mindanao daily news (dec 16, 2012)

VOL. 2, No. 182 Cagayan de Oro City Sunday December 16, 2012 P10.00

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Weather UpdateNortheast monsoon affecting Northern Luzon. MIMAROPA, Western and Central Visayas and Mindanao will be cloudy with light rains and thunderstorms. Metro Manila and the rest of the country will be partly cloudy with isolated brief rainshowers or thunderstorms. Moder-ate to strong winds blowing from the northeast will prevail over Northern and Central Luzon and Eastern Visayas. The coastal waters along these areas will be moderate to rough. Elsewhere, winds will be light to moderate coming from the northeast with slight to moderate seas.

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Las Piñas marks7th Parol Festival

COMMEMORATION of the first anniversary of the Sendong tragedy has kicked off in Cagayan de Oro City.

The executive commit-tee chaired by Councilor Alexander Dacer, which was created by Mayor Vi-cente Emano to prepare and implement a fitting program, is all set for various activities to highlight this.

Sendong commemoration activities kick off in OroOn December 14, the

city government delivered basic services to Internally Displaced Persons (IDPs) at the Calaanan Relocation Site during the People to People Program held there. This was followed by a tree plant-ing and growing activity.

On December 15, a med-ical-dental mission and tree planting program at

the Berjaya GK Village in Camaman-an, and at Xavier Ecoville in Barangay Lumbia have been conducted.

The same activity will take place at the Indahag Relocation Site today (De-cember 16) Sunday.

The city government will also be facilitating the release of liivelihood as-sistance in all permanent

relocation sites established for Typhoon Sendong sur-vivors and will partner with Magnum Radio for the hold-ing of a blood letting activity at the City Tourism Hall.

On the same day, Xavier University will turnover houses and kits to the city government. This will be held at the Ecoville Village.

Program

On December 17 will be a full day for Kagay-anons. It will start with a Eucharistic Mass to be held simulta-nously at the Calaanan Relocation site, Canitoan Permanent Site, Caritas Vil-lage in Indahag, Macapaya, Camaman-an; San Jose and St. John Vianney Seminary, Xavier Ecoville in

sendong | page 2PARoL | page 2

LAS Piñas once again proved that it is ‘the lantern capital of Metro Manila’ as residents of its barangays showed their ingenuity in creating the best Christmas parols (lanterns) using recycled and indigenous materials at the 7th Parol Festival’s lantern-making competi-tion.

“We are pleased that the Parol Festival is becoming popular not only here in Metro Manila but in other parts of the country as well. I always promote the festi-val when I attend festivals in other provinces. This is a big boost to our three-generation parol-making industry,” said Cynthia Villar, Managing Director of the Villar Foundation, which is in charge of the yearly festival.

Senator Manny Villar and former Las Piñas Rep. Cynthia Villar take a curious look on the 7th parol festival winner.

Recycled and indigenous materials used to reflect Christmas spirit

News In Focus2

Editor: CRIS DIAZ Email: [email protected]. : [email protected] • Advertising : [email protected]

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SunDAy | DECEmBER 16, 2012

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ONCE among the dominant and leading Southeast Asian nations during the 1950’s up to the 1970’s both in the economy and in the field of education, the Philippines now is nearly at the bottom level even with Vietnam and Cambodia fast catching up.

One of the contributory factors leading to this scenario is the kind of medium of instruction used in the educational sys-tem of the country. The young Filipino learners particularly the non-Tagalogs at the start of school age are beset with two languages aside from the vernacular which are English and Filipino.

A very good model country using the mother tongue is Japan. Before Japan opened her doors to western influence, she lagged behind in economy, technology and in education. But when Japan opened to western ideas, she adapted flexibility and innovation fitting to her culture and ways. One of these is the translation of all the knowledge in all fields she got from

the westerners notably from the United States and made books and other references using the Nipongo, the Japanese language. And this brought forth a positive impact to the Japanese learners because they have in-depth understanding and analysis on the lessons taught by their teachers. Moreover, even Ethiopia, Cambodia and Vietnam are adapting to this system. And these countries are showing pole vaulting progress.

It is therefore imperative that although we recognize the importance of the value of English and the unifying and patriotic value of Filipino language, the mother tongue or the vernacular for every Filipino learner should be given more emphasis and functionality most specially in the primary level of education. And this would mean better comprehension and application. Furthermore, we may regain the status we have had during the early post World War II period.

Sendong...from page 1

Lumbia, Mandumol-Aluba site; Iponan Reloca-tion Site, Tibasak, Macasa-ndig Site and the Balulang Relocation Site.

At 7:30 a.m. there will be a floral offering at the Cagayan de Oro River to be followed by the unveiling of the Tree of Life Marker at Isla de Oro.

The Rodelsa Circle will be the center of activities on the evening of December 17.

At 6:00 p.m., the city government will be paying tribute to persons, organiza-tions and groups that have helped the city recover from the devastations of

the tragedy.A video presentation

will also be shown about the city’s recovery program after Sendong.

FOR IDPsSeveral activities have

also been mulled for IDPs in different relocation sites.

Aside from competing in sports activities, IDPs will show off their talents as the committee has also prepared for the holding of caroling, dance and lantern contests on Monday, December 17.

A feeding program and gift-giving will also high-light the day.

The city has adopted the theme, “Looking back, A Reflection, A Celebration of Life … Moving Forward,”

Parol...from page 1

The festival is the brain-child of the Former Con-gresswoman of Las Piñas.

In 2007, she encour-aged the city’s magpaparols (lantern-makers) to orga-nize themselves into the ‘Samahang Magpaparol ng Las Piñas’. And to support them, the then Congress-woman Villar set up the Las Piñas Parol Center, which serves as a training area for the lantern-makers.

“We want this unique tradition of parol-making to be continued carried on by the younger generations, so we support the industry as much as we can,” said Mrs. Villar.

This year, the Parol Fes-tival will be held at its new venue—the Villar Social Institute of Poverty Al-leviation and Governance

(SIPAG) along C-5 Exten-sion in Pulang Lupa Uno. In the last six years, it was held at the St. Joseph Bamboo Organ Church .

Meanwhile, the younger Villar—Las Piñas Repre-sentative Mark Villar—is pleased with the entries in this year’s parol-making competition. “The residents of our barangays are really looking forward to the con-test and eagerly participate every year. The entries are becoming more and more artistic and creative, reflect-ing Las Piñeros’ skills and craftsmanship in making traditional lanterns,” he cited.

The lantern-making competition also highlights environmental protection as participants can only use recycled materials such as shampoo sachets/bottles, cans, bottles, tetra packs, newspapers etc. and natural

or indigenous materials such as coconut husk, dried leaves, feathers, shells etc. The frame of the lantern should be made of bamboo.

Entries will be judged according to ingenuity and resourcefulness, 30%; cre-ativity, 25%; impact, 30% and technical skills, 15%. The grand prize winner will get P45,000 and the three runners-up will get P20,000; P15,000; and P10,000 re-spectively. Consolation prizes of P2,000 will be given to all participants. The Villar Foundation extended a P1,000 cash subsidy each to all those who fielded entries in the contests.

in remembrance of the Sen-dong experience and in gratitude for the lives spared and for how the city has bounced back months after the tragedy. (LCR)

‘Impact of mother tonguebased multi-lingual education’

By AngeLitA M. MARiBojoc

MetroBank, DepEd launch search for Most Outstanding TeachersBy Rutchie c. AguhoB

OZAMIZ City––The Me-troBank Foundation, Inc. (MBFI), in cooperation with the Department of Education (DepEd) an-nounce the launching of the 2013 Search for Most Outstanding Teachers.

Now on its 29th year, the search has awarded 316 outstanding teachers from both public and pri-vate schools, nationwide, Education Secretary Armin A. Luistro said.

The search bestows honor on the teaching profess ion by accord-ing special recognition to teachers who mani-

fest deep commitment to the development of the youth through exemplary competence, remarkable dedication to their work, and effective educational leadership.

It is open to teachers who are Filipino citizens teaching full time in basic education at the elemen-tary

and secondary levels including alternative edu-cational system or in higher education at the tertiary level with permanent ap-pointment and teaching full-load.

Meanwhile, Luistro said nominees should have been actively teaching in the Philippines for the last 10 years, inclusive of leaves not exceeding three years, provided that the nominee is not on leave or must actually be teaching at the time of nomination.

Likewise, the nominee must not be on leave for more than two years im-mediately prior to nomina-tion and must be teachers with valid Professional Regulations Commission (PRC) license.

It a lso requires the nominees to have aver-age performance ratings of at least “Very Satisfac-tory” with no rating below “Satisfactory” for the last f ive years and that the performance ratings for five years closest to the time of nomination for those who have been on official/study leave.

On the other hand, the elementary school heads are entitled to two nomi-nees for each of the elemen-tary level, that is, one each for the primary level, from Kindergarten to Grade 3 and for the intermediate level, from Grade 4 to 6, while the high school heads are entitled to nominate only one teacher-nominee per school.

Nominees may submit the accomplished basic information sheet (BIS) to MetroBank nearest the nominee’s school or send via courier to MBFI, 4th floor, Executive Offices, MetroBank Plaza, Sen. Gil Puyat Avenue, Makati City on or before Febru-ary 8, 2013. (RCA-PIA10, Misamis Occidental)

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sundAy | decembeR 16, 2012 3

KIMBERLITE PAWNSHOP MALAYBALAY BRANCH

Kimberlite Pawnshop will be having an AUCTION SALE on all items that expired on November 2012

AUCTION DATE: JANUARY 22, 2013Estrada Bldg., Fortich-Don Carlos Sts.,

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EMAIL ADDRESS:[email protected]

MDN: Aug 17, 2012-Feb 17, 2013

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CASA AZZURRIOFFICE SPACE (2nd Floor)

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APPLicAtion | page 5

SunDAy, DECEmBER 16, 20124


Editorial Department. : [email protected] Department : [email protected]

REPUBLIC OF THE PHILIPPINESENERGY REGULATORY COMMISSIONSAN 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 SARANGANI ENERGY CORPORA-TION, ERC CASE NO. ______ RCAGUSAN DEL NORTE ELECTRIC CO-OPERATIVE, INC. AND SARANGANI ENERGY CORPORATION, Applicants.x - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

JOINT APPLICATION

Joint Applicants Agusan del Norte Electric Cooperative, Inc. and Saran-gani Energy Corporation, by their respective counsel, respectfully state:

THE APPLICANTS

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, Ma-gallanes, Nasipit, R. T. Romualdez, Santiago and Tubay, all in the province of Agusan del Norte (“Franchise Area”).

A copy of ANECO’s certificate of franchise is attached hereto as Annex “A.”

2. Sarangani Energy Corporation (“SEC”) 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 SEC’s Certificate of Incorporation and Certificate of Filing of Amended Articles of Incorporation issued by the Securities and Exchange Commission, Amended Articles of Incorporation and By-Laws, latest General Information Sheet and latest Audited Financial Statements are attached hereto as Annexes “B,” “B-1,” “B-2,” “B-3,” “B-4,” and “B-5,” respectively.

3. Applicants may be served orders and other processes through their respective counsel.

NATURE OF THE APPLICATION

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 SEC dated 17 March 2012 (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 Proce-dure, 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” to “D-12,” respectively. Proof of receipt by the Sangguniang Panlungsod of Makati City, where the principal office of SEC is located, is attached hereto as Annex “D-13.”

6. Furthermore, 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.

Copies of the newspaper and the corresponding affidavit of publication are attached hereto as Annexes “E” and “E-1,” respectively.

STATEMENT OF FACTS

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. According to the Department of Energy’s (“DOE”) Power Develop-ment Plan (2009-2030), the generating capacity in the Mindanao Grid is no longer sufficient to meet the required capacity, which is the peak demand plus the reserve margin mandated by this Honorable Commission. By 2015, the generating capacity will no longer be able to meet the grid peak demand, despite the commissioning of generating capacities already committed by private investors.

9. As a result, Mindanao, including the franchise area of ANECO, has experienced and is at risk of suffering 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.

10. The Mindanao Grid is heavily dependent on hydroelectric power. In fact, according to the DOE, fifty-three percent (53%) of the total depend-able capacity in the Mindanao Grid as of 2009 consists of hydroelectric generating capacity. As a consequence, available power supply in the Grid is drastically reduced in the summer months.

11. Insufficiency of ANECO’s power supply. ANECO’s total power supply is insufficient to meet its power requirements. 12. The bulk of ANECO’s power requirements is currently supplied by the National Power Corporation (“NPC”) under a Contract for the Supply of Electric Energy (“CSEE”) effective August 2011, which CSEE was as-signed to the Power Sector Assets and Liabilities Management Corporation (“PSALM”).

12.1. PSALM has sold Power Barges 117 and 118 to Therma Ma-rine, Inc. (“TMI”) and turned over the Iligan Diesel Power Plant to the Iligan City Government. As a result, NPC is no longer able to supply the full requirements of ANECO’s customers. In fact, NPC has reduced its firm supply to all the distribution utilities in the Mindanao region, including ANECO, by thirty percent (30%). NPC is expected to reduce further its firm supply by 2016 when its Energy Conversion Agreements with Western Mindanao Power Corporation and Southern Philippines Power Corporation expire.

12.2. Aside from the NPC, TMI also supplies 15 MW of power to ANECO under an Energy Supply Agreement (“ESA”) with a contract term effective until July 2013, subject to renewal by the parties.

12.3. ANECO also has entered into a 25-year supply contract with Agusan Power Corporation (“APC”) for the supply of power from its proposed 25 MW hydroelectric power plant. However, even with supply from APC, ANECO’s power supply will still be insufficient to meet its total requirements.

12.4. NPC Certification. In a certification dated 3 July 2012 NPC confirmed that it cannot commit to supply the levels of capacity that it has contracted to provide ANECO in their CSEE due to generation constraint and due to the present power supply situation in Mindanao.

A copy of the said certification is attached hereto as Annex “F.”

12.5. ANECO’s Increasing Power Requirements. The shortage of power supply is expected to worsen due to the steady increase in ANECO’s power demand, especially with the entry of new big loads, such as the Robinson’s Mall.

12.6. The insufficiency of supply in Mindanao, including ANECO’s Franchise Area, is expected to worsen due to the increase in demand, which the DOE estimates to grow at around four percent (4%) annually.

13. Consequently, ANECO will experience outages due to the shortage of supply and to the steady increase in its power demand, to the detri-ment of its customers and local businesses.

14. Procurement of Power Supply by ANECO. As mandated under DOE Circular No. 2003-12-011, it is the obligation of a distribution utility to forecast, assure and contract for the supply of power for its franchise area.

15. As the electricity requirements of ANECO’s customers continue to increase, its current power supply will be insufficient to meet its increas-ing demand. Hence, there is a need for additional capacity, particularly baseload capacity.


SunDAy DECEmBER 16, 2012 5



16. In a letter dated 7 October 2011, SEC offered to supply 10 MW of baseload capacity to ANECO. At that time, no other power provider made a firm offer to supply baseload to ANECO. A copy of the said letter is attached hereto as Annex “G.”

16.1. SEC was the only power supplier with the necessary permits to commence construction of a baseload power plant in Mindanao. It is currently at an advanced stage in its project financing arrangements, providing ANECO with a high degree of certainty that SEC will indeed install additional capacity to supply ANECO.

16.2. It takes several years before a power plant can be operational, as it requires considerably significant undertakings such as construction, testing and commissioning, and securing the needed financing. Hence, the exigency of concluding a supply agreement with a power provider at the soonest possible time.

17. In consideration of the urgent need for adequate power supply, and of SEC’s ability to supply ANECO’s power requirements in a timely manner, ANECO executed with SEC the PSA subject of the present Ap-plication. With the PSA, SEC shall provide ANECO 10 MW of adequate, reliable, and economic baseload power supply over the long-term.

ABSTRACT OF THE POWER SALES AGREEMENTAND RELATED INFORMATION

18. The Generation Facilities. To supply power under the PSA, SEC shall construct, own, operate, manage and maintain a 120 MW Circulating Fluidized Bed Combustor Boiler Coal-Fired power plant in the Municipality of Maasim, Sarangani (the “SEC Power Plant”). The SEC Power Plant consists of one generating unit with an installed capacity of 120 MW and a net dependable capacity of 105 MW.

A copy of a certification on the Plant’s heat rate is attached hereto as Annex “H.”

18.1. Expected Commercial Operations. The SEC Power Plant shall commence commercial operations within thirty-six (36) months from the effectiveness of the PSA, as discussed below.

19. Salient Features of the PSA.

19.1. Baseload. Under the PSA, SEC shall supply or cause to supply to ANECO the latter’s baseload electric power requirements up to the Contracted Capacity of ten (10) MW and the Dispatchable Energy as indicated in and subject to the terms and conditions of the PSA.

19.2. Term. The term of supply and purchase under the PSA shall be for twenty five (25) years commencing on the date the SEC Power Plant is ready to commence commercial operations, as designated by the Parties.

19.3. Effectiveness. The PSA shall become effective upon the occurrence of the following conditions: (a) its final approval by this Hon-orable Commission, (b) effectiveness of SEC’s equipment, procurement and construction (“EPC”) contract, and (c) attainment or waiver of the closing of SEC’s financing for the project.

20. Stages of Supply. SEC shall supply power to ANECO during the commissioning of the SEC Power Plant and thereafter, during the full com-mercial operations of the Plant. As discussed below, ANECO shall pay a lower rate during commissioning.

21. Purchased Power Rate. The rate to be paid by ANECO to SEC de-pends on whether the power is delivered during commissioning or during commercial operations of the SEC Power Plant.

21.1. For electricity delivered during commissioning, ANECO shall pay the adjusted fuel cost and the portion of Basic Capacity and Energy Charges and Adjustments that covers fixed and variable operation and maintenance costs, plus any value-added tax (“VAT”) and any other ap-plicable taxes, fees and charges.

21.2. For electricity delivered during commercial operations, AN-ECO shall pay the Basic Capacity and Energy Charges and Adjustments, plus any VAT and any other applicable taxes, fees and charges. The said charges and adjustments shall be computed based on the following for-mulae:

1. Monthly Payments

1.1. The Monthly Payments shall be paid to the Seller on a monthly basis in accordance with the following formula:

where:

CRF = Capital Recovery Fees

FOMF = Fixed Operation and Maintenance Fee

VOMF = Variable Operation and Maintenance Fee

AFC = Actual Fuel Cost

SC = Start-up Costs

RCEC = Replacement Capacity and Energy Costs

BCEC = Backup Capacity and Energy Costs

Taxes = Value-Added Tax and other applicable taxes, if any

CRF shall be computed as follows:

1.1.1 During the first Contract Year:

where:

CRF1 = Capital Recovery Fee for the first Contract Year

FCRF1 = $22.05 per kW per month which shall be converted to Philippine Pesos on the Commercial Operation Date at the weighted average US Dollar to Philippine Peso exchange rate provided in Schedule J (Power Plant Foreign Capital Recovery Fee Conversion)

DCRF1 = PhP457.35 per kW per month

CC = Contracted Capacity (10 MW)

F = where:

ED = Electricity delivered during the billing period in kWh

TMED = Theoretical Maximum Energy Delivered being the Contracted Capacity multiplied by the hours in the relevant month, less any adjustments made for Allowed Outage, limitation due to dispatch order, Force Majeure of SEC Power Plant, and allowable start-up time due to period of non-generation due to a Buyer dispatch order or an Allowed Outage, and any other hours as a consequence of Buyer’s failure to perform any of its obligations

F = 1 if the foregoing formula results in F being greater than 1

1.1.2 During the second Contract Year

where:

CRF2 = Capital Recovery Fee for the second Contract Year

FCRF2 = $25.31 per kW per month which shall be converted to Philippine Pesos on the Commercial Operation Date at the weighted average US Dollar to Philippine Peso exchange rate provided in Schedule J (Power Plant Foreign Capital Recovery Fee Conversion)



F =

Application...from page 4





start-up time due to period of non-generation due to a Buyer dispatch order or an Allowed Outage, and any other hours as a consequence of Buyer’s failure to perform any of its obligations


1.2 Fixed Operation and Maintenance Fee

The Fixed Operation and Maintenance Fee covers the operating and maintenance costs of the SEC Power Plant. It shall be computed accord-ing to the following formula:

where:

FOMF = Fixed Operation & Maintenance Fee in Philippine Pesos OMR = PhP333.23 per kW per month


F =

where:


TMED = Theoretical Maximum Energy Delivered being the Contracted Capacity multiplied by the hours in the relevant month, less any adjustments made for Allowed Outage, limitation due to dispatch order, Force Majeure of SEC Power Plant, and allow able start-up time due to period of non-generation due to a Buyer dispatch order or an Allowed Outage, and any other hours as a consequence of Buyer’s failure to perform any of its obligationsF = 1 if the foregoing formula results in F being greater than 1

FCPn = The arithmetic average of the values of the United States Consumer Price Index for all Items, as last published on or before the last day of such billing month by the International Monetary Fund; provided that if the International Monetary Fund ceases to publish such indices, the relevant indices as published by the U.S. Department of Labor Bureau of Labor Statistics shall apply.

FCPo = The arithmetic average of the values as of the date of this Agreement of the United States Consumer Price Index for all Items; as published by the International Monetary Fund, provided that if the International Monetary Fund ceases to publish such indices, the relevant indices as published by the U.S. Department of Labor Bureau of Labor Statistics shall apply.

LCPn = The arithmetic average of the values of the Consumer Price Index in the Philippines for all items and General Wholesale Price Index in Metro Manila for mineral fuels, lubricants and related materials, both as last published on or before the last day of such Billing Month by the National Statistics Office.

LCPo = The arithmetic average of the values as of the date of this Agreement of the Consumer Price Index in the Philippines for all items and General Wholesale Price Index in Metro Manila for mineral fuels, lubricants and related materials, both as published by the National Statistics Office.

Fxn = Actual Philippine Peso to US Dollar exchange rate on the meter reading date as published by the Bangko Sentral ng Pilipinas, www.bsp.gov.ph.

Fxo = Actual Philippine Peso to US Dollar exchange rate on the date of this Agreement as published by the Bangko Sentral ng Pilipinas, www.bsp.gov.ph.

where:


TMED = Theoretical Maximum Energy Delivered being the Contracted Capacity multiplied by the hours in the relevant month, less any adjustments made for Allowed Outage, limitation due to dispatch order, Force Majeure of SEC Power Plant, and allowable start-up time due to period of non-generation due to a Buyer dispatch order or an Allowed Outage, and any other hours as a consequence of Buyer’s failure to perform any of its obligations


1.1.3 During the third Contract Year

where:

CRF3 = Capital Recovery Fee for the third Contract Year

FCRF3 = $30.51 per kW per month which shall be converted to Philippine Pesos on the Commercial Operation Date at the weighted average US Dollar to Philippine Peso exchange rate provided in Schedule (Power Plant Foreign Capital Recovery Fee Conversion)



F = where:


TMED = Theoretical Maximum Energy Delivered being the Contracted Capacity multiplied by the hours in the relevant month, less any adjustments made for Allowed Outage, limitation due to dispatch order, Force Majeure of SEC Power Plant, and allow able start-up time due to period of non-generation due to a Buyer dispatch order or an Allowed Outage, and any other hours as a consequence of Buyer’s failure to perform any of its obligations


1.1.4 From the fourth Contract Year up to the end of the Term

where:

CRF = Capital Recovery Fee for the fourth Contract Year up to the end of the Term

FCRF = $30.51 per kW per month which shall be converted to Philippine Pesos on Commercial Operation Date at the weighted average US Dollar to Philippine Peso exchange rate provided in Schedule J (Power Plant Foreign Capital Recovery Fee Conversion)

DCRF = PhP632.83 per kW per month


F =

where:


TMED = Theoretical Maximum Energy Delivered being the Contracted Capacity multiplied by the hours in the relevant month, less any adjustments made for Allowed Outage, limitation due to dispatch order, Force Majeure of SEC Power Plant, and allowable APPLicAtion | page 7





heading “Weekly Index; NEWC Index” (or under such other replacement heading under which such prices are published by globalCOAL) with calorific value basis of 6,000 kcal/kg net as received) for the week immediately preceding the week in which the date of signing of this Agreement occurs. The FOB Base Price shall be reset every Quarter following the Quarter in which the date of this Agreement occurs, and such FOB Base Price applicable for all Shipments for which the B/L Date falls within and including the first day and the last day of such Quarter shall be equal to the arithmetic average of the globalCOAL Newcastle Index for the immediately preceding Quarter. Calorific Valuen= Average calorific value of the coal used in the billing period

F = Discount or premium applied to the coal used during the billing period

TC = Actual transport cost, including transshipment cost of the coal used during the billing period in USD per metric ton

Other Charges= Actual insurance cost and port charges (all charges incurred by a vessel at a loading port and discharge port including towage, pilotage, light dues, moor or unmoor, berthing and deberthing, assist tugs, wharf age, tonnage dues and sundries, including agent’s fees, communications charges and other miscellaneous expenses customarily regarded as port charges) and applicable customs duties and import taxes of the coal used during the billing period

Consumption Rate= 0.7kg/kWh, escalated at 0.5% annually

Forex = Actual Philippine Peso to US Dollar exchange rate on the date the Seller makes payment to the fuel supplier


Note: In the event that the Seller procures coal from multiple suppli-ers, the weighted average of the relevant values above shall be used.

1.5 Start-Up Costs

The Buyer shall pay the Seller Start-Up Costs for the cost of starting up the SEC Power Plant after a period of shutdown due to any reason attributable to the Buyer. The Start-Up Costs shall be paid in accordance with the following schedule:

Type of Synchronization Cost per Event (PHP) Cold Start-up to Synchronization 743,324 Warm Start-up to Synchronization 468,406 Hot Start-up to Synchronization 346,701

1.6 Replacement Capacity and Energy Cost; Backup Capacity and En-ergy Cost

The Buyer shall pay the Seller Replacement Capacity and Energy Cost in accordance with the invoice provided by the supplier of Replacement Capacity and Energy. The Buyer shall pay the Seller Backup Capacity and Energy Cost equivalent to the Monthly Payment had there been no Forced Outage.

2. Commissioning Output Charge

The Buyer shall pay the Seller the Commissioning Output Charge for electricity supplied prior to the Commercial Operation Date. The Com-missioning Output Charge shall be computed as follows:

where:

COC = Commissioning Output Charge

FOMF = Fixed Operation & Maintenance Fee computed in accordance with Item 1.2 of Schedule B of the PSA

1.3 Variable Operation and Maintenance Fee

The Variable Operation and Maintenance Fee covers the cost of the use of, among other items, chemicals, lubricants, spare parts, that are directly related to the generation of the SEC Power Plant. It shall be computed according to the following formula:

where:

VOMF = Variable Operation & Maintenance Fee in Pesos

VOMR = PhP0.3170 per kWh

ED = Electricity delivered during the billing period in kWh PPPn = The arithmetic average of the values of the United States Producers’ Price Index for industrial goods; as last published on or before the last day of such billing month by the International Monetary Fund; provided that if the International Monetary Fund ceases to publish such indices, the relevant indices as published by the U.S. Department of Labor Bureau of Labor Statistics shall apply.

PPPo = The arithmetic average of the values as of the date of this Agreement of the United States Producers’ Price Index for industrial goods; as published by the International Monetary Fund, provided that if the International Monetary Fund ceases to publish such indices, the relevant indices as published by the U.S. Department of Labor Bureau of Labor Statistics shall apply.

LCPn = The arithmetic average of the values of the Consumer Price Index in the Philippines for all items and General Wholesale Price Index in Metro Manila for mineral fuels, lubricants and related materials, both as last published on or before the last day of such Billing Month by the National Statistics Office.

LCPo = The arithmetic average of the values as of the date of this Agreement of the Consumer Price Index in the Philippines for all items and General Wholesale Price Index in Metro Manila for mineral fuels, lubricants and related materials, both as published by the National Statistics Office.

Fxn = Actual Philippine Peso to US Dollar exchange rate on the meter reading date as published by the Bangko Sentral ng Pilipinas, www.bsp.gov.ph

Fxo = Actual Philippine Peso to US Dollar exchange rate on the date of this Agreement as published by the Bangko Sentral ng Pilipinas, www.bsp.gov.ph.

1.4 Actual Fuel Cost

The Actual Fuel Cost is the fee paid to the Seller as payment for the procurement and delivery of the coal used in the operation of the SEC Power Plant. The Actual Fuel Cost shall be computed as follows:

where:

where:

FOB Base Price= The price expressed in US Dollars applicable for all Shipments for which the Bill of Lading Date falls within the period from and including the date of this Agreement until and including the last day of the Quarter in which the date of this Agreement occurs (the “FOB Base Price”), shall be equal to the global COAL Newcastle Index (which is the coal price per ton, FOB Newcastle, stated in USD, as published by globalCOAL on www.globalcoal.com under the






VOMF = Variable Operation & Maintenance Fee computed in accordance with Item 1.3 of Schedule B of the PSA

ACF = Actual Cost of Fuel computed in accordance with Item 1.4 of Schedule B of the PSA

3. Interconnection Capital Recovery Fee

The Buyer shall pay the Seller the Interconnection Capital Recovery Fee as payment for the Interconnection Facilities in accordance with the following formula:

where:

FIFCRF = Foreign Interconnection Capital Recovery Fee of $2.85 per kW per month which shall be converted to Philippine Pesos on the Commercial Operation Date at the weighted average US Dollar to Philippine Peso exchange rate provided in Schedule K (Foreign Interconnection Capital Recovery Fee Conversion)

DIFCRF = Domestic Interconnection Capital Recovery Fee of PHP122.55/ kW/month


Taxes = Value-Added Tax and other applicable taxes, if any

21.3. Price components and breakdowns. The components of the Basic Capacity and Energy Charges are:

a) The Capital Recovery Fee, which represents SEC’s recovery of its capital at a reasonable rate of return;

b) The Fixed Operation and Maintenance Fee, which covers the operating and maintenance costs of the power structures and equipment, and plant management and supervision costs;

c) The Variable Operation and Maintenance Fee, which covers the use of chemicals, lubricants, spare parts, and other materials that are directly related to the generation of electricity; and

d) The Actual Fuel Cost, which represents a pass-on of the actual cost incurred by SEC for fuel.

Relevant computations supporting the above formulae are contained in Annex “I” hereof. A sample computation of the rate is attached hereto as Annex “J.”

21.4. Basis for indexation. As indicated in the formulae above, the monthly fees to be paid by ANECO are subject to adjustments based on various indices or factors in order to properly reflect the fluctuation of SEC’s costs in producing electricity.

21.5. The Foreign Capital Recovery Fee component is fixed and is subject only to a one-time conversion to Philippine Pesos on Commercial Operation Date at the weighted average exchange rate as computed in accordance with the PSA. This will ensure that ANECO does not carry a long-term foreign exchange exposure on the Capital Recovery Fee com-ponent.

21.6. The components of the Operation and Maintenance Fees representing dollar-denominated costs are adjusted based on the foreign exchange rate and the US Consumer Price and Producer Price indices; those representing local costs are adjusted based on the local Consumer Price Index. The Actual Fuel Costs vary based on actual costs as well as the foreign exchange rate and on the Global Coal Newcastle index.

22. Regulatory Approval of Similar Contract. On 30 July 2012, this Honorable Commission approved with modification the Power Sales Agreement, as amended, between SEC and South Cotabato II Electric Cooperative, Inc. for the supply of 70 MW of capacity. The terms and conditions of the said agreement are generally identical to those of the PSA subject of the present case. 23. Sources of Funds/Financial Plans. The project will be funded through loans and equity. The indicative debt-equity ratio for the project is 70:30.

23.1. Project Cost. The generation rate under the PSA is based on the previously estimated project cost of US$ 280.197 million. However,

the actual project cost for the PSA has increased to US$ 288.587 million. However, the generation rate remains the same.

23.2. The main components of the actual project cost are as fol-lows:

USD 000s

EPC 207,508 71.9% Plant EPC 203,193 70.4% Spare Parts & Lab 245 0.1% EPC Contingency 4,069 1.4% Non-EPC 49,806 17.3% Construction Period Insurances 2,864 1.0% Pre-Operating Expenses 15,007 5.2% Development Fee 5,894 2.0% Social & Environmental 5,621 1.9% Land 4,706 1.6% Capitalised O&M 8,858 3.1% Commissioning 6,118 2.1% Contingency 719 0.2% VAT 0 0.0% Other Taxes 18 0.0% Financing Costs & DSRA 31,274 10.8% DSRA 0 0.0% Financing Costs 31,274 10.8%

TOTAL 288,587 100.0%

The breakdowns of the components of the above-mentioned project costs are attached hereto as Annexes “K” and “K-1.”

23.3. Annual Interest. SEC and its lenders have already finalized the terms and conditions of the project financing. SEC undertakes to provide the necessary documentation once the same is available.

23.4. For purposes of determining the Basic Capacity and Energy Charges, SEC applied an estimated interest rate of 9.5% per annum as indicated by the prospective lenders.

23.5. Computation of Project Internal Rate of Return/Weighted Average Cost of Capital. The Project Internal Rate of Return (“PIRR”) and nominal pre-tax Weighted Average Cost of Capital (“WACC”) are 12.8% and 14.80%, respectively. Computations of the PIRR and WACC are shown in Annexes “L” and “M,” respectively.

24. Cash Flow. 24.1. Breakdown of Operating and Maintenance Expenses. A detailed breakdown of the projected operating expenses, including ex-penses for the power plant and general and administrative expenses, is attached hereto as Annex “N.”

24.2. Offtake Arrangement. Under the PSA, SEC shall make avail-able, reserve, guarantee and deliver to ANECO the Contracted Capacity, and ANECO shall pay for such quantity of electric power. SEC shall utilize such Contracted Capacity to generate energy for ANECO.

24.3. There is no minimum energy offtake under the PSA. As SEC will dedicate 10 MW of capacity to ANECO, the Capital Recovery and the Fixed Operations and Maintenance Fees are computed based on the proportion of actual energy delivered to the energy that could have been delivered.

25. Fuel procurement. An international public tender for the supply of coal was conducted for purpose of procuring fuel for the SEC Power Plant. The conduct of the tender and the fuel procurement process is summarized in Annex “O.”

26. The conduct of international public tender assures ANECO of the best available cost of fuel supply. It must be stressed that SEC derives no revenue whatsoever from the fuel supply.

27. Environmental Compliance Certificate. The Department of Environ-ment and Natural Resources (“DENR”) has issued Environmental Compli-ance Certificate (“ECC”) Ref. No. 0901-001-4021 for the SEC Power Plant.

Copies of the relevant documents from the DENR are attached hereto as Annexes “P,” “P-1,” and “P-2.”

28. DOE Certification. On 8 October 2012, the DOE issued Certificate APPLicAtion | page 9





of Endorsement No. 2012-09-002, certifying that the SEC Power Plant is consistent with the Philippine Development Plan.

A copy of the said certificate is attached hereto as Annex “Q.”

29. Certificate of Compliance. As the SEC Power Plant is still to be constructed, it is not yet covered by a Certificate of Compliance (“COC”). In accordance with ERC Resolution No. 9, Series of 2010, SEC shall file the necessary application for a COC no later than three (3) months before the commencement of commercial operations.

30. ANECO’s load forecast projections. A copy of ANECO’s Distribu-tion Development Plan showing its load forecast projections is attached hereto as Annex “R.”

RATE IMPLICATIONS OF THE POWER SALES AGREEMENT

31. In order to determine the impact of the implementation of the PSA on ANECO’s generation costs, an analysis was conducted taking into consideration the reduction of NPC’s firm supply commitments to ANECO, ANECO’s contracted suppliers and the available alternative sources of power in Mindanao.

A copy of the said analysis is attached hereto as Annex “S.” The results of the analysis are summarized in the table below.

32. As shown by the analysis, the implementation of the PSA will re-sult in significant long term cost savings in ANECO’s blended generation rates.

Blended generation rate (P/kWh) YEAR Without SEC With SEC Difference 2014 5.20 5.20 - 2015 5.21 5.06 0.15 2016 5.81 5.33 0.48 2017 6.08 5.55 0.53 2018 6.30 5.78 0.52 2019 6.43 5.94 0.49 2020 6.55 6.17 0.39 2021-2025 6.91 (average) 6.50 (average) 0.41 (average) 2026-2030 7.46 (average) 7.14 (average) 0.32 (average) 2031-2035 7.91 (average) 7.65 (average) 0.26 (average) 2036-2039 8.25 (average) 8.03 (average) 0.22 (average)

33. In the analysis, it was assumed that APC commences supplying power in 2015 in accordance with its PPA. Considering that the existing available alternative suppliers are diesel/bunker C-fueled plants, it also assumed that the power requirements which cannot be supplied by NPC, SEC or APC will be taken from such alternative suppliers, specifically TMI or other diesel/bunker C plants at rates equivalent to TMI’s. It was also assumed that there would be no increase in the cost of fuel and other costs, as it is not possible to predict future costs.

34. It is clear that the implementation of the PSA results in significant long term savings for ANECO and its customers.

ALLEGATIONS IN SUPPORT OF THE MOTION FOR PROVISIONAL AUTHORITY

35. As discussed above, NPC and TMI cannot supply ANECO’s current total power requirements. In fact, NPC has reduced its power supply commitment to ANECO. NPC is likewise prohibited from investing in power generating facilities. Further, NPC’s Energy Conversion Agreements with Western Mindanao Power Corporation and Southern Philippines Power Corporation are set to expire soon in 2016. Moreover, even with supply from APC, ANECO’s power supply will still be insufficient to meet its total power requirements.

36. In addition, ANECO’s power demand is steadily increasing.

37. Thus, given the reduction in its power supply and its steadily in-creasing power requirements, it is imperative that ANECO contracts for additional power. Otherwise, ANECO would not have sufficient power supply to the detriment, not only to ANECO’s customers, but to local businesses as well.

38. This scenario renders the provisional approval of the instant Appli-cation warranted. As this Honorable Commission is aware, it takes years to undertake the financing, construction, installation and operation of a power plant. Hence, the provisional approval of the instant Application

will ensure that SEC’s Power Plant is operational and can supply ANECO’s power requirements at the soonest possible time.

39. In view of the foregoing, Joint Applicants respectfully move for the provisional approval of the instant Application pursuant to Rule 14 of this Honorable Commission’s Rules of Practice and Procedure.

PRAYER

WHEREFORE, premises considered, Joint Applicants ANECO and SEC re-spectfully pray that this Honorable Commission:

1. immediately issue an Order provisionally approving the Power Sup-ply Agreement dated 17 March 2012 subject of the instant Application, as well as the generation rate and adjustment mechanism indicated therein; and

2. after due hearing, render judgment making such provisional ap-proval permanent.

Joint Applicants pray for other just and equitable relief under the premises.

Pasig City, 12 December 2012.

DUREMDES TEVES SAGMIT RAMOS AND PARTNERS Counsel for Applicant Agusan del Norte Electric Cooperative Door B4, Plaza de Luisa Complex R. Magsaysay St. Davao City Tel. No. 082-226-3727

By:

(sgd.) MARIA CHRISTINA S. SAGMIT Roll No. 42758 IBP No. 870629, 1/2/12, Davao City PTR No. 1134740, 1/3/12, Davao City MCLE Compliance No. III-0016759

LACHICA & ASSOCIATES Counsel for Applicant Sarangani Energy Corporation Suite 1903-B, West Tower Philippine Stock Exchange Centre Exchange Road, Ortigas Center Pasig City

Tel.: (632) 687.5028 Loc. 223, Fax: (632) 631.4858 E-mail: [email protected]

By: (sgd.) SUNDY LORENCE C. LACHICA PTR No. 7551402; 1/10/12; Pasig City IBP No. 883070; 1/10/12; Makati MCLE Compliance No. IV-0007955; 9/18/12 Roll No. 51017

(sgd.) CHRISTIENE SALVE A. DEMAISIP PTR No. 7551401; 1/10/12; Pasig City IBP No. 883071; 1/10/12; Rizal MCLE Compliance No. III-0010836; 03/30/10 Roll No. 54475

MDN: Dec 16, 2012


SunDAyDECEmBER 16, 201210


Editorial. : [email protected] : [email protected]

Special thanks to our Sponsors:ABOITIZ, PEPSI, STEAG, NSO REGION X, DEL MONTE, NESTLE,

CONG. MAXIE RODRIGUEZ, CONG. BENJO BENALDO,CONG. BAMBI EMANO, GOV. OSCAR MORENO,SAN MIGUEL BEER, GAMMA FARMS, FUNDADOR,

XAVIER UNIVERSITY AND SNAP-IN-A-BOX PHOTOBOOTH

BWM Group converge at the Media Center

gathers for journalism forum and Christmas party

The forum and seminar featured speakers include Mindanao Daily News (MDN) Editor-in-Chief R u e l P e l o n e , M D N Associate Editor Cris Diaz, BusinessWeek Mindanao (BWM) Editor-in-Chief Nelson Constantino, BWM Media Center Training Director for Broadcast Joe del Puerto Felicilda, The Cagayan de Oro TIMES Editor-in-Chief Shaun Alejandrae Yap Uy, and facilitated by BWM Media Center Training Director for Print Allan Mediante.

The participants of the said forum and seminar are the BWM Group’s Mindanao Bureau Chiefs and Correspondents who came from key cities and provinces of Mindanao.

The group enjoyed a whole day lecture and forum in the fields of news writing, column/editorial writing, feature writing, photojournalism with focus on file handling digital imaging files.

BWM-AP CEO and Publisher Dante Sudaria says, “this is a very special occasion for the BWM Group, we are getting bigger and better, but it is also good to be reminded of how we started out and also for our correspondents to refresh themselves in the various fields of

journalism.” M r. S u d a r i a a l s o

enthused that “with the advancemen t o f new technologies, it is best to use all available resources for us to keep ourselves on track with the daily grind of the newspapering industry.”

The event is also a special gathering for the BWM Group as they celebrate Christmas ahead, “we celebrate our Christmas party ahead because I know that this is a very busy month and we are always very busy with the daily tasks that we have in our respective newspapers, this is our way of thanking all our partners in making BWM what it is today, Merry Christmas to all of you”, Mr. Sudaria adds.

Now on its third year, BusinessWeek Mindanao newspaper already comes out three-times-a-week, Mondays, Wednesdays, and Fridays. This year is also the 1st anniversary year of Mindanao Daily News.

Mindanao STAR Balita’s presence on the other hand, has already made its mark in the “masa” (Class C-D) readership, equally rising to visibility are the two latest additions to the group – The Cagayan de Oro TIMES which is a weekly lifestyle newspaper and the BWM Magazine.

BusinessWeek Mindanao Advertising & Promotions (BWM-AP) holds a Mindanao-wide Mindanao-wide Journalism Forum and Seminar, December 1, 2012 at the BWM Media Center, Abellanosa Street, Cagayan de Oro City.

BusinessWeek Mindanao Executive Editor Allan Mediante facilitates the BWM Group’s Mindanao-wide Journalism Forum and Seminar at the BWM Media Center, December 1, 2012.

Mindanao Daily News Editor-in-Chief Ruel Pelone gives a refresher course on news writing for the BWM Group’s bureau chiefs and correspondents.

Mindanao Daily News Managing Editor Joe del Puerto Felicilda gives a refresher course on news/data and proper press conferrence decorum for the BWM Group’s bureau chiefs and correspondents.

ABAMIN’s Congressman Maximo Rodriguez delivers an inspirational talk as a guest of honor during the BWM Group event.

BusinessWeek Mindanao Advertising & Promotions CEo and Publisher Dante Sudaria in his inspirational message during the BWM Group’s Mindanao-wide Journalism Forum and Seminar at the BWM Media Center.

mindanao daily news (dec 16, 2012)

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