Furnished:

1. Atty. Irish Mae V. RodriguezCounselfor HPCoc/o Hawaiian-Philippine CompanyBarangay Hawaiian, Silay CityNegros Occidental

2. Hawaiian-Philippine CompanyBarangay Hawaiian, Silay CityNegros Occidental

3. Office of the Solicitor General (OSG)134 Amorsolo Street, Legaspi Village, City of Makati 1229

4. Commission on Audit (COA)Commonwealth Avenue, Quezon City 1121

5. Senate Committee on EnergyGSIS Building, Roxas Boulevard, Pasay City 1300

'ERe --I Office of the Chairman

. \lli!III\\\\'!\\I,~li\~\II\\I\\I!\~ll\j\il~,11 {; L_2015-021-02632


6. House of Representatives Committee on EnergyBatasan Hills, Quezon City 1126

7. Office of the CityMayorSHay City, Negros Occidental

8. Office of the GovernorProvince of Negros Occidental

9. National Grid Corporation of the Philippines(NGCP)Quezon Avenue corner BIR Road, Diliman, Quezon City

10.Philippine Chamber of Commerce and Industry(PCCI)3rd Floor, Chamber and Industry Plaza (CIP),1030 Campus Avenue corner Park Avenue,M,KinleyTownCent", FortBonifacio,TagnigC~

ÿþO RDERERCCASENO . 2 0 1 5 - Energy Regulatory ...

Documents

Transcript of ÿþO RDERERCCASENO . 2 0 1 5 - Energy Regulatory ...