2016-11-03 (19) · erccaseno. 2016-156 rc notice ofpublic hearing/ 17october 2016 page2of19 1....

OF

ELECTRICINC.AND

POWER

IN THE MATTER OF THEJOINT APPLICATION FORAPPROVAL OF THE POWERSUPPLY CONTRACT (PSC)ENTERED INTO BY ANDBETWEEN ISABELA IELECTRIC COOPERATIVE,INC. (ISELCO I) ANDMARIVELES POWERGENERATIONCORPORATION (MPGC),WITH PRAYER FORCONFIDENTIALTREATMENTINFORMATION

ISABELA ICOOPERATIVE,(ISELCO I)MARIVELESGENERATIONCORPORATION (MPGC),

Applicants.x------------ ---------x

ERC CASE NO. 2016-156 RC

DO CKl!1'lDl1DD..ate: ..q~...I. 2_~Mny.. --'.~... " - ...- ...-....-

NOTICE OF PUBLIC HEARING

TO ALL INTERESTED PARTIES:

Notice is hereby given that on 25 July 2016, Isabela I ElectricCooperative, Inc. (ISELCO 1) and Mariveles Power GenerationCorporation (MPGC), filed a Joint Application with Prayer forConfidential Treatment of Information (Joint Application) seekingthe Commission's approval of the Power Supply Contract (PSC)entered into by both parties.

•ISELCO I and MPGC in. their Joint Application stated the

following:

The Joint Applicants

ERC CASE NO. 2016-156 RCNOTICE OF PUBLIC HEARING/ 17OCTOBER 2016Page 2 of 19

1. ISELCO I is a non-stock, non-profit electriccooperative duly organized and existing under thePhilippine Laws, with principal office at Victoria,Alicia, Isabela. It holds a franchise to operate lightand power services in the Cities of Cauayan andSantiago, and in the Municipality of Alicia,Angadanan, Cabatuan, Cordon, Echague, Jones, Luna,Ramon, Reina Mercedes, San Agustin, San Guillermo,San Isidro, and San Mateo, all in the Province ofIsabela (Franchise Area). It shall also be hereinreferred to as the "Buyer";

2. MPGC is a corporation duly created and existing byand under the laws of the Republic of the Philippines,with business address at the No. 40 San MiguelAvenue, Mandaluyong City. It shall also be hereinreferred to as the "Seller";

3. The Joint Applicants may be served with the orders,notices and other processes of the HonorableCommission through their respective undersignedcounsels at the addresses indicated herein;

Nature of the Application

4. The Joint Application for approval of the PowerSupply Contract (PSC) dated 28 April 2016 enteredinto by and between ISELCO I and MPGC, is beingsubmitted to the Honorable Commission for its reviewand approval pursuant to Sections 25 and 45(b) ofRepublic Act No. 9136, otherwise known as theElectric Power Industry Reform Act of 2001 or theEPlRA, Rules 5, Section 4(e) and 11, Section 5 of itsImplementing Rules and Regulations (IRR), Rule20(B) of its Rules of Practice and Procedure, andother pertinent rules and regulations;

Statement of Facts

5. Competitive Selection Process (CSP). On 19 October2015, ISELCOI's Bids and Awards Committee (BAC)published an invitation to bid in a newspaper ofgeneral circulation for the supply of its powerrequirements for the period 2018-2028;

5.1 During the Pre-bid Conference held on 28October 2015, only SMC Global PowerHoldings Corporation, the parent company ofMPGC, Energy Development Corporation(EDC), an affiliate of Bac-Man Geothermal,Incorporated (BGI), and Southwest LuzonPower Generation Corporation (SLPGC)attended. However, during the 10 November2015 Opening of Bids, only MPGC and BGI


made the offers of PhP3.0035/kWh andPhP4-4269/kWh, respectively;

5.2 After a thorough review of the two (2) offers,the BAC recommended to the Board ofDirectors to award ISELCO I's power supplyrequirements to MPGC;

5.3 On 20 January 2016, ISELCO I's Board issuedResolution No. 005S.-2016 approving saidrecommendation;

5-4 Subsequently, on 14 April 2016, ISELCO I'sBoard issued Resolution No. 018s.-2016approving the PSC between ISELCO I andMPGC;

6. Salient Features of the PSC.

6.1 Contract Capacity. The Contract Capacity forthe duration of the PSC shall be 25,000 kW.The Buyer shall maintain a minimum hourlyenergy nomination of at least forty percent(40%) of the Contract Capacity for the durationof said PSC as its share in the minimum stableload of the Power Plant. The Contract Capacityshall be subject to a separate NominationProtocol;

6.2 Generation Source. MPGCis constructing a 4 x150 MW Circulating Fluidized Bed Coal-FiredThermal Power Plant (the Plant) located inSitio Lusong, Barangay Biaan, Mariveles,Bataan, which is expected to be commerciallyoperational by the 3rd quarter of calendar year2019;

6.3 Contract Term. The PSC shall take effectbetween the Parties on the date of signing(Execution Date) and shall remain effective fora period of twenty (20) years from the later ofthe Commercial Operations Date (COD) or theSupply EffectiveDate;

6-4 Contract Charges. Under the PSC, the Buyershall pay the following Capacity and EnergyFees for the duration of the Contract:

RateA 1,096.5259B 238.1533

CFees (PhP kW-month)Variable 0 eration and

Rate0.2702

ERC CASE NO. 2016~156RCNOTICE OF PUBLICHEARINGj 17OCTOBER 2016Page 4 of 19 .

Maintenance FeeFuel Fee --1-'1-55-6--1.

6.5 Other Charges. The Buyer shall bear all othercosts and charges incurred after the DeliveryPoint, including but not limited to transmissionline losses, arty' interconnection charges andsite specific loss adjustments, among others;

6.6 Adjustment Formula. The Contract Chargesare adjusted on a monthly basis in accordancewith the following Adjustment Formula (AnnexII-B of the PSC):

MONTHLY CONTRACT CHARGES = Capacity Charge~month+Energy Chargesmonth

Where:

Capacity Charges =

Energy Charges =

Capital RecoveryFee (CRF) +Fixed OperationandMaintenanceFee (FOM)

VariableOperation andMaintenanceFee (VOM) +Fuel Fee + Start-up Charge

I. CAPITAL RECOVERY FEE (CRFmonth)

CRFmonth = CRFadjusted x CC

Where:

CRFadjusted(CRF(base)x 0.30)+ (CRF(base)x 0.70x

FXm

FXoi

CRFbase

FXm =

Capital Recovery Fee inPhPjkW-month containedin Annex II -A of the PSC

The simple average of thedaily exchange rate of thePhilippine Peso to the USDollar, as posted by theBangko Sentral ngPilipinas (BSP) for thecalendar month withinwhich the start of the

• I

I

ERC CASE NO. 2016-156 RCNOTICE OF PUBLIC HEARING/ 17OCTOBER 2016Pages Of19

current Billing Periodoccurs

FXo

CC

=

=

Exchange rate of thePhilippine Peso to the USDollar, Base = PhP44-414

Contract Capacity in kW

II. FIXED OPERATION ANDMAINTENANCEFEE (FOMmonth)

FOMmonth = FOM x PHCPIm x CCPHCPIo

Where:

FOM = Fixed Operation andMaintenance Fee inPhP/kW-month containedin Annex II-A ofthe PSC

PHCPIm =

PHCPIo =

Philippine Consumer PriceIndex (CPI) for All IncomeHouseholds in thePhilippines - All Items(2006=100), as posted bythe Philippine NationalStatistics Office (NSO) forthe calendar month withinwhich the start of thecurrent Billing Periodoccurs

Philippine CPI for AllIncome Households in thePhilippines - All Items(2006=100), as posted bythe Philippine NSO for thecalendar month of theCOD

CC = Contract Capacity in kWIII. VARIABLE OPERATION AND

MAINTENANCEFEE (VOMmonth)

VOMmonth [( 0.85 x VOM x USCPlmUSCPlo

Where:

xFXmFXo + (o.lsxVOMx

PHCPlmPHCPlo )] xAE

VOM = Variable Operation andMaintenance Fee III

ERC CASE NO. 2016-156 RCNOTICE OF PUBLIC HEARING/ 17OCTOBER 2016Page 6 of19

PhP /kWh contained IIIAnnex II-Aof the PSC

DSCPIm =

USCPIo =

United States (US) CPI forAll Urban Consumers - AllItems (1982-84=100), asposted by the Unites StatesBureau of Labor Statistics(USBLS) for the calendarmonth within which thestart of the current BillingPeriod occurs

US CPI for All UrbanConsumers - All Items(1982-84=100) for thecalendar month of theCOD

I

I

PHCPIm =

FXm

FXo

=

=

The average dailyexchange rate of thePhilippine Peso to the USDollar, as posted by theBSP for the calendarmonth within which thestart of the current BillingPeriod occurs

Exchange rate of thePhilippine Peso to the USDollar, Base=PhP44-414

Philippine CPI for AllIncome Households in thePhilippines - All Items(2006=100), as posted bythe Philippine NSO for thecalendar month withinwhich the start of thecurrent Billing Periodoccurs

PHCPIo = Philippine CPI for AllIncome Households in thePhilippines - All Items(2006=100), as posted bythe Philippine NSO for thecalendar month of theCOD

AE = Associated Energy in kWhdelivered to the Buyer bythe Seller during thecurrent Billing Period

ERC CASE NO. 2016-156 RCNOTICE OF PUBLIC HEARING/ 17OCTOBER 2016Page 70f19

The Parties agree to adopt changes in any ofthe inflationary indices subject to priornotification by the Seller to the Buyer for theoccurrence of any of the following events: a)shift made in the base year and otheradjustments to such inflation index made bythe relevant authorized entity; or b) theinflation index: i) becomes unavailable, ii) isreplaced by a new benchmark rate asdetermined by the relevant authorized entity orits successor-in-interest, iii) ceases to exist, oriv) in the reasonable determination of eitherParty, fails to reflect the real costs and forms anintegral part of this price adjustment formula;

IV. FUEL FEE (Fuelmonth)

FUELmonth = [( Fuel Cost +Freight Cost1,000 ) x CRx FXm ] xAE

Where:

Fuel Cost = Base Fuel Cost, in USD/MT xNewcastlemNewcastleo

Newcastlem = Average monthlycoal price index inUSD/MT as posted byglobal coal on the websitewww.globalcoal.com forthe calendar month withinwhich the start of thecurrent Billing Periodoccurs

Newcastleo = Coal pnceequivalentUSDS8.SS/MT

indexto

Base Fuel Cost=

Freight Cost

Blended Cost equivalent toUSD46.77/MT

= Actual TransportCosts in USD/MT whichincludes but not limited toport charges, fuelinsurance, wharfage fees,excise tax, handling,customs brokerage fees,custom duties, stevedoresand arrastre costs, tuggagecosts, survey fee, towage,pilotage, light dues,mooring and unmooring,berthing and de-berthing,

http://www.globalcoal.com


and tonnage dues andsundries on the coal usedduring the current BillingPeriod. Freight costs shallinclude all other existingand future taxes, fees,imposts and other chargesthat may be imposed onthe transport of coal

CR

FXm

FXo

AE

=

=

=

=

Consumption rate at0.70kg/kWh escalatedannually by one and a halfpercent (1.5%) or theactual plant fuelconsumption rate,whichever is lower

The average dailyexchange rate of thePhilippine Peso to the USDollar, as posted by theBSP for the calendarmonth within which thestart of the current BillingPeriod occurs

Exchange rate of thePhilippine Peso to the USDollar, Base=PhP44-414

Associated Energy in kWhdelivered to the Buyer bythe Seller during thecurrent Billing Period atthe Delivery Points statedin Annex III of the PSC

The Parties further agree that when any or allof the above components of the Fuel Cost nolonger reflect the Seller's actual cost of coal(including the FOB price, coal indexation,premiums, among others), the Fuel Cost shallbe computed based on the Seller's actual cost offuel subject to the Seller's prior notification tothe Buyer;

V. Start-up Charge (per Unit and per Start-up) - to be added on top ofVOM & Fuelcharges

Cold Start-up - downtime of eight (8) hoursand above

Start Up Charge = 130,000 liters x LFOmx CC


TPC

Warm Start-up - downtime of less than eight(8) hours

Start Up Charge

Where:

= 36,000 liters x LFOm xCCTPC

LFOm

CCTPC

=

=

=

The actual price of dieseloil in PhP/liter as billed bysupplier of diesel oilapplicable for the BillingPeriod

Contract Capacity in kW

Total plant capacity (net)per unit in kW

6.7 Sources of Funds. SMCGlobal Power HoldingsCorporation, MPGC's parent company,advances the funds allowing for the on-goingconstruction of the Plant. MPGC is working onhaving a financial close with a target Debt toEquity ratio of70%:30%;

6.8 Discounts. The Seller provides forPrompt Payment Discount (PPD)Collection Efficiency Discount (CED);

bothand

a) PPD. The Buyer may avail of the PPDequivalent to one percent (1%) of the totalof the Capacity and Energy Charges andother components of the current power bill,provided that:

i. The Buyer has no arrears from previouspower billings including the SecurityDeposit or any unpaid charges orpenalties including VAT;

11. The Buyer has submitted all necessaryBureau of Internal Revenue (BIR) TaxCertificates for all taxes withheld as wellas for all zero (o)-rated VAT end-consumers;

lll. The Buyer pays the power bill in full onor before the 10th day of the calendarmonth following the current BillingPeriod; and

ERC CASE NO~2016-156 RCNOTICE OF PUBLIC HEARING/17 OCTOBER 2016Page 10 of 19

IV. The Buyer complies. with other policiesand procedures as may be required bythe Seller, subject to prior notificationby the Seller to the Buyer; and

b) CED. The Buyer shall be entitled to thefollowing CED:

Collection Discount,Efficiency Levels PhP/kWhBelow65% None66% to 75% 0.0576% to 85% 0.1086% to 95% 0.1596% and above 0.20

In order for the Buyer to avail of the CED, itmust comply with the following conditions:

1. The Buyer has no outstandingobligations to the Seller from previouspower bills including VAT;and .

11. The Buyer shall submit to the Seller: aduly accomplished CED AvailmeiltForm; a copy of its Monthly Financialand Statistical Report(MFSR)/Collection Efficiency Reportsigned by its. Finance Manager and-General Manager, stamped "received" bythe NEA; Audited Financial Statements(AFS) stamped "received" by the BIR (tobe submitted to the Seller.within three(3) calendar days from receipt of theBIR; and zero (o)-rated VAT certificatesas updated monthly;

6.9 Outages.

6.9.1 Annual Outage Allowance Per Unit.During the term of the PSC, the Sellershall not be obligated to deliver energyduring the Annual Outage Allowance ofeight hundred forty (840) cumulativeoutage hours within a Contract Year forScheduled and Forced Outages of thePlant;

Unutilized outage hours for a ContractYear shall not be carried over to thefollowing Contract Year; and

6.9.2 Major Maintenance Outage Hours PerUnit. The Seller shall be allowed anadditional outage allowance of seven


hundred twenty (720) cumulativeoutage hours Major Maintenance onceevery five (5) years counted from thefirst Major Maintenance of each Unit ofthe Plant. The Seller is not obligated todeliver energy during MajorMaintenance Outage. The ContractCharges for the Major MaintenanceContract Year shall be governed byAnnex II-A of the PSC; and

6.10 Replacement Power. The Seller shall supplyReplacement Power during outages, the priceof which shall be based on Article 9 (Chargesand Adjustments) of said PSC;

Rate Impact on ISELCO I's Overall Generation Rate

7. The indicative rate impact on ISELCO I's overallgeneration rate with and without the supply fromMPGC are as follows:

MPGCvs. Wholesale Electricitv Spot Market WESM)Energy As Billed Power Bill Adjusted Rate

2015 (kWh) (PhP) (PhP/kWh)January 23,387,423.81 123,230,674.82 5.2691February 22,916,784.93 95,984,662.02 4.1884March 24,718,016.00 99,042,618.31 4.0069April 17,061,671.00 86,949,687.75 5.0962May 25,281,201.00 110,961,719.31 4.3891June 31,193,195.00 125,905,092.98 4.0363Julv 32,911,109.00 127,280,422.95 3.8674Total 177,469,400.75 769,354,878.13 4.3351

Energy As Billed Power Bill Adjusted Rate2015 (kWh) (PhP) (PhP/kWh) .

January 23,387,423.81 78,827,982.70 3.3705February 22,916,784.93 121,301,137.23 5.2931March 24,718,016.00 130,529,862.79 5.2808April 17,061,671.00 88,715,986.98 5.1997Mav 25,281,201.00 151,107,445.92 5.9771June 31,193,195.00 243,407,082-46 7.8032July 32,911,109.00 156,401,626-44 4.7522Total 177,469,400.75 970,291,124.53 5-4674

Increase/ (Decrease)

8. Environmental Compliance Certificate (ECC). MPGCundertakes to file an application before theDepartment of Environment and Natural Resources(DENR) for the issuance of an ECC in favor of itsPower Plant in Mariveles, Bataan;


9. Board of Investments (BO!) Certificate. The PowerPlant Project is not covered by the BOI as the same iswith the Authority of the Freeport Area of Bataan(AFAB);

10. Certificate of Compliance (COC). The Power Plant isstill under construction and the target/estimated CODis sometime in August 2019. Hence, it is not yetcovered by a COCo Nonetheless, MPGC undertakes tofile the necessary application for a COC at least three(3) months before the target COD;

11. Further, MPGC's Power Plant is considered as acommitted project, and is in the process of securing acertification from the Department of Energy (DOE)that the same is consistent with the PowerDevelopment Plan (PDP). It undertakes to submit thecertification as soon as the same becomes available;

12. Furthermore, MPGC undertakes to submit acertification from the National Power Corporation(NPC) on the insufficiency of supply within the LuzonRegion during the term of the PSC;

Compliance with the Pre-filing Requirements

13. Copies of the foregoing documents and/orinformation are attached to the Joint Application asannexes and made integral parts hereof:

Annex Documents/InformationA MPGC's Articles of Incorporation and

Amended Articles of IncorporationB MPGC's Certificate of Registration

issued by the Securities and ExchangeCommission (SEC)

C MPGC's Latest General InformationSheet (GIS)

D PSC entered into by and betweenISELCO I and MPGC

Eand Details of the PSC:Series

a. Executive Summaryb. Sources of Funds/Financial Plans

• Debt/Equity Ratio• Project Cost• Computation of Return on

Investment (ROO/WeightedAverage Cost of Capital(WACC)

• Certification from theBank/Lending Institutionspecifying the principalamortization, term and


interest during thecooperation period of the loanagreement

c. Purchased Power Rate• Breakdown of the base prices

I • Sample Computation ofPower Rates with thesupporting documents on theassumptions taken

• Rate ImpactStudy/Simulation

• Statement of impact on theoverall rates of ISELCO I oncethe contract is approved

• Basis/Rationale of indexationand level of indexation

d. Cash Flow• Initial Costs• Breakdown of Operating and

Maintenance expenses• Minimum Energy Off-take

(MEOT)F Details of the Power Rate Calculations

and Financial Model (Confidential)G, G-1 Contracts for the Supply, ConstructionandG- and Supervision for the Power Plant

2 (Confidential)H Details of the Fuel Procurement ProcessI Transmission Service Agreement (TSA)

between the National Grid Corporationof the Philippines (NGCP) and ISELCO I

Jand Acknowledgment receipts by theSeries Sangguniang Pambayan of Alicia, the

Sangguniang Panlalawigan of Isabela,and the Sangguniang Panlungsod ofMandaluyong City (including annexes)

14. Further, in compliance with Article VI, Sections land2 of the Honorable Commission's Guidelines for theRecovery of Costs for the Generation Component ofthe Distribution Utilities' (DU) Rates, copies of theforegoing are, likewise, attached to the JointApplication as annexes and made integral partshereof:

AnnexK

L

Mand

Documents InformationRelevant technical and economiccharacteristics of the generationcapacity, installed capacity, mode ofo eration, and de endable ca aciCosts analysis of the proposed pricingrovisions of the PSCDetails of the Com etitive Selection

ERC CASE NO. 2016-156 RCNOTICE OF PUBLIC HEARING/ 17OCTOBER 2016Page 140f19

Series Process (CSP) undertaken by ISELCO Ileading to the selection of MPGC as itssupplier, including invitations toparticipate and submit proposals, Termsof Reference (TOR), proposals and/ortender offers received by ISELCO I,ISELCO I's Special Bids and AwardsCommittee (SBAC) Evaluation Report;ISELCO I's Board Resolutionconfirming the said SBAC EvaluationReport, and the Notice of Award toMPGC

Nand Details of the interconnection facility ofSeries the MPGCPower Plant0 ISELCO I's latest Distribution

Development Plan (DDP) and LoadForecast Projections

P Demand Side Management (DSM)Program that could be implemented byISELCO I if approved by the HonorableCommission

Q MPGC's latest Audited FinancialStatements (APS), Balance Sheet,Income Statement, and Statement ofCash Flows

Q-l Bank Certification of Long-term Loans,including Schedule of Original Loan(principal amount, interest payable andterm of the loan) and Updated Balances(principal amount, interest payable andpenalties, if any and remaining term ofthe loan)

Q-2 Operating Expenses for the Power Plantand General and AdministrativeExpense

Q-3 Certification from the enginemanufacturer or MPGC of the net heatrate in liters per kWh

Q-4 Simulation on the number of operatingunits necessary to meet the MEOTand/or additional energy/demandrequirements of ISELCO I

Q-s Potential Cost (absolute amounts andPhP/kWh) of Ancillary Services as andwhen MPGC or ISELCO I is connectedto the main grid

15. Furthermore, the Joint Application is consistent andin accordance with the first (1st) and fifth (5th)"Whereas clauses" of the DOE Circular No. 2003-12-11which are quoted hereunder:

"WHEREAS, Section 2 of Republic ActNo. 9136, also known as the Electric PowerIndustry Reform Act of 2001 or EPlRA,


declared as a policy of the State, among others,[to ensure the quality, reliability, security andaffordability of the supply of electric power;"(first "whereas clause", Department of EnergyCircular No. 2003-12-11. Underscoringsupplied.)

"WHEREAS, pursuant to Section 23 ofEPlRA, all distribution utilities, as defined inthe law, SHALLHAVETHE OBLIGATIONTOSUPPLYELECTRICITY IN THE LEASTCOSTMANNER TO ITS CAPTIVEMARKET subjectto the collection of retail rate duly approved bythe Energy Regulatory Commission;" (fifth"whereas clause", ibid. Underscoringsupplied.)

16. The Joint Application is, likewise, consistent withSection 1 of the same Department Circular whichdeclares as State policy, that:

"All distribution utilities musthenceforth take cognizance and assume fullresponsibility to forecast, assure and contractfor the supply of electric power in therespective franchise areas to meet theirobligations as a distribution utility."(Underscoring supplied.)

17. Byway of emphasis, Resolution No. 21, Series of 2005of the Honorable Commission dated 19 October 2005had directed all Distribution Utilities (DUs) "to enterinto future bilateral power supply contract with powerproducers to be subjected to a review by theCommission." (Underscoring supplied.)

18. The PSC with MPGC was made to ensure thecontinuous supply of power to ISELCO I and due tothe former's competitive pricing structure and otherfavorable terms of its contract, which will redound tothe benefit of the latter and its end-consumers interms of reliable and affordable power supply;

Allegations in Support of the Confidential Treatmentof Annexes "F", and "G", "G-l", and "G-2"

19. Rule 4 of the Honorable Commission's Rules ofPractice and Procedure provides that ISELCO I andMPGC may request that information may not bedisclosed;

20. MPGC prays for the confidential treatment of theinformation contained in the following annexes, andnot disclosed except to the officers and staff of theHonorable Commission and its staff:

*-----


Annex Documents and/orInformation .

F Details of the Power RateCalculations and Financial Model

(Confidential)G, G-1 Contracts for the Supply,andG-2 Construction and Supervision for

the Power Plant (Confidential)

21. Annex "F" contains the details of MPGC's power ratecalculations and financial model as well as themanner by which these were derived. Theseinformation are proprietary in nature and should beprotected as trade secrets as contemplated by law andjurisprudence. In the case of Air PhilippinesCorporation vs. Pennswell, Inc.', the Supreme Courtdefined a trade secret, as follows:

"A trade secret may consist of anyformula, pattern, device, or compilation ofinformation that: (1) is used in one's business;and (2) gives the employer an opportunity toobtain an advantage over competitors who donot possess the information. Generally, a tradesecret is a process or device intended forcontinuous use in the operation of thebusiness, for example, a machine or formula,but can be a price list. or .catalogue orspecialized. customer list. It is indubitable thattrade secrets constitute proprietary rights. Theinventor, discoverer, or possessor of a tradesecret or similar innovation has rights thereinwhich may be. treated as property, andordinarily an injunction will be granted toprevent the disclosure of the trade secret byone who obtained the information "inconfidence" or through a "confidentialrelationship". American jurisprudence hasutilized the following factors to determine if aninformation is a trade secret, to wit:

(1) the extent to which the informationis known outside of the employer'sbusiness;

(2) . the extent to which the informationis known by employees and othersinvolved in the business;

(3) the extent of measures taken by theemployer to guard the secrecy ofthe information;

1 G.R. No. 172835, December 13, 2007.

L __

ERC CASE NO. 2016-156 RCNOTICE OF PUBLIC HEARING/ 17OCTOBER 2016Page 17of 19

(4) the value of the information to theemployer and to competitors;

(5) the amount of effort or moneyexpended by the company indeveloping the information; and

(6) the extent to which the informationcould be easily or readily obtainedthrough an independent source."(citations omitted, emphasissupplied)

22. The interest of the consuming public is sufficientlyprotected by the review and evaluation of the ratesunder the PSCby the Honorable Commission, withoutthe need to disclose the contents of Annex "F". Thereasonableness and transparency of the prices ofelectricity is to be assured by the HonorableCommission through its own review and verificationof MPGC's operating costs and expenses;

23. More importantly, MPGC's competitors, should theyobtain the information in Annex "F", will gain undueadvantage thereon and have the opportunity to usethe same in their operations. The negotiating powerof MPGCwith parties it plans to contract with or whoit is currently doing business with, will clearly bethwarted if it is compelled to disclose suchinformation;

24. Further, Annexes "G", "G-1", and "G-2" pertain to theSupply, Construction, and Supervision Contracts,respectively, for the Power Plant. These contractshave counter-parties who are not parties to the JointApplication. They contain highly technical designs,drawings and other information which are theintellectual property and trade secrets of the counter-parties, and therefore should not be disclosed to thepublic. ISELCO I and MPGC, likewise, pray for theconfidential treatment of Annexes "G", "G-1", and "G-2", under the same premises above; and

25. Accordingly, ISELCOI and MPGCsubmit one (1) copyeach of Annexes "F", "G", "G-1",and "G-2", in a sealedenvelope, with the said envelope and each page of thedocuments and/or information stamped with theword "Confidential".

Prayer

WHEREFORE, the foregoing premises considered, the JointApplicants Isabela I Electric Cooperative, Incorporated (ISELCO I)and Mariveles Power Generation Corporation (MPGC) most

ERCCASE NO. 2016-156 RCNOTICE OF PUBLIC HEARING/ 17OCTOBER 2016Page 18 of 19

respectfully pray that after due notice and hearing, the HonorableCommission:

1. ISSUE an Order treating Annexes "F", "G", "G-l", and"G-2", and all the information contained therein asconfidential, directing their non-disclosure to personsother than the officers and staff of the HonorableCommission, continuously protecting the saidinformation from public disclosure by maintaining thesame separate and apart from the records of the case,and ensuring that these are not divulged tounauthorized persons, pursuant to Rule 4 of its Rulesof Practice and Procedure; and

2. ISSUE a Decision approving the Joint Application andthe PSC between ISELCO I and MPGC, andauthorizing ISELCO I to charge and collect the feestherein from its member-consumers.

Other reliefs just and equitable under the premises are,likewise, prayed for.

The Commission has set the Joint Application fordetermination of compliance with the jurisdictional requirements,expository presentation, Pre-trial Conference, and presentation ofevidence on 29 November 2016 at one o'clock in theafternoon (1:00 P.M.), at ISELCO I's principal office atAlicia, Isabela.

All persons who have an interest in the subject matter of theproceeding may become a party by filing, at least five (5) days prior tothe initial hearing and subject to the requirements in the 2006 Rulesof Practice and Procedure, a verified petition with the Commissiongiving the docket number and title of the proceeding and stating: (1)the petitioner's name and address; (2) the nature of petitioner'sinterest in the subject matter of the proceeding, and the way andmanner in which such interest is affected by the issues involved in theproceeding; and (3) a statement of the relief desired.

All other persons who may want their views known to theCommission with respect to the subject matter of the proceeding mayfile their opposition to the Joint Application or comment thereon atany stage of the proceeding before Applicants conclude thepresentation of their evidence. No particular form of opposition orcomment is required, but the document, letter or writing shouldcontain the name and address of such person and a concise statementof the opposition or comment and the grounds relied upon.

,J

i

ERC CASE NO. 2016-156 RCNOTICE OF PUBLIC HEARINGf 17OCTOBER 2016Page 19 of 19

All such persons who wish to have a copy of the JointApplication may request from Applicants that they be furnished withthe same, prior to the date of the initial hearing. Applicants arehereby directed to furnish all those making such request with copiesof the Joint Application and its attachments, subject to thereimbursement of reasonable photocopying costs. Any such personmay likewise examine the Joint Application and other pertinentrecords filed with the Commission during the standard officehours.

WITNESS, the Honorable Chairman JOSE VICENTE B.SALAZAR, and the Honorable Commissioners ALFREDO J. NON,GLORIA VICTORIA C. YAP-TARUC,JOSEFINA PATRICIAA.MAGPALE-ASIRIT, and GERONIMO D. STA. ANA, EnergyRegulatory Commission, this l'1h day of October 2016 at PasigCity.

J. MARASIGANwfofStaff

Officeof the Chairman and CEO

LS:I&t

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