Decision - ERC Case No. 2011-095 RC

Republic of the Philippines
ENERGY REGULATORY COMMISSION

San Miguel Avenue, Pasig City
IN THE MATTER OF THE

APPLICATION FOR THE APPROVAL
OF THE PROPOSED CAPITAL
EXPENDITURE (CAPEX) PROJECTS
FOR THE YEARS 2011 TO 2015,
WITH PRAYER FOR PROVISIONAL
AUTHORITY
ERe CASE NO. 2011-095 RC
PROVINCE OF SIQUIJOR ELECTRIC

COOPERATIVE, INC. (PROSIELCO), ,
nOCKBT1D
Applicant. DMt,~: J_AN.._~__~_)U1~j~
)(- -- - - - - - - - - - - - - - - - - - - - - - - - )( Rt: ff.1I _.."_ ~
DECISION
Before the Commission for resolution is the application filed on

July 11, 2011 by the Province of Siquijor Electric Cooperative, Inc.
(PROSIELCO) for the approval of its proposed capital expenditure
(CAPEX) projects for the years 2011 to 2015, with prayer for
provisional authority.
Having found the said application sufficient in form and' in

substance with the required fees having been paid, an Order and a
Notice of Public Hearing, both dated July 13, 2011, were issued
setting the case for initial hearing on August 18, 2011.
In the same Order, PROSIELCO was directed to cause the

publication of the 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 scheduled date of initial
hearing. It was also directed to inform its 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.
ERC CASE NO. 2011-095 RC
DECISION/November 4, 2013
Page 2 of 16
The Office of the Solicitor General (OSG), the Commission on

Audit (COA) and the Committees on Energy of both Houses of
Congress were furnished with copies of the Order and the Notice of
Public Hearing and were requested to have their respective duly
authorized representatives present at the initial hearing.
Likewise, the Offices of the Governor and the Mayors of the

Municipalities within the franchise area of PROSIELCO were
furnished with copies of the Order and Notice of Public Hearing for
the appropriate posting thereof on their respective bulletin boards.
During the August 18, 2011 initial hearing, only PROSIELCO

appeared. No intervenor/oppositor appeared nor was there any
intervention/opposition registered.
At the said hearing, PROSIELCO presented its proofs of

compliance with the Commission's posting and publication of notice
requirements which were duly marked as Exhibits "0" to "K-3",
inclusive.
Thereafter, it conducted an expository presentation of its

application through Engr. Peter Efren B. Laurie, its Asset
Management Officer, and Mrs. Nenita C. Panzo, its Finance
Manager.
At the termination of the expository presentation, the

Commission propounded clarificatory questions.
PROSIELCO moved that an Order of general default be issued

against all interested parties who failed to participate in the said
proceeding. Said motion was granted.
PROSIELCO presented as witnesses Engr. Laurie and Mrs.

Panzo, who testified in support of the instant application. In the
course their respective direct examinations, several documents were
presented and marked as exhibits. PROSIELCO was, then, directed
to submit its formal offer of evidence together with other supporting
documents.
On September 2, 2011, PROSIELCO filed its "Formal Offer of

Evidence".
Page 3 of 16
On November 16, 2011, PROSIELCO file an "Urgent Request

for Permission to Immediately Implement Some CAPEX Projects".
On October 21, 2013, the Commission issued an Order

resolving the "Urgent Request for Permission to Immediately
Implement Some CAPEX Projects", admitting said "Formal Offer of
Evidence" and declaring the case submitted for resolution.
DISCUSSION AND EVALUATION
PROSIELCO sought the approval of the following CAPEX

projects:
Proposed Cost
Project Name Rationale Project Type
(PhP)
Primary Distribution Development Projects
ReplacemenUrehabilitation of
its rotten and burned poles
and deteriorated and Safety 2,539,656.76
damaged assembly units
and cross-arms Its distribution network assets namely, its
conductors; poles; assemblies and
Replacement of deteriorated transformers, are rotten, damaged or
conductor of 3-phase deteriorated. The replacement of these facilities Safety 750,103.20
backbone line is necessary for the safety and reliability of its
distribution system.
Replacement of deteriorated
Idamaged transformers, Safety 1,627,753.36
Reclosers and cut-outs
Installation of timer switch at The project is intended to correct the power

Power
its capacitor banks intended factor deficiency of its system during off-peak 577,728.00
Quality
for Feeders 1 and 2 Circuit hours.
Installation of a 3 pole The project aims to comply with the safety

transfer switch at the load standard provided in the Philippine Electrical Safety I
93,220.00
end of both Feeders 1 and 2 Code (PEC) in terms of proper distribution Reliability
Circuit connection procedures.
The acquisition of the equipment will provide

Procurement of Current
protection to its installed distribution Safety 289,100.00
Limiter Fuse
transformers.
Other Network Development Projects
The acquisition of the equipment will give

Distribution Transformers
additional installed capacity to meet its Capacity 3,583,405.00
Expansion
customers' additional demand.
The project aims to comply with its mandate of

providing electric service to all of its customers,
New Customer Accessories since additional customers are expected to
Capacity 12,250,621.44
and kWh meters apply for new connection. The project also
includes the acquisition of wires for service
drops, metering facilities and equipment.
Page 4 of 16
Non-network Development Projects
The repair of its existing office is intended to

Customer
Repair of its Office Building provide a comfortable working place for its 730,713.20
Efficiency
personnel and payment center for its customers.
Procurement of Linemen Customer

The project will enhance its operation and 500,287.04
Tools and Equipment Efficiency
maintenance services.
Procurement of Mini-Utility Its personnel will be equipped with the proper Customer
Service and Mini-boom equipment to efficiently attend to the needs of 1,188,000.00
Efficiency
Truck its consumers in the best possible way.
I Grand Total (PhP) 24,130,588.00
A. PROJECT EVALUATION
I. Project No. 1 - Replacement/rehabilitation of rotten and

burned poles, deteriorated and damaged
assembly units and cross-arms
Project NO.2 - Replacement of deteriorated conductor of 3-

phase backbone line
Project NO.3 - Replacement of deteriorated/damaged

transformers, Reclosers, and cut-outs
The subject distribution network assets are already aged,

corroded, decayed and dilapidated. They pose as a threat to public
safety which contributes to the inefficiency and unreliability and to the
continuous amplification of unaccounted losses or high non-technical
losses of PROSIELCO's distribution system.
PROSIELCO is obliged to maintain the safe and reliable

operation of its distribution system. Thus, it has to replace these
distribution network assets.
The Commission reduced PROSIELCO's proposed project cost

by excluding the cost of labor and by allotting eight percent (8%) of
the material cost for the contingency and inflation rate factor. The
labor cost for these projects should be funded by PROSIELCO.
Meanwhile, the material cost for project no. 2 was based on the price
benchmark provided for in the Commission's Valuation Handbook.
The following tables show the detailed approved costs of the

said projects:
Page 5 of 16
Project 1. Approved Project Cost Breakdown:
Cost Project Cost (PhP)

Materials Details Units Year
(PhP/unit) 2011 2012 2013 2014 2015
Crossarm & C1 8 2,966.04 25,626.59 - - - -
Assembly
Units C2 3 6,074.30 19,680.73 - - - -
2011
35 ft., steel 3 13,038.74 42,245.52 - - - -
Poles 40 ft., steel 2 17,395.25 37,573.74 - - - -
45 ft., steel 2 24,554.32 53,037.33 - - - -
C1 10 2,966.04 - 32,033.23 - - -
Crossarm &
C2 4 6,074.30 - 26,240.98 - - -
Assembly
C3 1 2,055.41 - 2,219.84 - - -
Units
C4 1 7.779.60 - 8,401.97 - - -
C7 2 6,490.84 2012 - 14,020.21 - - -
C8 3 10,872.73 - 35,227.65 - - -
35 ft., steel 15 13,038.74 - 211,227.59 - - -
Poles 40 ft., steel 8 17,395.25 - 150,294.96 - - -
45 ft., steel 5 24,554.32 - 132,593.33 - - -
Crossarm & C1 10 2,966.04 - - 32,033.23 - -
Assembly
Units
C2 4 6,074.30 - - 26,240.98 - -
2013
35 ft., steel 15 13,038.74 - - 211,227.59 - -
Poles 40 ft., steel 8 17,395.25 - - 150,294.96 - -
45 ft., steel 4 24,554.32 - - 106,074.66 - -
Crossarm & C1 9 2,966.04 - - - 28,829.91 -
Assembly
Units
C2 4 6,074.30 - - - 26,240.98 -
2014
35 ft., steel 15 13,038.74 - - - 211,227.59 -
Poles 40 ft., steel 5 17,395.25 - - - 93,934.35 -
45 ft., steel 2 24,554.32 - - - 53,037.33 -
Crossarm & C1 9 2,966.04 - - - - 28,829.91
Assembly
Units
C2 4 6,074.30 - - - - 26,240.98
2015
35 ft., steel 15 13,038.74 - - - - 211,227.59
Poles 40 ft., steel 5 17,395.25 - - - - 93,934.35
45 ft., steel 2 24,554.32 - - - - 53,037.33
__ Su_b_-T_o_t_al 17_8~,1_6_3._9_1
1 612,259.75 I 525,871.42 I 413,270.15 1 413,270.151
Grand Total (PhP) 2,142,835.39 I
Length Unit Cost Project Cost

Materials Specifications Year
(km) (PhP/km) (PhP)
Conductors Insulated, ACSR #1/0 10.82 52,200.00 2012 565,012.80
Cost Project Cost (PhP)

(PhP/unit) 2011 2012 2013 2014 2015
10 kVA,
Conventional
4 40,107.00 173,262.24 - - - -
Distribution 15 kVA,
Transformers Conventional
1 41,965.00 2011 45,322.20 - - - -
25 kVA,
Conventional
2 56,250.00 121,500.00 - - - -
Page 6 of 16
combination
Fuse Cut-out
w/arresters
4 4,643.00 20,057.76 - - - -
10 kVA,
Conventional
3 40,107.00 - 129,946.68 - - -
1 41,965.00 - 45,322.20 - - -
2012
25 kVA,
Conventional
1 56,250.00 - 60,750.00 - - -
combination
Fuse Cut-out
w/arresters
4 4,643.00 - 20,057.76 - - -
2 40,107.00 - - 86,631.12 - -
2013
combination
Fuse Cut-out
w/arresters
4 4,643.00 - - 20,057.76 - -
2 40,107.00 - - - 86,631.12 -
2014
combination
Fuse Cut-out
w/arresters
4 4,643.00 - - - 20,057.76 -
1 40,107.00 2015 - - - - 43,315.56
Sub-Total (PhP) I 360,142.20 I 256,076.64 I 106,688.88 I 106,688.88 I 43,315.56 I

Grand Total (PhP) I 872,912.16 I
Approved Cumulative Cost Breakdown of the Projects:
Project Cost (PhP)

Pro'ect NO.1 Pro'ect NO.2 Pro'ect NO.3 Total Cost
2,142,835.39 565,012.80 872,912.16 3,580,760.35
II. Installation of Timer Switch at Capacitor Banks Intended for

Feeders 1 and 2 Circuit
PROSIELCO has six (6) sets of fixed capacitor banks installed

within its entire distribution system. The timer switch was installed to
correct the under-voltages being encountered in some areas,
particularly those connected in the farthest portion of its feeders.
PROSIELCO, however, alleged that its system is experiencing
leading power factor during off-peak period and, that during such
incidence, its technical staff switches off the protection devices of the
capacitors manually in order to ease the system from a leading power
factor.
PROSIELCO intends to implement a more reliable procedure in

maintaining the power quality of its distribution system by acquiring
timer switches for each capacitor banks. The device will remove
human intervention considering that it has the capability of switching
off automatically during a specified leading power factor magnitude.
However, PROSIELCO did not provide the Commission the

required data or record to confirm the incidence of having a leading
Page 7 of 16
power factor within its distribution system during off-peak period. The
magnitude of the leading power factor should be properly identified in
order to determine the necessity of switching off the capacitors.
The leading power factor will not be an issue if it does not

exceed a magnitude of 0.90. The Philippine Small Grid Guidelines
requires generators to have power factor absorbing capabilities within
the limits of 0.85 power factor lagging and 0.90 power factor leading.
Thus, it is unnecessary to switch off the capacitors, much more
require additional switching device to the capacitors, if the system's
power factor is within the said limits.
III. Installation of 3 Pole Transfer Switch at the Load End of both

PROSIELCO is serving its franchise area through two (2)

feeders, with a conductor size of #1/0 ACSR, distributed around the
island. There are three (3) single phase fuse cut-outs installed at the
end point of the said feeders in order to temporarily transfer loads in
the event fault occurred in one of these feeders. This practice of
using the existing device is not compliant with the safety standard
provided in the Philippine Electrical Code (PEC) in terms of proper
distribution connection procedures considering that it may endanger
the equipment of customers connected as 3-phase system.
The project will provide a simultaneous switching of each line

phases of the 3-phase system during load transferring which
coincides with the safety standards provided for in the PEC.

by excluding the cost of labor and by allotting 8% of the material cost
for the contingency and inflation rate factor. The labor cost for this
project should be funded by PROSIELCO. The breakdown of the
approved project cost is shown below, as follows:
Total
Material Other
Project
Materials Specifications Year Cost Cost
Cost
(PhP) (PhP)
(PhP)
Transfer Switch 3-pole, 15 kV 2013 79,000.00 6,320.00 85,320.00
IV. Procurement of Current Limiter Fuse
Records of PROSIELCO show that for the past three (3) years,
twenty-six (26) units of its distribution transformers were busted
. ERC CASE NO. 2011-095 RC
,
"
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Page 8 of 16
primarily due to lightning. As of the present, it utilizes fuse cut-out and

lightning arrester combinations as its protection devices for its
distribution transformers for such phenomenon and for any other
abnormalities within its distribution system. However, this protection
equipment cannot withstand the effect of lightning due to its limited
features.

by excluding the cost of labor and by allotting 8% of the material cost
for the contingency and inflation rate factor. The labor cost for this
project should be funded by PROSIELCO. The breakdown of the
approved project cost is shown below, as follows:
Material Other Project

Unit Cost
Materials Units Year Cost Cost Cost
(PhP/unit)
(PhP) (PhP) (PhP)
Current Limiter Fuse 50 4,900.00 2012 245,000.00 19,600.00 264,600.00
v. Distribution Transformers Expansion
The installation of additional distribution transformers to the

network is a continuing process in the distribution utility (DU) to
address the increase of additional loads. Additional loads require
additional capacity in the secondary network. The forecasted
distribution transformer requirement was predicted based on the
forecasted additional demand requirement of the entire system and
the accepted efficiency loading performance of the entire communal
distribution transformers installed within the system.
PROSIELCO prefer to maintain the seventy percent (70%)

loading performance of its installed distribution transformers within
the applied CAPEX period. Meanwhile, the predicted number of the
distribution transformer per capacity is an allocation based on the
average historical percentage sharing of the existing capacities of
PROSIELCO for the year 2009. Shown below is the summary of
PROSIELCO's distribution transformer requirement:
Forecasted Total KVA

KVA Capacity
Quantity Capacity (70%
KVA of the load
10 15 25 10 15 25
Rating growth)
2011 6 5 2 60.00 75.00 50.00 185.00
><-c
Wo 2012 7 5 2 70.00 75.00 50,00 195.00
Q. 'i: 2013 8 5 2 80.00 75.00 50,00 205.00
(1)
(JQ. 2014 9 5 2 90.00 75.00 50.00 215.00
2015 10 5 2 100.00 75.00 50.00 225.00
Page 9 of 16
However, there is inconsistency on the proposed unit cost of

the distribution transformers involved in this project and in the
previous project (Project NO.3). For purposes of consistency, the
Commission approves the unit cost involved in the previous project.
The Commission, also, reduced the proposed project cost by

allotting 8% of the material cost for the contingency and inflation rate
factor. The breakdown of the approved project cost is shown below,
as follows:
Unit Cost Project Cost (PhP)

(PhP/unit) 2011 2012 2013 2014 2015
Distribution
10 kVA 6 40,107.00 259,893.36 - - - -
Transformers
15 kVA 5 41,965.00 2011 226,611.00 - - - -
25 kVA 2 56,250.00 121,500.00 - - - -
Distribution
10 kVA 7 40,107.00 - 303,208.92 - - -
Transformers
15 kVA 5 41,965.00 2012 - 226,611.00 - - -
25 kVA 2 56,250.00 - 121,500.00 - - -
Distribution
10 kVA 8 40,107.00 - - 346,524.48 - -
Transformers
15 kVA 5 41,965.00 2013 - - 226,611.00 - -
25 kVA 2 56,250.00 - - 121,500.00 - -
Distribution
10 kVA 9 40,107.00 - - - 389,840.04 -
Transformers
15 kVA 5 41,965.00 2014 - - - 226,611.00 -
25 kVA 2 56,250.00 - - - 121,500.00 -
Distribution
10 kVA 10 40,107.00 - - - - 433,155.60
Transformers
15 kVA 5 41,965.00 2015 - - - - 226,611.00
25 kVA 2 56,250.00 - - - - 121,500.00
Sub-Total I 608,004.36 I 651,319.92 I 694,635.48 I 737,951.04 I 781,266.60 I
Grand Total I 3,473,177.40 I
VI. New Customer Accessories and kWh Meters
Load growth requires the addition of new equipment and assets

necessary to forecast the projected new connections which will be the
basis in determining the quantity of materials/equipment to be
augmented.
The forecasting of PROSIELCO's new customers used its 7-

year historical customer data. Each of the customer types are
forecasted separately to capture the best model fitted to each
customer type. PROSIELCO used the forecast for residential
customers only for this project. The model adapted in the residential
customer forecast is represented by the equation: Customer =
8,852.07 + 727t + 2.74f (w/horizon). The selected model passed
and met all the criteria necessary to validate the accuracy of the
forecasted model. The model has an Adjusted R2 of 0.9992 and a
MAPE of 1.31 %. The annual forecasted additional number of
residential customers will then be identified by subtracting the
"
Page 10 of 16
forecasted number of residential customers in a year from the

previous year's total number of residential customers.

by adjusting the unit cost of the required materials based on the 2012
NEA price index. The breakdown of the approved project cost is
shown below, as follows:
Length Unit Cost Material Project Cost

Particulars Details Units Year
(km) (PhP/unitlkm) Cost (PhP) (PhP)
1-<1>, 10(60)A,
KWh meter,
electronic
bottom- - 1,535 818.57 1,256,504.95
connected
#6 ACSR 2011 2,758,011.25
Conductor
Duplex
46.05 - 20,770.00 956,458.50
Wood Screw %"X7" - 3,070 1.50 4,605.00
Accessories - - 1,535 352.08 540,442.80
1-<1>
, 10(60)A,
KWh meter,
bottom- - 1,318 818.57 1,078,875.26
electronic
connected
#6 ACSR 2012 2,368,116.50
Conductor
Duplex
39.54 - 20,770.00 821,245.80
Wood Screw %"X7" - 2,636 1.50 3,954.00
Accessories - - 1,318 352.08 464,041.44
1-<1>
, 10(60)A,
KWh meter,
electronic
bottom- - 1,332 818.57 1,090,335.24
connected
#6 ACSR 2013 2,393,271.00
Conductor
Duplex
39.96 - 20,770.00 829,969.20
Wood Screw %"X7" - 2,664 1.50 3,996.00
Accessories - - 1,332 352.08 468,970.56
1-<1>
, 10(60)A,
KWh meter,
electronic
bottom- - 1,315 818.57 1,076,419.55
connected
#6 ACSR 2014 2,362,726.25
Conductor
Duplex
39.45 - 20,770.00 819,376.50
Wood Screw %" X 7" - 2,630 1.50 3,945.00
Accessories - - 1,315 352.08 462,985.20 -
1-<1>, 10(60)A,
KWh meter,
electronic
bottom- - 1,268 818.57 1,037,946.76
connected
#6 ACSR 2015 2,278,279.00
Conductor
Duplex
38.04 - 20,770.00 790,090.80
Wood Screw %"X7" - 2,536 1.50 3,804.00
.
Accessories - - 1,268 352.08 446,437.44
I Grand Total I 12,160,404.00 I

VII. Repair of Office Building
The existing office building of PROSIELCO was built in 1992

and needs rehabilitation. The most visible damaged portion of the
building is its roofing and ceiling. The condition is not conducive for
the employees, as well as with the paying consumers, during the
rainy season.
ERCCASE NO. 2011-095 RC
Page 11 of 16
PROSIELCO intends to rehabilitate its office building in order to

address this problem. The implementation of the project will enhance
its operation and will provide convenience to its employees and its
member consumers during working hours and during monthly
payments. The rehabilitation would include repair of the roofing and
ceiling as well as painting of the entire building.

by reducing the other cost factors to 30% of the material cost. The
breakdown of the approved project cost is shown below, as follows:
Unit Cost Material Cost Other Project Cost

Activity Package Year
(PhP/unit) (PhP) Cost (PhP) (PhP)
Paintings 1 112,468.00 2012 112,468.00 33,740.40 146,208.40
CeilinQ Structure 1 159,280.00 2012 159,280.00 47,784.00 207,064.00
Roofing Sheets 1 250,190.00 2012 250,190.00 75,057.00 325,247.00
Grand Total I 678,519.40 I
VIII. Procurement of Linemen Tools and Equipment
The acquisition of linemen tools and equipment should form

part of PROSIELCO's operations and maintenance (O&M)
expenditures. Thus, the proposed project cost should be re-aligned
to form part of PROSIELCO's O&M budget. '.
IX. Procurement of Mini-Utility Service and Mini-boom Truck
These vehicles will assist PROSIELCO in the maintenance of

its distribution network assets.
The Mini-Utility truck shall serve as a carrier vehicle for the

materials, equipment and poles while the Mini-Boom truck will serve
as an important vehicle for its technical personnel in actual work on
PROSIELCO's distribution network assets during interruptions or
maintenance service. The Mini-Boom trucks are designed with a
single or double-arm boom for extra stability.
The Commission reduced the proposed project cost by allotting

8% of the material cost for the contingency and inflation rate factor.
The breakdown of the approved project cost is shown below, as
follows:
, . ERC CASE NO. 2011-095 RC
"
Page 12 of 16
Other Project
Unit Cost Material
Materials Units Year Cost Cost.
(PhP/unit) Cost (PhP)
(PhP) (PhP)
Mini Utility Truck 1 480,000.00 480,000.00 38,400.00 518,400.00
2011
Mini Boom Truck 1 600,000.00 600,000.00 48,000.00 648,000.00
I Grand Total 11,166,400.00 I
B. FINANCING PLAN I RATE IMPACT ANALYSIS
PROSIELCO intends to use its previous collections and

projected revenues from its Reinvestment Fund for Sustainable
CAPEX (RFSC) to finance its CAPEX projects.
Shown below is the Commission's simulation uSing the

approved costs and other financial considerations such as
PROSIELCO's accumulated RFSC collection and half of its projected
annual leased income from the Regulatory Asset Base (RAB):
Particulars 2011 2012 2013 2014 2015 Entire 5-years

Energy Sales
13,491,814 14,52;3,698 15,572,711 16,616,880 17,634,229 77,839,332
Forecast, KWh
Approved RFSC
0.4438 0.4438 0.4438 0.4438 0.4438 0.4438
Rate, PhP/KWh
Cash balance
beginning, PhP, 2,990,351.00 4,028,587.90 5,197,152.61 8,433,313.54 12,319,416.12 2,990,351.00
excess/( shortfall)
CASH INFLOWS
Current year
RFSC Collection, 5,987,667.05 6,445,617.17 6,911,169.14 7,374,571.34 7,826,070.83 34,545,095.54
PhP
50% income on
leased properties, 159,322.56 159,322.56 159,322.56 159,322.56 159,322.56 796,612.80
PhP
Loan proceeds
from financial - - - - - -
institutions, PhP
Total Cash
6,146,989.61 6,604,939.73 7,070,491.70 7,533,893.90 7,985,393.39 35,341,708.34
Inflows, PhP
Available cash for
9,137,340.61 10,633,527.63 12,267,644.32 15,967,207.44 20,304,809.51 38,332,059.34
disbursement, PhP
CASH OUTFLOWS
CAPEX
Requirement, 5,070,721.72 5,395,905.01 3,805,786.78 3,620,636.32 3,516,131.31 21,409,181.15
PhP
. - ._ ....... _._------- ,-_ .. . _-,-- - ..~- .. ,.. _.M_ .. - --- - -----_. __ . _ ... . " -_.- ._- .~.-_ .. ..-
" ... "' --~--- --~--_.- .. '.- .. .. -_. -- --_.~
CAPEX
Amortization, - - - - - -
PhP " ... _~- --
Previous Loan
Amortization, - - - - - -
PhP
ERC Permit
38,031.00 40,470.00 28,544.00 27,155.00 26,371.00 160,571.00
Fees, PhP
Total Cash
5,108,752.72 5,436,375.01 3,834,330.78 3,647,791.32 3,542,502.31 21,569,752.15
Outflows, PhP
Page 13 of 16
Cash balance
ending, PhP, 4,028,587.90 5,197,152.61 8,433,313.54 12,319,416.12 16,762,307.19 16,762,307.19
excess/(shortfall)
Rate Impact on
RFSC, PhP/KWh, 0.2986 0.3578 0.5415 0.7414 0.9506 0.2153
excess/( shortfall)
The Commission conducted a sensitivity analysis simulation on

the indicative effect on PROSIELCO's existing RFSC rate due to the
varying projected energy sales taking into consideration some
eventualities and unpredicted factors that may occur during the
normal course of business.
Based on the simulation made by the Commission, the

revenues derived from PROSIELCO's existing RFSC rate are
sufficient to finance the entire approved projects.
The simulation does not include the effect of the improved

efficiency, reliability (less ENS) and system loss reduction that may
be realized upon the implementation of PROSIELCO's CAPEX
projects. The simulation is just an indicative effect on its RFSC rate,
Distribution, Supply and Metering (DSM) component. The overall rate
impact will still be subject to further review in its rate adjustment
application prescribed under the Tariff Glide Path (TGP) Guidelines.
A perusal of the evidence presented herein showed that the

approval of PROSIELCO's CAPEX projects is in accordance with the
provisions of Republic Act No. 9136 (R.A. 9136) and the "Resolution
Amending the Rules for Approval of Regulated Entities' Capital
Expenditure Projects" and will redound to the benefit of its consumers
in terms of continuous, reliable and efficient power supply as
mandated by R.A. 9136 (Section 2. Declaration of Policy - (b) "to
ensure the quality, reliability, security and affordability of the supply of
electric power").
WHEREFORE, the foregoing premises considered, the

application filed by the Province of Siquijor Electric Cooperative, Inc.
(PROSIELCO) for the approval of its proposed capital expenditure
(CAPEX) projects for the years 2011 to 2015, with prayer for
provisional authority, is hereby APPROVED with modification,
subject to the following conditions:
a) PROSIELCO is authorized to implement the following

CAPEX projects:
, , ERC CASE NO. 2011-095 RC
~
Page 14 of 16
Project Name Total (PhP)

2011 2015
Primary Distribution
Development Projects
Replacement/rehabilitation of
rotten and burned poles,
deteriorated and damaged 178,163.91 612,259.75 525,871.42 413,270.15 413,270.15 2,142,835.39
assembly units and cross-
arms
Replacement of deteriorated
conductor of 3-phase - 565,012.80 - - - 565,012.80
backbone line
Replacement of
deteriorated/damaged
360,142.20 256,076.64 106,688.88 106,688.88 43,315.56 872,912.16
transformers, Reclosers, and
cut-outs
Installation of 3 pole transfer
switch at the load end of both - - 85,320.00 - - 85,320.00
Procurement of Current
Limiter Fuse
- 264,600.00 - - - 264,600.00
Other Network
Development Projects
Distribution Transformers
608,004.36 651,319.92 694,635.48 737,951.04 781,266.60 3,473,177.40
Expansion
New Customer Accessories
2,758,011.25 2,368,116.50 2,393,271.00 2,362,726.25 2,278,279.00 12,160,404.00
and Kilowatt-hour Meters
Non-Network Development
Projects
Repair of Office Buildinq - 678,519.40 - - - 678,519.40
Procurement of Mini-Utility
Service and Mini-boom Truck
1,166,400.00 - - - - 1,166,400.00
GRAND TOTAL (PhP) I 5,070,721.72 I 5,395,905.01 I 3,805,786.781 3,620,636.32 I 3,516,131.31 I 21,409,181.151
b) PROSIELCO's proposed installation of timer switch at its

capacitor banks intended for feeders 1 and 2 circuit is
DISAPPROVED;
c) PROSIELCO is directed to re-align the procurement of

linemen tools and equipment to its Operation and
Maintenance (O&M) expenditures;
d) PROSIELCO should conduct a competitive bidding for the

purchase of major materials in the implementation of the
approved CAPEX projects; and
e) PROSIELCO is directed to remit to the Commission a total

permit fee amounting to One Hundred Sixty Thousand Five
Hundred Sixty-Eight and 85/100 Pesos (PhP160,568.85),
.
,
,
.. ERC CASE NO. 2011-095 RC
Page 15 of 16
within fifteen (15) days from receipt hereof, computed as

follows:
PhP21 ,409,181.15
-----..-..-------------------- )( PhPO.75 = PhP160,568.85
PhP100.00
50 ORDERED.
Pasig City, November 4, 2013.
4~~G.~R~{~
ff' r Chairperson
~r OnA.J ~;~ ~-oA/~

ALFREDO J. NON GLepRiA VICTORIA D YAP- TARUC
Commissioner Commissioner
J05EFINA PATR /i.. MAGPALE-A5IRIT

Co
.'-~
, ERC CASE NO. 2011-095 RC
Page 16 of 16
Copy Furnished:
1. Atty. Zenon S. Suarez

Counsel for PROSIELCO
Rm. 313, Web-Jet Building,
64 Quezon Avenue
Cor BMA St., Quezon City
2. Province of Siquijor Electric Cooperative, Inc. (PROSIELCO)

PROSIELCO Main Office,
Nonoc, Larena, Siquijor
3. Office of the Solicitor General

134 Amorsolo Street, Legaspi Village
Makati City, Metro Manila
4. Commission on Audit
Commonwealth Avenue
Quezon City, Metro Manila
5. Senate Committee on Energy

GSIS Bldg. Roxas Blvd., Pasay City
Metro Manila
6. House Committee on Energy

Batasan Hills, Quezon City, Metro Manila
7. Office of the Governor

Province of Siquijor
8. Office of the Minicipal Mayor

Siquijor, Siquijor
9. Office of the Municipal Mayor

San Juan, Siquijor

Lazi, Siquijor

Maria, Siquijor

Larena, Siquijor

Enrique Villanueva, Siquijor
14. National Grid Corporation of the Philippines (NGCP)

Quezon Avenue corner BIR Road, Diliman, Quezon City

Decision - ERC Case No. 2011-095 RC

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Republic of the Philippines

ENERGY REGULATORY COMMISSION

IN THE MATTER OF THE

ERe CASE NO. 2011-095 RC

PROVINCE OF SIQUIJOR ELECTRIC

Before the Commission for resolution is the application filed on

Having found the said application sufficient in form and' in

In the same Order, PROSIELCO was directed to cause the

The Office of the Solicitor General (OSG), the Commission on

Likewise, the Offices of the Governor and the Mayors of the

During the August 18, 2011 initial hearing, only PROSIELCO

At the said hearing, PROSIELCO presented its proofs of

Thereafter, it conducted an expository presentation of its

At the termination of the expository presentation, the

PROSIELCO moved that an Order of general default be issued

PROSIELCO presented as witnesses Engr. Laurie and Mrs.

On September 2, 2011, PROSIELCO filed its "Formal Offer of

On November 16, 2011, PROSIELCO file an "Urgent Request

On October 21, 2013, the Commission issued an Order

DISCUSSION AND EVALUATION

PROSIELCO sought the approval of the following CAPEX

Installation of timer switch at The project is intended to correct the power

Installation of a 3 pole The project aims to comply with the safety

The acquisition of the equipment will provide

The acquisition of the equipment will give

The project aims to comply with its mandate of

Non-network Development Projects

The repair of its existing office is intended to

Procurement of Linemen Customer

I Grand Total (PhP) 24,130,588.00

I. Project No. 1 - Replacement/rehabilitation of rotten and

Project NO.2 - Replacement of deteriorated conductor of 3-

Project NO.3 - Replacement of deteriorated/damaged

The subject distribution network assets are already aged,

PROSIELCO is obliged to maintain the safe and reliable

The Commission reduced PROSIELCO's proposed project cost

The following tables show the detailed approved costs of the

Project 1. Approved Project Cost Breakdown:

Cost Project Cost (PhP)

Grand Total (PhP) 2,142,835.39 I

Project 2. Approved Project Cost Breakdown:

Length Unit Cost Project Cost

Project 3. Approved Project Cost Breakdown:

Cost Project Cost (PhP)

Sub-Total (PhP) I 360,142.20 I 256,076.64 I 106,688.88 I 106,688.88 I 43,315.56 I

Approved Cumulative Cost Breakdown of the Projects:

Project Cost (PhP)

II. Installation of Timer Switch at Capacitor Banks Intended for

PROSIELCO has six (6) sets of fixed capacitor banks installed

PROSIELCO intends to implement a more reliable procedure in

However, PROSIELCO did not provide the Commission the

The leading power factor will not be an issue if it does not

III. Installation of 3 Pole Transfer Switch at the Load End of both

PROSIELCO is serving its franchise area through two (2)

The project will provide a simultaneous switching of each line

The Commission reduced PROSIELCO's proposed project cost

IV. Procurement of Current Limiter Fuse

primarily due to lightning. As of the present, it utilizes fuse cut-out and

The Commission reduced PROSIELCO's proposed project cost

Material Other Project

v. Distribution Transformers Expansion

The installation of additional distribution transformers to the

PROSIELCO prefer to maintain the seventy percent (70%)