IN THE MATTER OF THE

APPLICATION FOR APPROVAL

OF UNPLANNED CAPITAL
EXPENDITURE (CAPEX)

ERC CASE NO. 2012-128 RC

SOUTH COTABATO II
ELECTRIC COOPERATIVE,
INC. (SOCOTECO II),
.Applicant~
x-------------------------x

DECISION

Before this Commission for resolution is the application filed on

27 November 2012 by South Cotabato II Electric Cooperative, Inc.
(SOCOTECOII) for the approval of its unplanned capital expenditure
(CAPEX).

Having found said application sufficient in form and in

substance with the required fees having been paid, al) Order and a
NotIce of Public Hearing, both dated 18 February 2013, were issued
setting the case for jurisdictional hearing, expository presentation,
pre-trial conference and evidentiary hearing on 3 April 2013.

In the same Order, SOCOTECO II 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 date of the scheduled
initial hearing. It was also directed to inform the consumers, by any
other means available and appropriate, of the filing of the instant
application, ..its reasons. therefor and of the scheduled hearing
lhe"o/{
ERC Case No. 2012-128 RC
DECISION/24 May 2016
Page 2 of 14

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 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 of the Province of South

Cotabato and the Province of Sarangani and the Mayors of the
Municipalities and Cities within the franchise area of SOCOTECO II
were furnished with copies of the Order and Notice of Public Hearing
for the appropriate posting thereof on their respective bulletin
boards.

On 27 March 2,2013, SOCOTECOII filed its "Pre-Trial Brief'.

During the 3 April 2013 initial hearing, only SOCOTECO II

appeared. No intervenor/oppositor appeared nor was there any
intervention/ opposition registered.

At the said hearing, SOCOTECO II presented its proofs of

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

At the termination of the expository presentation, SOCOTECO

II presented the following witnesses: 1) Engr. Joseph Yanga, its
System Planning and Development Supervisor; and 2) Ms. Sylvette
Rose Pepaiio, its Budget Officer, who both testified in support of the
application.

In the course of their direct testimonies, additional documents

were identified and duly marked as exhibits. Thereafter,. the
Commission propounded clarificatory questions on the said witnesses
and directed the submission of various documents.

On 4 April 2013, NGCP filed its "Petitionfor Intervention".

On 5 April 2013, the Commission issued an Order directing

SOCOTECOII to file its comment to the said petition.

On 10 April2013, socomco II moo its «compuan"lf

..
ERC Case No. 2012-128 RC
DECISIONj24 May 2016
Page 3 of 14

On 11 April 2013, SOCOTECO II filed its "Formal Offer of

Evidence" .

On 7 May 2013, SOCOTECO II filed its "Comment to Petition

for Intervention".

On 23 October 2013, the Commission issued an Order directing

SOCOTECO II to submit the result of the Grid Impact Study (GIS) on
its proposed connection to the Grid.

On 3 January 2014, SOCOTECO II filed its ':Answer" with the

attached certification from the National Grid Corporation of the
Philippines (NGCP), in lieu ofthe GIS.

On 13 January 2014, the Commission issued an Order denying

the "Petition for Intervention" filed by NGCP for being filed out of
time.

On 15 May 2015, the Commission issued an Order directing

SOCOTECO II to submit various documents for the evaluation of the
instant application.

On 1 June 2015, the Commission issued an Order directing

SOCOTECO II to submit an update of the instant application.

On 17 August 2015, SOCOTECO II filed its "Compliance".

On 17 May 2016, the Commission issued an Order admitting

pieces of evidence that were contained in SOCOTECO II's "Formal
Offer of Evidence" and declaring the case submitted for resolution.

DISCUSSION

SOCOTECO II sought the Commission's approval of the

following
capital
pmj'l
 ERC Case No. 2012-128 RC
DECISION/24 May 2016
Page 4 of 14

PROJECT COST
PARTICULARS
(PhP)
NElWORK
Installation of the two 35/43.75 MVA Transformer Bank at
125,208,186.00
Lagao Substation
Installation of 2-69 kV Sectionalized Circuit Breaker 4,900,000.00
Total Network 130,108,186.00
NElWORK
Relocation of SOCOTECO II's Proposed New Headquarters 55,000,000.00
Total Non-Network 55,000,000.00
TOTALProiect Cost ner Annlication (PhP) 185,108,186.00

FORECASTING

Under the Electric Cooperative's Distribution Utility Planning

Manual (ECDUPM), all forecasting models formulated must be tested
for validity and accuracy. Valid models should meet the following
criteria for each statistical value:

1. Adjusted R2should be at least 99% (for trend analysis);

2. P-value should be lower than 0.1; and
3. T-statistic should be greater than 2 or less than -2.

Accuracy of the model, likewise, should have a Mean Absolute

Percentage Error (MAPE) ofless than 5%.

These models can either be polynomial trend and its variants

(e.g., log and power) or time series technique such as Holt-Winter's
method and optimized trend with seasonal factors which are
formulated by the distribution utility planner in determining which
model will produce the best forecast. The final resulting model
should meet the technical criteria as indicated above.

All models formulated by SOCOTECO II were verified by the

Commission in order to determine whether or not the resulting
forecast conforms with the criteria as specified in the guidelines.

PERFORMANCE ASSESSMENT

Evaluating the performance of a distribution network

provide a complete picture of the needs of an electric cooper?,
l:~
f
ERC Case No. 2012-128 RC
DECISIONj24 May 2016
Page 5 Of14

(EC) in formulating project ideas. Below is a summary of the

Commission's assessment on the condition of the distribution system
of SOCOTECOII:

Capacity

SOCOTECO II has fifteen substations with a total capacity of

166.5 MVA at 99% power factor and a demand of 102 MW
coincidental peak. Out of all the 15 substations, the interconnected
substation capacities of Calumpang Lanoy, New Society, Lagao, and
Leon Llido are expected to overload in the next years to come. The
said four main substations that serve the business and commercial
districts of General Santos City has a total capacity of 93.75 MVA.

Reliability

SOCOTECO II typically keeps track of customer reliability by

using reliability indices which are average customer reliability values
for a specific area. The area can be the utility's entire service area, a
particular region, a substation service area or a feeder service area.
The most common customer reliability indices used are: System
Average Interruption Frequency Index (SAlFI), System Average
Interruption Duration Index (SAIDI), Customer Average Interruption
Duration Index (CAlDI), and Average System Availability Index
(ASAI).

In the proposed reliability improvement project included in the

application, the reliability indices are calculated based upon customer
exposure to outages, isolation, and repair time.

Non-Network Projects

SOCOTECOII administrative office had been in General Santos

City since 1972. The strategic location has been very helpful,
effective, and efficient in addressing the demands and needs of
SOCOTECOII to its member-consumer. However, through time, the
said location has been congested and overcrowded due to fast
development of business establishments and infrastructures in the
city. Because of the said development, challenges in the deployment
of technical and engineering services have been experienced in the
current administrative office location.

The management of SOCOTECO II conducted a study of its

performance as to providing service if the heavy traffic a'i
..
ERC Case No. 2012-128 RC
DECISIONj24 May 2016
Page 6 of 14

congestion in the area will be part of the circumstances of everyday

SOCOTECOII transaction.

GOAL SElTING AND PRIORITIZATION

In order to meet the desired goal of an electric cooperative (EC)

in addressing the deficienciesof its system, the degree of importance
of the identified criteria should be established due to economic
considerations affectingelectric consumers.

As provided in the ECDUPM, the safe installations and

operation of the distribution system should be the first priority of the
ECsand should complywith the safety requirements of the Philippine
Electrical Code. Capacity problems take second priority after the
safety problems. This shall include the identified future requirements
of customers. The third priority of the EC is to correct the voltage
violations in the distribution system and other power quality
problems.

Priorities regarding improvements in service reliability,

reduction of system losses, and rural electrification shall be set by the
ECconsidering its access to financial resources.

PROJECT FORMULATION

After goal setting and problem prioritization, projects (Le.

alternatives and options) should be formulated to address the
identified and quantified problems. The project ideas must be
validated whether they are physically feasible and practical to
implement.

Each formulated project will then be evaluated for technical

feasibility. This will entail some modifications in the analytical
models used in the performance assessment to capture the proposed
solutions and predicting the results to determine whether planning
criteria are met. The project ideas that are not technically-feasible
will be screened out of the list while feasible ones will be ranked
according to technical effectiveness.

The technically-feasible solutions will then be evaluated for

economic or financial feasibility. The least cost among the
alternatives shall be selected for problems that are dee~~~ /
"mandatory" to meet the EC's obligations to its customers. 0/
ERC Case No. 2012-128 RC
DECISION/24 May 2016
Page 70f14

"desirable" projects which are optional (e.g. reliability improvement

and system loss reduction above the standards), the Net Present
Value (NPV) must be positive or the benefit/cost ratio must be
greater than one. An incremental benefit-cost analysis will be
conducted for the combined mandatory and optional projects to
optimize the Distribution Plan based on allowed costs or given capital
budget. If certain problems have one solution, necessary justification
of its necessity and/or benefit should be provided.

SOCOTECOII identified several capital projects that are needed

to provide continuous, reliable, and good quality of service to the
consuming public. These projects are divided to address capacity
inadequacies, reliability improvement, and customer service
improvement, as shown below:

Projects that will address Capacity Inadequacies:

• Installation of 2-35/43.75 MVA substations

Projects that will address Power Reliability:

• Installation of 2 units - 69 kV electronically controlled circuit

breakers in the lines going to Maasim - Kiamba and Sari -
Glan.

Non-network projects that will address Customer

Efficiency:

• Relocation of SOCOTECOII's Proposed New Headquarters

COSTANALYSIS

SOCOTECO II prayed for the total amount of

PhP185,108,186.00 for the implementation of the proposed capital
projects. The said amount was adjusted by the Commission based on
the result of its evaluation and arrived at the final amount of
PhP178,955A55.25.

The Commission re-assessed the cost estimates of the proposed

projects using the ERC Valuation Handbook as provided in
Resolution No. 17,Series of 2010, entitled "A Resolution Adopting the
Valuation Handbook for the Optimized Depreciate~ Replacem~~J ~
Cost Valuation of System FIxed Assets of Pnvately own'i
ERC Case No. 2012-128 RC
DECISION/24 May 2016
Page 8 of 14

Distribution Utilities Operating Under Performance-Based

Regulation (PBR)" and NEA Price Index for the year 2012.

Based on the Commission's evaluation, most of the proposed

material costs are lesser than the said price benchmarks. However,
for the first installed 35/43.75 MYA Substation, the consideration will
be the actual cost of the already implemented project worth
56,451,362.25.

PROJECT STATUS

.In 2012, SOCOTECO II implemented the first installation of

35/43.75 MYA Substation in Lagao. The Commission determined
that the proposed project is necessary for SOCOTECOII to maintain a
safe distribution network in the fulfillment of its mandate. Hence, the
project falls under the category of Emergency CAPEX that needs
immediate implementation without prior approval by the
Commission but needs to be filed within 60 days from the start of
implementation. A separate application need not be filed since the
said project is already included in this application. In addition, all
details of the implemented project are validated by the Commission.

Further, SOCOTECO II's remaining projects shall be

implemented on the years 2016 and 2017, as provided below:

2016CAPEXProjects: .
• Installation of 2 units of 69 kV Sectionalized Circuit Breaker;
and
• Relocation of SOCOTECOII's Proposed New Headquarters

2017 CAPEXProjects:
• Installation of the other 35/43.75 MYA Substation

FINANCING SCHEME

As per application, SOCOTECOII intends to finance the cost of

its project through its Reinvestment Fund for Sustainable Capital
Expenditures (RFSC) and any funding deficit thereof on the projected
~ev~nu~ shall ~ sourced through loan from various lending
InstitutIOns/I
 ERC Case No. 2012-128 RC
DECISION/24 May 2016
Page 9 Of14

The table below provides the probable effect on SOCOTECO II's

existing RFSC rate if it opted not to avail of any loans and will just
utilize its expected revenues from the RFSC in financing the entire
capital expenditure projects in order to establish the necessity of the
recommended loan amount, to wit:

Indicative effect on the existing RFSC rate i+no loan is availed

Particulars 2012 2013 2014 2015 2016 2017 6 Year Impact

RFSC on hand
(beginning of
year) (PhP)
- 96,844,448.42 1:>09,948,153,38 275,255,684.8, 82,450,599.7- ~36,637,694.74 -

Kilowatt-hour
609.832.863.00 678.329.993.00 700.882.833.00 683.473.767.00 7'6.949,002.00 751.643.668.00 4.141,112,126.00
Sales
CASH
INFLOWS
RFSC collected 208.201,990.18 218,277,321.19 1,202,578,961.39
177.095.463.42 '96.987,029.97 203.536.374.70 198.480.781.94
funds @ 0.2904
- -- - -- -- ..... - --- --- - --
Total Cash
177,095,463.42 196,987,029.97 1203,536,374.70 198,480,781.94 1:<08,201,990.18 218,277,321.19 1,202,578,961.39
Inflo\-\'s
Available ,
cash for 654,915,015.92 1,202,578,961.39
177,095.463.42 293,831,478.38 1413,484,528.09 473,736,466.77 ~90,652,589.9"
disbursement
(PhP) - - -- ... -
CASH
OUTFLOWS
CAPEX 59,9°0,000.00 62,604,°93.00 178,955,455.25
56,451,362.25
Requirement

Amortization 81,m,481.oo 9',285,867.00 93,242,260,00 95.269.920.00 525.709,868.00

80,251,015.00 83.883.325.00
(PhP)
ERC pennit ree 872.635.22 469.530.70 1,342,165.91
I fPhPi
--
Total Cash 138,228,843.25 91,285,867.00 154,014,895.22 158,343,543.70 706,007,489.16
80,251,015.00 83,883,325.00
Outflows
EXCESS/
(SHORTFALL) 96,844.448.42 209.948.153.38 275.255.684.84 382.450.599.77 436.637.694.74 496.571.472.23 496.571.472.23
PhP

As reflected in the above simulation, the revenues derived from

SOCOTECO Irs existing RFSC rate of 0.2904 are sufficient to finance
the entire capital expenditure projects.

The detailed discussion of the Commission's resolution of

SOCOTECO II's proposed capital expenditures is embodied in a
separate document attached as Annex "A" and made as an integral
part of this Decision.

A perusal of the evidence presented herein showed that the

approval of SOCOTECO II's unplanned capital expenditure (CAPEX)
is in accordance with the provisions of R.A. 9136, the Commission's
"Resolution Amending the Rules for Approval of Regulated Enti'i
""
ERC Case No. 2012-128 RC
DECISION/24 May 2016
Page 10 of 14

Capital Expenditure Projects", and Section (e)l of Commonwealth 20

Act No. 146 (C.A. 146), as amended or the "Public Service Act", and
will redound to the benefit of the consumers in terms of continuous,
reliable and efficient power supply as mandated by R.A. 9136, or the
Electric Power Industry Reform Act of 2001 (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 South Cotabato II Electric Cooperative, Inc.
(SOCOTECO II) for approval of its unplanned capital expenditure
(CAPEX) is hereby APPROVED with modification, as follows:

1. The implemented capital expenditure project below IS

CONFIRMED.

Project Cost (PhP)

Approved
Project Description
Proposed Cost Cost/Actual
Cost
Network Project
1. Installation of the first
35/43.75 MVA Transformer 62,604,093.00
Bank at Lagao Substation
Total Project Cost (PhP)

2. The following unimplemented capital expenditure projects

are APPROVED:

Project Cost (PhP)

Project Description
Proposed Cost Approved Cost

Network Projects
1. Installation ofthe second 62,604,093.00 62,604,093.00

"Sec. 20. Acts requiring the approval of the Commission. - Subject to established limitations and exceptions and
saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator
thereof, without the approval and authorization of the Commission previously had - Xxx

(e) Hereafter to issue any stock or stock certificates representing an increase of capital; or issue any share of stock
without par value; or issue any bonds or other evidence of indebtedness payable in more than one year fro~ the
issuance thereof, provided that it shall be the duty of the Co~mission, after hea~ing,to appro~e any SUChrss~e
maturing in more than one year from the date thereof, when satisfied that the same IS to be made 10 accordance~
law, and the purpose of such issue be approved by the Commission." / j('
 ERCCase No. 2012-128 RC
DECISIONj24 May 2016
Page 11of 14

35/43.75 MVA Transformer

Bank at Lagao Substation
2. Installation of 2-69 kV
4,900,000.00 4,900,000.00
Sectionalized Circuit Breaker
Sub-total 67,504,093.00 67,504,093.00
Non-Network Proiects
3. Relocation of SOCOTECOII's
55,000,000.00 55,000,000.00
Proposed New Headquarters
Sub-total (PhP) 55.000.000.00 55,000,000.00
Total Project Cost (PhP) 122,504,093.00 122,504,093.00

Accordingly, the modified amount of PhPI78,955,455.~5 for the

unplanned capital expenditure of SOCOTECO II is hereby
APPROVED.

Relative thereto, SOCOTECO II is hereby directed to remit to

the Commission, within fifteen (15) days from receipt hereof, a total
permit fee in the amount of One Million Three Hundred Forty-
Two Thousand One Hundred Sixty-Five and 92/100 Pesos
(PhP1,342,165.92), computed as follows:

PhP178,955,455.25
----------------------------- x PhPO.75 = PhP1,342,165.92
PhP100.00

Breakdown of Permit Fees

Project Cost Permit Fees Due Date
Year (PhP) (PhP)
2014 56,451,362.25 423,385.22
2016 59,900,000.00 449,250.00
Sub-Total Within 15 days from
116,351,362.25 872,635.22 receipt of order
(PhP)
2017 62,604,093 469,530.70 January 15,2017
Total 1,342,165.92
178,955,455.25
(PhP)

Further, SOCOTECO II is hereby directed to: 1) submit the

results of the competitive bidding which includes proposals and
purchase orders, the as-built drawings and bill of materials, and t'l
 , '!'.

ERC Case No. 2012-128 RC .

DECISION/24 May 2016
Page 12 of 14

actual cost incurred in the implementation of the planned capital

expenditure projects not later than the 30th of January of the
succeeding year; and 2) conduct a competitive bidding for the
purchase of major materials in the implementation of the proposed
projects.

SO ORDERED.

Pasig City, 24 May 2016.

(On Leave)
GLORIA VICTORIA C. YAP-TARDC
Commissioner

(On Leave)
JOSEFINA PATRICIA A. MAGPALE-ASIRIT ONIMO D. STA. ANA
Commissioner Commissioner

M
&(/AP~
.
C~E NO.2012-128RCSOCOTECO
II-DECISION
..
ERC Case No. 2012-128 RC
DECISION/24 May 2016
Page 13 of 14

Copy Furnished:

1. DELOS ANGELES AGUIRRE OLAGUER

SALOMON FABRO & OJEDA
Attn: Atty. Maria Concepcion O. Ojeda
Counsel for Applicant
240 J.P. Rizal, Sta. Elena, Marikina City

2. THE OFFICE OF THE SOLICITOR GENERAL

234 Amorsolo Street, Legaspi Village, Makati City
Metro Manila

3. THE COMMISSION ON AUDIT

Don Mariano Marcos Avenue
Dilirnan, Quezon City, Metro Manila

5. THE COMMITTEE ON ENERGY

House of the Senate.
GSIS Building, Roxas Blvd., Pasay City, Metro Manila

6. THE COMMITTEE ON ENERGY

House of Representatives
Batasan Hills, Quezon City, Metro Manila

7. SOUTH COTABATO II ELECTRIC COOPERATIVE,

INC. (SOCOTECO II)
J. Catolico Ave., Lagao
General Santos City

8. Engr. Rodolfo Ocat

General Manager
SOCOTECO II
J. Catolico Ave., Lagao
General Santos City

9. Municipal Mayor
Alabel, Sarangani Province

10. Municipal Mayor

Glan, Sarangani Province

11. Municipal Mayor

Klarnba,SaranganiProvince

12. City Mayor

Genem1 Sanlo, City, Samngaol p'Ovi0'
." ERCCase No. 2012-128 RC
DECISIONj24 May 2016
Page 14 of 14

13. Municipal Mayor

Maasim, Sarangani Province

14. Municipal Mayor

Malapatan, Sarangani Province

15. Municipal Mayor

Malungon, Sarangani Province

16. Municipality Mayor

Maitum, Sarangani Province

17. Municipal Mayor

Polomolok, South Cotabato

18. Municipal Mayor

Tupi, South Cotabato

19. Office of the Governor

Province of Sarangani

20. Office of the Governor

Province of South Cotabato

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

22. National Grid Corporation of the Philippines

(NGCP) n f';~
Quezon Avenue corner BIR Road, Diliman, Quezo~
 ANNEX "A"

DETAILED PROJECT DISCUSSION

I. NETWORK PROJECTS

Pro'ect No. 1
Pro'ect Title Installation of 2-35/43.75 MVA Substations
Pro'ect Code SS001
Pro'ect T e Ca acit
Priorit Rank
Project Category Substation Pro'ect

Project Description I Duration

• Installation of an additional 35/43.75 MVA transformer
bank and the replacement of the existing 20 MVA
power transformer by another 35/43.75 MVA
transformer in Lagao Substation. The existing 20 MVA 2012
will be transferred to New Society Substation in
Polomolok, replacing the current 15 MVA installed in
the said substation.

Proposed CAPEX Cost (PhP)

2014 to
2011 2012 2013 2017 Total
2016
62,604,093 62,604,093 125,208,186

Project Justification
• SOCOTECO II's proposed installation of 2-35/43.75 MVA Substation in
Lagao is due to the increasing demand of power in General Santos City
brought about by the development of business establishments. The
existing 20 MVA in Lagao will be replaced by 2-35/43.75 MVA and the
said 20 MVA will be transferred to Polomolok to address the location's
ower re uirement.

Technical Analysis
• There are four main substations that support the power requirement in
General Santos' business commercial district, namely: 15/18.75 MVA
New Society Substation, 20/25 MVA Lagao Substation, 20/25 MVA Leon
L1ido Substation and 20/25 MVA Calumpang Substation. The 4
substations have a total rated maximum capacity of 93.75 MVA.

• The table below shows that SOCOTECO II's system capacity can no
longer address its power requirement in the next years to come without
additional capacity.
I

With the Project

Installation of
Without the project another 35/43.25
Installation of additional
MVAand
35/43.75 MVA
relocating the
existin 20MVA

YEAR 2011 2012 2013 2014 2015 2016 2017 2018

EXISTING
CAPACITY (MVA) 93.75 93.75 93.75 137.5 137.5 137.5 156.25 156.25

DEMAND (MVA) 74.169 75.776 83.546 87.274 91.107 95.046 99.091 103.241

% LOADING 79.11% 80.83% 89.12% 63.47% 66.26% 69.12% 63.42% 66.07%

With the proposed project

YEAR 2019 2020 2021 2022 2023 2024 2025

EXISTING
156.25 156.25 156.25 156.25 156.25 156.25 156.25
CAPACITY IMVAI
DEMAND {MVAl 107.496 111.858 116.324 120.897 125.575 130.358 135.247

% LOADING' 68.80% 71.59% 74.45% 77.37% 80.37% 83.43% 86.56%

Section 1.2 of the 2011 Distribution Utility Planning Manual provides that:

"Where substations are interconnected by the distribution

voltage network, and load transfers at distribution level are
possible, additional capacity will be triggered in the year that
the total load on all interconnected substations exceeds 70%
of the total interconnected transformer capacity. "

The table presents the projected condition of the system capacity of

SOCOTECO II and the immediate need in putting up new capacities with
the consideration that the substation capacity will be 70% loaded in
reference to a 10 year planning horizon.

A loading analysis of the interconnected substation was performed by

determining the loading percentage on each given year. A substation is
considered fully loaded/served if the loading of transformers exceeds 70%
of the maximum rated capacity.

The projected demand shown in the table was determined through load
forecasting; where scientific load forecasting models were formulated and
tested for validity to ensure that the forecast will be within the acceptable
accuracy. The measure of the overall error in the forecast for an entire set
of data was also computed and it passes the maximum 3% forecast error
measured in terms of maximum absolute percentage error (MAPE).

Albeit the delay from its proposed year of installation (2012), SOCOTECO
II implemented the installation of the first 35 MVA Substation located in
Lagao as a response to the projected rapid increase of power demand.
Thereafter, the second 35 MVA Substation is planned to be installed on
2017.
Economic and Cost Analysis
• SOCOTECO II, in its substation economic analysis presented three
alternatives to determine the most economical and least cost
transformer size to be installed in the system and to address the 15
years forecasted power requirement. The transformer sizes considered
are 20 MVA, 35 MVA and 40 MVA power transformers, which provides
the following Present Value (PV):

Alternative 1: 4-20 MVA Power Transformer

New Total Rated %

Year Demand Investment Present Value
Substation Capacity loading
2011 93.75 74.169 79.11% 0 0
2012 2 143.75 75.776 52.71% 60,000,000 51,424,166.80
2013 143.75 83.546 58.12% 0 1,689,081.05
2014 143.75 87.274 60.71% 0 1,544,284.87
2015 143.75 91.107 63.38% 0 1,412,443.73
2016 143.75 95.046 66.12% 0 1,292,372.97
2017 143.75 99.091 68.93% 0 1,182,996.82
2018 1 168.75 103.241 61.18% 30,000,000 15,579,030.77
2019 168.75 107.496 63.70% 0 1,448,161.83
2020 168.75 111.858 66.29% 0 1,324,593.66
2021 168.75 116.324 68.93% 0 1,212,004.91
2022 1 193.75 120.897 62.40% 30,000,000 11,005,267.90
2023 193.75 125.575 64.81% 0 1,322,260.49
2024 193.75 130.358 67.28% 0 1,209,200.94
2025 193.75 135.247 69.80% 0 1,106,164.22
4 120,000,000 92,752,031.00

Alternative 2: 2-35 MVAPower Transformer (as proposed)

New Total Rated %
Year Demand Investment Present Value
Substation Capacity loading
2011 93.75 74.169 79.11% 0 0
2012 1 137.5 75.776 55.11% 35,000,000 30,060,215.00
2013 137.5 83.546 60.76% 0 1,046,375.00
2014 137.5 87.274 63.47% 0 958,228.00
2015 137.5 91.107 66.26% 0 877,930.00
2016 137.5 95.046 69.12% 0 804,759.00 ,
2017 1 181.25 99.091 54.67% 35,000,000 19,368,022.00
2018 181.25 103.241 56.96% 0 1,286,769.00
2019 181.25 107.496 59.31% 0 1,176,815.00
2020 181.25 111.858 61.71% 0 1,076,643.00
2021 181.25 116.324 64.18% 0 985,364.00
2022 181.25 120.897 66.70% 0 902,169.00
2023 181.25 125.575 69.28% 0 826,322.00
2024 181.25 130.358 71.92% 0 757,155.00
2025 181.25 135.247 74.62% 0 694,064.00
70,000,000 60,820,830.00

..'
 . Alternative 3: 2-40 MVAPowerTransform'er: . , .

New Total Rated %~

Year Demand Investment Present Value
Substation Capacity Loading
2011 93.75 74.169 79.11% 0 0
2012 1 143.75 75.776 52.71% 45,000,000 38,619,787.88
2013 143.75 83.546 58.12% 0 1,315,597.59
2014 143.75 87.274 60.71% 0 1,203,416.63
2015 143.75 91.107 63.38% 0 1,101,257.50
2016 143.75 95.046 66.12% 0 1,008,203.27
2017 143.75 99.091 68.93% 0 923,421.35
2018 1 193.75 103.241 53.29% 45,000,000 22,608,887.92
2019 '193.75 107.496 55.48% 0 1,476,284.19
2020 193.75 111.858 57.73% 0 1,349,002.93
2021 193.75 116.324 60.04% 0 1,233,075.01
2022 193.75 120.897 62.40% 0 1,127,467.56
2023 193.75 125.575 64.81% 0 1,031,242.39
2024 193.75 130.358 67.28% 0 943,547.30
2025 193.75 135.247 69.80% 0 863,608.17
90,000,000 74,804,799.69

• Below is the Substation Economic Analysis Summary considering the

abovementioned transformer sizes:

Transformer Max Rated No. of

Present Value (PhP)
Capacity (MVA) Capacity Transformer

20 25 4 92,752,031.00
...
, • .. .... : -, "
. 60,820,830.00
..
35 ...
43.75 :.; '2 .
..
"
40 50 2 74,804,800.00

• Among the three (3) alternatives, the 2-35 MVA Substation is the most
technically feasible solution to be undertaken with the lowest net present
value.

Commission's Resolution I Remarks

Pro'ect to continue as ro osed
Pro'ect to continue with REVISED Ca ital Ex enditure
Pro'ect to continue with Technical Amendments
Project to be deferred which may be included in its next
a lication with additional 'ustification

2011 2012 2013 2017

56,451,362.25 62,604,093.00 119,055,455.25
Pro'ect No. 2
Pro'ect Title Installation of 2-69 kV Sectionalized Circuit Breaker
Pro'ect Code SRI 001
Pro'ect T pe Reliabilit
Priorit Rank
Project Category

Project Description I Duration

• Installation of 2 units - 69 kV electronically controlled
circuit breakers in the lines going to Maasim - Kiamba 2012
and Sari - Glan.

Proposed CAPEX Cost (PhP)

2011 2012 2013 2014 2015 ~":T1'Totar'
4,900,00.00 4,900,000.00

Project Justification
• The proposed installation of 2 units - 69 kV circuit breakers will mitigate
the continuous line tripping resulting in the improvement of the reliability
of electric service in the municipality of Maasim, Kiamba, Maitum, Alabel
and Glan.

Technical Analysis
• The proposed project aims to mitigate the impact of line tripping and
advance the reliability performance by installing electronically controlled
circuit breakers to the identified low reliability 69 kV lines.

• As embodied in the ECDUPM, in calculating the reliability of the

distribution system, the EC must establish the average failure rates
(failure or faults per year) and repair times (hours). As such, the
following were computed per affected line given the based year 2011
Interruption Report:
. .
.. --

Klinan - Kiamba Klinan - Glan

Indicators
line Line
Line Failure Rate 0.0144 0.0286
Reoairina Time 6 2
Total Line Lenath 95.46 58.44
Interruotion Duration 127.68 94.37

• Using the failure rates and repair time, reliability indices can be further
quantified, analyzed and compared to help determine if a project can
improve the reliability of the lines. The simulated result of the existing
system in comparison with the system adopting the proposed project is
provided as follows:
 Expected Enerav Not ServedIYr. Total Potential
Without the With the Energy
Project Project SavedIYr.
Klinan to Kiamba Line 1,968,482KWhr 1,416,516KWhr 551,966 KWhr
Klinan to Glan Line 3,981,027 KWhr 1,452,824KWhr 2,528,203 KWhr

• Reconfiguring the lines by installing 2 units of 69 kV electronically

controlled circuit breaker for reliability enhancement is technically viable
considering the improvement of the Expected Energy Not Served
(EENS) having a Potential Energy Saved of 551,966 KWhr and
2,528,203 KWhr, for Klinan to Kiamba Line and Klinan to Glan Line
respectively.

• In improving the reliability, the objective of minimizing customer's power

interruption is achieved, thus, improving the service of the Distribution
Utility.

Economic and Cost Analysis

• In order to quantify the monetary value of the improvement of the
project, the customer interruption costs shall be established which
provides an indirect measure of losses associated with power failure.

• The financial benefits brought by the project were accounted by

converting monetary value the energy not served using SOCOTECO II's
aggregate distribution charges.

Proposed Sectionalizing Circuit Breakers for Maasim - Kiamba Line

Solvingfor Net PresentValue PHP614,050
InternalRateof Return 18.11%
PresentValue (PV) Benefit PHP 3,559,191.24
PresentValue (PV) Cost PHP2,334,620.04
Benefit Cost Ratio 1.524526982

ProDosedSectionalizina Circuit Breakers for Sari - Glan Line

Solvingfor Net PresentValue PHP2,117,796
InternalRateof Return 31.52%
PresentValue (PV) Benefit PHP4,358,310.82
PresentValue (PV) Cost PHP 2,240,515.17
Benefit Cost Ratio 1.945227095

• The abovementioned cost benefit analysis shows that the proposed

project is economically feasible, which explains:

a) that the internal rate of return of the project satisfies the criteria;
b) net present value of the investment of the proposed project is
positive, which means that the discounted value of the income from
the ro'ect is hi her than the discounted value of the ex enditure;
 c) The benefit cost ratio of the net present value of all savings to net
present value of all costs is greater than 1.

• Therefore, the financial evaluation confirms that the projects benefit will
contribute to the development of SO COTE CO II's system and to the
economic development of the area.

• The Commission adopted the cost estimate of SOCOTECO II in its

evaluation. Unit costs/prices of materials in SOCOTECO II's estimate
were referred to the 2015 NEA Price Index for com arative ur oses.

Commission's Resolution I Remarks

Pro'ect to continue as ro osed
Pro'ect to continue with REVISED Ca ital Ex enditure
Pro'ect to continue with Technical Amendments
Project to be deferred which may be included in its next
a lication with additional 'ustification

Approved CAPEX Cost (PhP)

2014 to
2011 2012 2013 2016 Total
2015
- - - - 4,900,000.00 -
 3
Relocation of SOCOTECO II's Proposed New
Head uarters
SRI 003
Non Network Re uirements

Non Network Re uirements

Project Description I Duration

• Relocation of SOCOTECO II's Proposed New
Headquarters at New Society, Apopong, General 2012
Santos Cit

Project Justification
• The proposed project will improve the efficiency of the employees,
particularly the Maintenance Crew, in delivering prompt and quality
service to the customer.

Commission's Discussion
• SOCOTECO II's administrative office had been in place at the heart of
General Santos City since 1972. That time, the location was
strategically planned to efficiently address the demands and needs of
the member-consumer. However, with the development of the city, the
current administrative office location would not be ideal anymore for
engineering and other technical services, hence, the need to relocate.

• Not to mention that in delivering technical services which entails major

repairs, SOCOTECO II will have to go from the city (current
headquarters) to New Society, Apopong where the warehouse is
located, back to the affected consumer (repair site) to address their
concern.

For the Current Headquarters:

For the Proposed Headquarters:

• The traffic in the city, because of the volume of people and vehicle using
the road, which blocks the passage of SOCOTECO II's Maintenance
Crew, gives more delay on the part of the distribution utility.

• This situation greatly affects the commitment of SOCOTECO II in

delivering products and services in an efficient and cost effective
manner while ensuring reliable and affordable electric service to the
consumer.

• Time and distance are the two factors that will trigger the cause of
discomfort and stress, thereby having complaints. These complaints
made SOCOTECO II's Management to decide that it is only proper to
conduct a study on the performance of SOCOTECO II in providing
service considering traffic and location as main factor.

• For 2014 Consumer Complaint Response Data, it was noted that there
were 203 filed reports that needed major repairs.

Travel Time Repair Time

SOCOTECO II HQ
Duration in Hours Duration in Hours

Old 92.10 2527.60

New 48.12 2527.60

• Out of the 203 filed reports, it has been tracked that the Maintenance
Crew spent 92.10 hours travelling before they reach the repair site. If
the New Headquarters will be relocated at the location of the warehouse
in New Society, Apopong, more than 50% of the travel time will be
saved by SO COTE CO II's crew.

• The time and distance saved in travelling given the implementation of

the proposed project gives more savings to SOCOTECO II in terms of
salary for manpower, fuel and maintenance of vehicles.

• The current SOCOTECO II administrative office shall remain as a

satellite service office to serve the paying customer.

• The Commission approved the proposed cost based on the submitted

Building Plan and Cost Estimates which the Commission finds just and
reasonable.

• Therefore, given the above discussion, the Commission approved the

implementation of the proposed construction/relocation of the new
head uarters of SOCOTECO II.
Commission's Resolution I Remarks
ProOectto continue as ro osed
ProOectto continue with REVISED Ca ital Ex enditure
ProOectto continue with Technical Amendments
Project to be deferred which may be included in its next
a lication with additional °ustification

Approved CAPEX Cost (PhP)

.2014 to
2011 2012 2013 2016 Total
2015
- - - - 55,000,000000 55,000,000.00