.~~~A~"'~- '''{-I!!Q:' " . ~

Republic of the Philippines ,'It NPPj(WCJ for ~.I PI" Z

ENERGY REGULATORYCOMMISSION' f"'{l';~;g ..San Miguel Avenue, Pasig City 1'i¥J~)~

IN THE MAlTER OF THEAPPLICATION FORAPPROVAL OF THE POWERPURCHASE AND SALEAGREEMENT (PPSA)BETWEEN EASTERN SAMARELECTRIC COOPERATIVE,INC. AND GNPOWERDINGININ LTD. CO., WITHPRAYER FOR CONFIDENTIAL.TREATMENT OFINFORMATION AND THEISSUANCE OF PROVISIONALAUTHORITY

ERC CASE NO. 2016-058 RC

EASTERN SAMAR ELECTRIC. COOPERATIVE, INC.(ESAMELCO) AND GNPOWERDINGININ LTD. CO. (GNPD),

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

NOTICE OF PUBLIC HEARING

TOALL INTERESTED PARTIES:

Notice is hereby given that on 27 April 2016, the Eastern SamarElectric Cooperative, Inc. (ESAMELCO) and GNPower Dinginin Ltd.Co. (GNPD) filed an Application for approval of the power purchase'and sale agreement (PPSA) between them, with prayer forconfidential treatment of information and the issuance of provisionalauthority.

In the said Application, ESAMELCO and GNPD alleged thefollowing:

1. Applicant ESAMELCOis a non-stock, non-profit electriccooperative, duly organized and existing under and by virtueof the laws of the Philippines, with principal office address

ERCCase No. 2016-058 RCNotice of Public Hearing/2o July 2016Page 2 Of13

Cabong, Borongan, Eastern Samar. It is authorized todistribute and provide electricity services to its member-consumers in the Municipalities of Jipapad, Arteche, SanPolicarpo, Oras, Dolores, Maslog, Can-avid, Taft, Sulat, SanJulian, Maydolong Balangkayan, Llorente, Hernani, GeneralMacArthur, Quinapondan, Giporlos, Balangiga, Lawaan,Salcedo, Mercedes, and Guiuan, all in the Province of EasternSamar (collectively, the "Franchise Area");

2. Copies of ESAMELCO's Articles of Incorporation, By-Laws, Certificate of Registration and Certificate of Franchiseare attached as follows:

Annex .. -_._-, ,-.-

~.. Document

"A" ESAMELCO'sArticles of Incorporation"B" ESAMELCO'sBy-laws

"C" Certificate of Registration with the NationalElectrification Administration (NEA)

"D" Certificate of Franchise

3. Meanwhile, Applicant GNPD is a duly registered limitedpartnership organized and existing under Philippine laws,engaged in the business of developing, constructing, operatingand owning power generation facilities and in the sale andtrade of electric power. Its principal office is at 28th Floor,Orient Square Building, Don Francisco Ortigas, Jr. Road,Ortigas Center, Pasig City;

4. Applicant GNPD's owners and development team, at thetime of the privatization of NPCjPSALM's assets, focused onthe development and construction of the first large-scalepower plant in the Philippines, the 2x300MW coal-fired powerplant of GNPower Mariveles Coal Plant Ltd. Co., after theenactment of EPIRA to support the government's call foradditional capacity to meet the growing power demand. It alsoencouraged other IPPs to build and add new capacity that ledto our current state of a stable supply in Luzon;

5. Applicant GNPD's pertinent documents evidencing itsdue registration as a limited partnership are appended heretoas follows:

Allnex';"E""F"

DocumentCertificate of Registration issued by theSecurities and Exchan e Commission (SEC)GNPD's Articles of Partnershi

6. Applicants may be served with orders, notices and otherlegal processes of this Honorable Commission through theaddress of the undersigned counsels;

ERC Case N(). 2()1~-058RCNotice of Public Hearing/2o July 2016Page 3 of ,.8 .

. . .

7. l3yand pursuant ~oSections 23, 25, 43 (u), and 45 (b) ofRepublic Act No. 9136, otherwise known as the Electric PowerIndustry Reform Act of 2001 (EPlRA), its ImplementingRules and Regulations, and other pertinent rules andregulations, the instant Application for the consideration andapproval of the Power Purchase and Sale Agreement (PPSA)executed by and between Applicants ESAMELCO and GNPDon 16December 2015 is herein respectfully filed. A copy of thePPSA is hereto attached as Annex "G"and forms an integralpart hereof;

I. STATEMENTOF FACTS

ESAMELCO's Power Supply and Demand Situation

8. ESAMELCO,together with other Region 8 ECs, needs toaddress the insufficiency of its power supply due to theincreasing demand within its franchise area;

9. ESAMELCOcurrently receives a total of nMW from itsexisting suppliers out of its peak requirement of 15.82MW.With an annual average growth rate of 3.51%, ESAMELCOforecasts that its peak demand for the years 2017 to 2023 willbe 21.90MW;

10.The eleven (n) electric cooperatives (ECs) of Region 8,namely:

(i) Biliran Electric Cooperative, Inc. (BILECO)(ii) Don Orestes Romualdez Electric Cooperative, Inc.

(DORELCO)(iii) Eastern Samar Electric Cooperative, Inc.

(ESAMELCO)(iv) Leyte II Electric Cooperative, Inc. (LEYECOII)(v) Leyte IIIElectric Cooperative, Inc. (LEYECOIII)(vi) Leyte IV Electric Cooperative, Inc. (LEYECOIV)(vii) Leyte V Electric Cooperative, Inc. (LEYECOV)(viii) Northern Samar Electric Cooperative, Inc.

(NORSAMELCO)(ix) Samar I Electric Cooperative, Inc. (SAMELCOI)(x) Samar II Electric Cooperative, Inc. (SAMELCO II)

and(xi) Southern Leyte Electric Cooperative, Inc. (SOLECO),

collectively, the "Region 8 ECs", have just concluded thecompetitive selection process with FDC Utilities, Inc. (FDC),Trans Asia Oil and Energy Development Corporation (TransAsia), GNPower Ltd. Co. (GNPower), and San Miguel EnergyCorporation (SMEC) for their short-term power supplyrequirements, covering the period 2015-2018 for demandsranging from 65MW in 2015 to 93MW in 2018;

ERCCase NQ. 2016-05tJ RCNotice of Public Hearing/20 July 2016Page 4 Of1~ .

l~.Subsequently, the faregaing Regian 8 ECs received twa(2) unsalicited prapasals far the supply af their aggregatedlang-term baselaad demand af 150MW fram December 26,2018 to.December 25,2038, ar far a twenty (20) year periad;

The Competitive Selection Process

12.Guided by a declared and agreed palicy and guidelinesas described in Regian 8 ECs Rules and Procedures farUnsalicited Prapasal, which is Annex A af the Instructians to.Prapanents (subsequently, the Final Instructians to.Prapanents), the Regian 8 ECs created the Jaint CampetitivePawer Supply Pracurement (JCPSP) Baard, the R8 JCPSPBids and Awards Cammittee (JBAC) and the Care TechnicalWarking Graup (CTWG)l to. canduct the initial evaluatian afthe unsalicited prapasals in arder to. determine which will bemare advantageaus far the Regian 8 ECs;

13.The CTWG faund the prapasal af GNPawer better andcansistent with the criteria set farth in the afarementianedpalicy and guidelines;

14.GNPawer submitted a Firm and Final Prapasal,cantaining the Legal, Technical and Financial Dacuments; theTechnical Prapasal; and the Financial Propasal, as required bythe JBAC. GNPawer, thraugh the submitted biddingdacuments, manifested to. R8 JBAC that a special purpasecampany was established far the Dinginin Praject, which isGNPawer Dinginin Ltd. Ca. (GNPD), and GNPawer is the leaddevelaper af the said praject;

15.After a mare detailed evaluatian, the JBAC endarsed theGNPawer prapasal to. the R8 JCPSP Baard, which grantedGNPawer the Original Proponent status in the CampetitiveSelectian Pracess thraugh Camparative Prapasals far thepracurement af the lang-term baselaad pawer supply afRegian 8 ECs;

16.Generating campanies (GENCOs) were invited to.submit Camparative Prapasals to. challenge GNPawer's afferthraugh publicatians in newspapers af general and natianalcirculatian far twa (2) cansecutive weeks and thraugh writteninvitatians to.the GENCOslisted in the DOEwebsite;

1The Region 8 JCPSP Board is composed of all Board Presidents and General Managers of the 11Electric Cooperatives in the islands of Leyte, Biliran and Samar. The R8 JCPSP BAC (or JBAC) iscomposed of representatives of the BAC of each EC. The J1WG is composed of technical, financeand market trading personnel from the ECs. Select members of the J1WG which is called CoreTechnical Working Group or ClWG was tasked to provide direct technical support to the JBAC.

ERCCase No. 2016-058 RCNQtice of Public Hearing/2o July 2016Page 5 Of18

17.Participating GENCOssubmitted letters of intent (LOIs)and afterwards, they were provided with a copy theInstructions to Proponents (ITP) (subsequently, FinalInstructions to Proponents) and due diligence data.Thereafter, transaction conferences were held to clarify anddiscuss the transaction process, requirements, rules andevaluation methodology;

18.During the suhmission and opening of bids, only SanMiguel Energy .Corporation ("SMEC") submitted acomparative proposal. However, upon evaluation, SMEC'sevaluated long-term levelized price was found to be higherthan GNPower's;

19.On 13 November 2015, the R8 JBAC issued a Notice ofAward to GNPower and the same was accepted by GNPoweron 14November 2015;

20. Afterwards, the Region 8 ECs, GNPower and GNPDnegotiated the final terms and conditions of the PowerPurchase and Sale Agreement (PPSA) based on the KeyContract Terms provided in the Final Instructions toProponents. Separate/individual but identical PPSAs weresigned by and between each of the 11Region ECs and GNPD;

21. Accordingly, on December 16, 2015, ESAMELCOandGNPD executed the subject PPSA, providing the terms andconditions for the supply of 15MW baseload power toESAMELCO to assure the adequate and reliable supply ofpower to ESAMELCO'sfranchise area;

22. In support of the above competitive selection process,Applicants ESAMELCOand GNPDhereby attach the followingdocuments to form integral parts hereof:

"J""K"

"K-l""K-2"

"K-3"

Instructions to Pro onents (ITP)Final Instructions to Pro onents (FITP)Information MemorandumComments to the Unsolicited Proposal ofGNPowerGNPower Unsolicited Proposal EvaluationRe ortInvitation to Submit Comparative Proposals aspublished in the Philippine Daily Inquirer on 07Au ust 2015Affidavit of Publication dated 15A ril 2016Invitation to Submit Comparative Proposals aspublished in the Manila Bulletin on 14 August2015Affidavit of Publication dated 15A ril 2016

ERC Case No. 2016-058 RCNotice of Public Hearing/20 July 2016Page 6 Of18

"L" AES Philippines' Letter of Intent to Participatein Region 8 Joint Competitive Power SupplyProcurement dated 02 September 2015

"L-l" FPC Utilities, Inc.'s Letter of Intent dated 01September 2015

"L-2" SMC Global Power's Letter of Intent toParticipate dated 26 August 2015

"M" Limay Premiere Power Corp.'s letter dated 28October 2015

"N" R8 JCPSP Assessment of SMC Global PowerFinancial Model

"0" Notice of Award to GNPower dated 13November2015

II. ABSTRACTOF THE PPSA AND OTHERRELATED INFORMATION

23. The following are the salient features ofthe PPSA:

A. Term of Agreement. The PPSA shall be effective atthe date of its execution, and shall terminate after 240 monthsfrom the date specified in the Commencement Date Notice2defined as the written notice that indicates thecommencement of the first delivery of the Product after GNPDbegins commercial operations in the market, which shall notbe later than the first day of the Billing Period immediatelyafter the lapse of thirty-six (36) months from the ERC's finalapproval of the PPSA;3

B. Source of Supply4. GNPD shall make available, sell,and deliver or cause to be delivered to ESAMELCO theProducts at the Delivery Point, whether sourced from GNPD'sfacility or from other electricity generators, including theWholesale Electricity Spot Market (WESM);

GNPD's facility shall be constructed and operated inMariveles, Bataan. The Technical Details of the Project isherewith attached to form an integral part hereof as Annex"P'"~-,

C. Contracted Capacity. ESAMELCO is contractuallyentitled to receive from GNPD, at any hour, subject to GNPD'sAvailable Capacity (as defined in the PPSA) for such hour, theContracted Capacity (as defined in the PPSA), as follows:

2 Section 1.3, Schedule 1. Contracted Capacity, Contract Price and Terms of Agreement, PPSA,page 30

3 Section 1.1, Article 1. Definitions and Interpretations, PPSA, page 44 Section 3.1, Article 3. Obligations and Deliveries, PPSA,page 115 Refers to electric capacity, contracted on a variable Capacity Utilization Factor basis, togetherwith energy, as specified in Schedule 1of the PPSA, as the context requires, or as otherwiseagreed by the Parties. (Section 1.1, Article 1. Definitions and Interpretations, PPSA,page 8)

ERCCase No. 2016-058 RCNotice of Public Hearing/20 July 2016Page 70f18

Year Contracted Capacity(kW)

1 15,0002 15,000

3 15,000

4 15,000

5 15,0006 15,000

7 15,0008 15,000

9 15,00010 15,00011 15,00012 15,00013 15,00014 15,00015 15,00016 15,00017 15,00018 15,000

19 15,00020 15,000

ESAMELCO shall utilize and pay for the capacitydelivered by GNPD at 65% to 100% Capacity Utilization Factor(CUF). GNPD may increase the capacity up to 83% CUF andlower the same to not less than 65% CUF.

C.l.Option to Increase Contracted Capacity

Section 3.7 of the PPSA, provides that upon writtennotice to GNPD, ESAMELCO may, upon approval byGNPD, increase its Contracted Capacity which increaseshall be subjected to the same terms and conditionscontained in the PPSA. In considering whether or not toapprove the request for increase in Contracted Capacity,GNPD may take into consideration the capacity availablefor such increase from its facility in its sole opinion, and/orthe willingness of any other buyer to assign its ContractedCapacity. Such increase in Contracted Capacity shall beeffective on the date GNPD gives its written approval.

D. Contract Price

The Contract Price shall be composed of Capacity Priceand Energy Price. The Capacity Price shall be computed as theproduct of the Capacity Fee for a Billing Period multiplied bythe quantity of Product delivered at the Delivery Point. TheEnergy Price shall be computed as the product of the EnergyFee for a Billing Period multiplied by the quantity of Product

ERe Case No. 2016-058 RCNotice of Public Hearing/2Q JlJly 2Q16Page 8 of 18

delivered at the pelivery Point, and shall be inclusive of theexi~ting Government Charges under Energy Regulations No. 1-94 as of Effective Date. .

D.l. Capacity Fee

The Capacity Fee is the component of the ContractPrice allocated to pay for the cost, as well as the operationsand maintenance of the power plant and is designated asthe Capacity Fee in Schedule 1 of the PPSA as such may beadjusted from time to time based on GNPD's CapacityFactor.

The corresponding Capacity Fee for a given CapacityUtilization Factor is set forth in the table below:

Capacity Fees for Specific Capacity Utilization Factors

CapacityUtilization Factor Capacity Fee

(%) ($ /kWh)100% 0.045699% 0.046098% 0.046497% 0.046796% 0.047195% 0.047594% 0.047993% 0.048392% 0.048791% 0.049190% 0.049689% 0.050088% 0.050587% 0.050986% 0.051485% 0.051984% 0.052483% 0.052982% 0.053481% 0.054080% 0.054579% 0.055178% 0.055677% 0.056276% 0.056875% 0.057574% 0.058273% 0.058972% 0.0596

ERC Cas~No. 2Q16-058 RCNotice ofPubli,e Hearing/2o July 2016Page 9 Of18

71% 0.060370% 0.061169% 0.061868% 0.062667% 0.063466% 0.064365% 0.0651

For the resulting Capacity Utilization Factor which isnot a whole number, the corresponding Capacity Fee shallbe computed using the formula as set forth below:

Capacity Fee= - 0.10971 X (CUF)3 + 0.344263 X (CUF)2- 0.39644 x CUF + 0.2075

Where:

Capacity Fee - is the Capacity Fee in $/kWh

CUF - is the Capacity Utilization Factor between 65%and 100%, provided that if the actual CUF is below 65%(the "Minimum Capacity Utilization Factor"), theCapacity Price shall be calculated based on theCapacity Fee and quantity associated with theMinimum Capacity Utilization Factor.

The Capacity Utilization Factor (CUF) shall becomputed asfollows:

CUF = QCC * [HT - EHro]

Where:

Q = Quantity as defined in Section 1.1 of theAgreement

CC = Contracted Capacity, in kW, as set forth inSchedule 1

HT = Total number of hours in such Billing PeriodEHTO = the sum of the duration, in Equivalent Hours,

of Scheduled Outages and Unscheduled Outagesin such Billing Period

For example,

Q =CC =HT =EHTO =

18,648,000 kWh37,000 kW720 hours101 hours

ERCCase No. 2016-058 RCNotice of Public Hearing/20 July 2016Page 10 Of18

l8,648,QOQ kWhCUF = ., .. '.. .

37,000 kW * [720 hours - 101 hours]

18,648,000 kWh- 22,903,000 kWh

= 81.42% .

D.2. Energy Fee

[ClF. ] .

Energy Fee = lEF x _n_ClFo

Where:

IEF - Initial Energy Fee equal to $0.0328/ k'WhCIFn - CIF Cost of Fuelfor Billing Period nCIFo - Base CIF Cost of Fuel equal to $10.2514 /

million keal

E. Capacity Utilization Discount. Section 5.3 (c) of thePPSA provides that if ESAMELCO pays the invoice amount infull in accordance with GNPD's invoice instruction on orbefore the twenty-fifth (25th) day of the succeeding calendarmonth from the relevant Billing Period and ESAMELCO's CUFis greater than or equal to 65%, ESAMELCO shall receive acredit on the next subsequent bill equal to 2.8% of the EnergyFee multiplied by the actual quantity of the Product actuallydelivered set forth in such invoice for the Billing Period forwhich the credit was earned.

F. Scheduled and Unscheduled Outages. Pursuant toSection 3.2, GNPD is allowed Scheduled Outages not to exceedfive hundred forty (540) Equivalent Hours for each ContractYear during which times reduced or no deliveries will beavailable to ESAMELCO. GNPD is likewise allowedUnscheduled Outages of five hundred forty (540) EquivalentHours for each Contract Year during which times reduced orno deliveries will be available to the Buyer.

III. COMMERCIALADVANTAGE OFTHEGENERATION RATEAND IMPACTON ESAMELCO'S

RETAILRATES

24. ESAMELCO, together with the other Region 8 ECs,needs to address the insufficiency of its power supply due tothe increasing demand within its franchise area;

25. The additional supply from GNPD will significantlyaugment the supply deficiency of ESAMELCO and will

ERC Case No. 2016-058 RCNotice ofPu~licHearingj2Q Jqly 2()16Page 11Of1S

decr~ase the adverse effects thereof by providing a stable andadequate source of electricity;

26. Aside from the lower generation cost of the powersupply from GNPD, ESAMELCOis also entitled to CapacityUtilization Discount, if conditions are met, which makes evenmore competitive the proposed rate contained in the subjectPPSA. Also, it is worthy to note that the GNPD rate wasfurther reduced during the. finalization of the PPSA withRegion 8 ECs where it was requested that. the conditions toavail Prompt Payment Discount (PPD) and the posting of asecurity deposit be waived. As a result, the Contract Price isalready net of PPD;

27. Among alternative suppliers capable of providingadditional energy to ESAMELCOand the rest of the Region 8ECs, GNPD's rates proved to be more reasonable andcompetitive. While GNPD's offer is primarily intended for itsbase load requirements, the Capacity Factor Pricing under thePPSAprovides flexibility in the Region 8 ECs' utilization of theContracted Capacity;

28. ESAMELCO simulated a rate impact analysis whichultimately resulted in PhPO.1230/kWh rate reduction with theexecution of the PPSAwith GNPD, to wit:

ESAMELCO RATE IMPACT ANALYSIS

withGNPD

Forecasted Resulting 2019 Weighted2019* Amount Percent Capacity Average Average

Average (PhP) Share Utilization Rate RateQuantity (%) Factor (%) (PhPjkWh) (PhPjkWh)(kWh)

GNPD 103,567,464.65 378,601,223.77 96.83% 79% 3.6556

WESM 3,386,836.34 15,946,887.61 3.17% 4.7085 3.6889

TOTAL 106,954,300.99 394,548,111.39 100%

without GNPD

Forecasted Percent Resulting 2019 Weighted2019*Average Amount Share Capacity Average Average

Quantity (PhP) (%) Utilization Rate Rate(kWh) Factor (%) (PhPjkWh) (PhPjkWh)

GNPD 0.00 0.00 0.00% 0% 0.0000

WESM 106,954,300.99 407,695,383.27 100.00% 3.8119 3.8119

TOTAL 106,954,300.99 407,695,383.27 100%,l_GE~E~TION RATEIMPACT,PhPjkWh (0.1230)

Notes:Analysis and simulations is based on ESAMELCO'sforeeasted 2019 hourly load profile

ERCCase No. 2016-058 RCNotice of Public Hearing/20 July 2016Page 12 of 18

GNPD rate is based on applicable (i) Capacity Fee at Resulting Capacity Factor; (ii) March 2015 to February2016, FOREX (iii) Energy Fee based on projected 2019 prices subject to rate escalation by 2019 based on 2019Inflation Factors from World Bank Commodities Price Forecast (Nominal USD), July 15, 2015;WESM Prices is based on 2015 prices of Nodal Points of ESAMELCO and escalated to 3% per year upto 2019

* GNPD under Interim/Partial Delivery

29. In compliance with Rule 20 of ERC Rules of Practiceand Procedure relative to the submission of supportingdocuments and information for the approval of the PPSA andthe rate structure embodied therein, Applicants ESAMELCOand GNPD attach the following documents to form integralparts hereof:

rANNEX -- DocuMENT - - --'I! - -" .... il

"0" Executive Summary of the PPSA"Q-1" Breakdown of the Contract Price and Sample

Calculation"R" Rate Impact Simulation"8" GNPD's Financial Assumptions including Project

Cost, Sources of Financing, Debt-Equity Ratio,WACCcomputation, and Projected Equity IRR

"T" Breakdown of Costs including Engineering,Procurement and Construction (EPC) Costs,Operations and Maintenance (O&M) Costs, andProiected Fuel Costs

"u" Projected Balance Sheet, Income Statement,Revenue and Cash Flow

"U-l" Compact Disc containing a soft copy of Annexes"s" to "u"

"V" Details of Fuel Procurement"V-l" Sworn Statement - Coal Procurement Process"w" GNPD's Audited Financial Statement for 2014"X" GNPD's Transmission Plan for the Proiect"-y" Certificate of Endorsement from DOE that the

Project IS included III the DOE's PowerDevelooment Plan

"Y-l" Environmental Certificate of Compliance fromDENR

"z" ESAMELCO's Distribution Development Plan(DDP)

"AA" ESAMELCO's Actual and Forecasted Energy andDemand

"BB" ESAMELCO'sAverage Daily Load Curve"CC" ESAMELCO's Board Resolution authorizing the

Board President and the General Manager to signthe Power Purchase and Sale Agreement (PPSA),to file with the ERC the Application for theapproval of the said PPSA, and for other purposessign the PPSA on behalf of ESAMELCO, to engageAtty. Ma. Concepcion Ojeda as legal counsel andto designate competent persons as witness

ERC Case No. 2016-058 RCNotice of Public Hearing/2Q July 2016Page 13 of 18

, ,.

"DD"GNPD'sGeneral Partner's Certificate q.ttesiing tothe resolution of the General Partners to executethe subject PPSA with ESAMELCO anddesi natin si natories thereto

"DD-1" GNPD's General Partner's Certificate attesting tothe resolution of the General Partners to file anapplication for the approval of the subject PPSAwith . ERC. and designating its authorizedre resentatives and Ie al counsels

30. Applicants ESAMELCOand GNPD are reserving theirright to submit other documents, either in the course of thehearing or as may be required by this Honorable Commission.

IV. COMPLIANCEWITH PRE-FILINGREQUIREMENTS

31. Applicants manifest compliance with the pre-filingrequirements mandated under the Implementing Rules andRegulations of the EPIRA and Rule 6 of the ERC Rules ofPractice and Procedure, to be established by the following:

a. Certifications acknowledging receipt of theApplication with annexes to be issued by the LegislativeBodies of Pasig City, City of Borongan, and the Province ofEastern Samar, to be appended as Annexes "EE", "FF"and "GG", respectively;

b. Notarized Affidavit of Publication stating that theApplication was published in a newspaper of generalcirculation within ESAMELCO's Franchise Area, to beappended herein as Annex "HH"; and

c. Complete newspaper issue where the Applicationwas published, to be appended herein as Annex "HH-1",and the relevant page thereof where the Applicationappears, as Annex "HH-2";

V. MOTION FOR CONFIDENTIAL TREATMENT OFANNEXES "H" to "J" and "S" to "V"

32.Under Rule 4 of the ERC Rules of Practice andProcedure, a party to any proceeding before the HonorableCommission may request that certain information not bedisclosed and be treated as confidential, by describing withparticularity the information to be treated as confidential,specifying the ground for the claim of confidential treatmentof the information and, if applicable, specifying the periodduring which the information must not be disclosed;

ERCCase No. 2016-058 RCNotice ()fPublic Hearingj2Q July 2016Page 14 of 1~ '

33. Applicant ESAMELCO humbly requests for t):leconfidential treatment of Annexes "H" to "J" hereof,consisting of the tender documents. These annexes show theindividual offers of the bidders which participated in the R8JCPSP, as well as the results of the evaluation. The Region 8ECs, ESAMELCOincluded, are bound by their undertaking tosecure and keep in confidence the offers and the proposedterms of supply, so as not to prejudice or pre-empt any futureCSPs in which these bidders will participate. Otherwise,ESAMELCO and the rest of the Region 8 ECs may be heldliable for damages for breach of confidentiality, andeventually, risk their good relations with the suppliersconcerned;

34. Similarly, Applicant GNPD respectfully moves for theconfidential treatment ofAnnexes "8" to "V" hereof. Theseannexes, exclusively owned by Applicant GNPD, containinformation which are considered part of its business andtrade secrets. As such, GNPDhas the sole proprietary interestand will be unduly prejudiced should they be, disclosed to thepublic;

35. These annexes contain numbers, data, formula,methodology, and calculations involving valuable andsensitive commercial, financial information reflecting GNPD'sbusiness operations and financial trade secrets. Therefore,GNPD's confidential, proprietary, and private informationincluded in the aforesaid annexes should be protected frompublic dissemination. Otherwise, such information can beillegally and unfairly utilized by business competitors who mayuse the same for their own private gain and to the irreparableprejudice of GNPD. Negotiations with prospective customersmay also be affected;

36. The information contained in Annexes "8" to "V",constitute "trade secrets", for which GNPD has actual andvaluable proprietary interest. As explained by the SupremeCourt, a trade secret may consist of any formula, pattern,device, or compilation of information that is used in one'sbusiness and gives the employer an opportunity to obtain anadvantage over competitors who do not possess theinformation6• It is indubitable that trade secrets constituteproprietary rights and jurisprudence has consistentlyacknowledged the private character of trade secrets7• Further,as ruled in Garcia VS. Board of Investments8, trade secretsand confidential, commercial and financial information areexempt from public scrutiny;

6 Air Philippines Corporation vs. Pennswell Inc., G.R. No. 172835, December 13, 2007.7 Ibid.,8177 SeRA 374 (1989).

ERCCase No. 2016-058 RCNotice of Public Hearing/2o July 201~Page 15Of18

37.Accordingly, it is respectfully submitted that Annexes"H" to "J" and "S" to "Y" must be accorded confidential. . .

treatment. As such, they are to be used exclusively by theHonorable Commission and for the sole purpose of evaluatingthis Application, thereby protecting these data. fromunnecessary public disclosure;

38. In accordance with Section 1(b), Rule 4 of the ERCRules of Practice and Procedure, Applicants ESAMELCOand. GNPD submit one (1) copy each ofAnnexes "H" to "J" and"S" to "Y" in a sealed envelope, with the envelope and eachpage of the documents stamped with the word "Confidential";

VI. PRAYER FOR PROVISIONAL AUTHORITY

39. All the foregoing allegations are re-pleaded byreference in support of herein Prayer for the issuance ofProvisional Authority to implement the subject PPSA;

40. ESAMELCO and GNPD pray for the issuance of aProvisional Authority or interim relief prior to final decisionpursuant to Rule 14 of the ERC Rules of Practice andProcedure, to wit:

"Section 3. Action on the Motion. - Motionsfor provisional authority or interim relief may beacted upon with or without hearing. The Commissionshall act on the motion on the basis of the allegationsof the application or petition and supportingdocuments and other evidences that applicant orpetitioner has submitted and the comments oropposition filed by any interested person, if there beany."

41. Worthy of note is that based on the Department ofEnergy's (DOE) 2015-2030 Luzon and Visayas Grids Supply-Demand Outlook, Luzon's peak demand in 2015 is 8,974MWwith an Annual Average Growth Rate (AAGR)of 4.85% whileVisayas' Peak Demand is 1,847MW with AAGR of 3-4%.Therefore, Luzon's peak demand is expected to increase to11,347MWin 2020, and to 18,264MW by the year 2030 andfor Visayas, 2,042MW in 2020 and 3,025MW in 2030. Thiselectricity demand growth has led to DOE's call for planningand investments in the power sector;

42. The continuous addition of supply shall help keepstable power supply for the increasing demand and low andstable cost of power available at the WESM and for the end-users;

ERCCase No. 2016-058 RCNotice ofPu~lic Hearing/20 ~uly 2016Page 1(jof 18

43. Contributing to the J",uzonand Visayas Grid's demandgrowth is ESAMELCO's peak load demand which increases ata rate of 3.51% per year. By 2019, it is projected thatESAMELCO's existing power suppliers will not be able to meetthe power needs of its member consumers, which is expectedto have increased to 16.3%;

. 44. Thus, the PPSA with GNPD is crucial for ESAMELCOto guarantee that. its forward power needs are satisfied,without compromising the .reasonableness of the generationrate to be passed on to its member-consumers;

45. While target delivery of power under the terms andconditions of the PPSA is expected to commence not later thanthirty-six (36) months after the final approval of theHonorable Commission, the Parties, however, intend tocommence delivery whether on an interim or full capacitybasis on December 26, 2018. Applicants, nonetheless, shallbegin at the earliest opportune time their compliance with allfinancial and regulatory requirements and processes leadingup to the timely completion of GNPD's facility;

46. It is also worthy to note that part of the funds neededto construct GNPD's facility will be sourced from loans comingfrom banks/financial institutions. The HonorableCommission's provisional approval of the instant Applicationis a vital requirement for the release of the loan proceeds.Hence, a timely compliance with the requirements of thefinancial agreements ensures stable source of funds and timelyconstruction of the generation facility, and theimplementation of the PPSA as contemplated by theApplicants;

47. With continuous financing, the timely implementationof the project shall be assured, to the full benefit ofESAMELCO and the Luzon and Visayas' Grids. Otherwise, anydelay in the implementation of the project shall exposeESAMELCO to supply risk and unstable market prices in thefuture;

48. To emphasize the necessity of a provisional approvalof herein Application, a Judicial Affidavit to support theprayer for provisional authority will be attached herewith toform an integral part hereof as Annex "II";

49. In recognition of the fact that a substantial amount oftime is customarily needed to evaluate the documentssubmitted to support the approval of herein Application,Applicants ESAMELCO and GNPD seek the kindconsideration of the Honorable Commission to approve theinstant Application, immediately, albeit, provisionally;

ERCCase No. 2016-058 RCNotice of Public Hearing/20 July 2016Page 17Of18

PRAYER

WHEREFORE, premises considered, it is mostrespectfully prayed of the Honorable Commission that (i) allinformation set forth in Annexes "H" to "J" and "S" to"V" to the instant Application be treated as confidential; (ii)pending hearing on the merits, a Provisional Authority beDULY ISSUED authorizing the immediate implementationof the subject Power Purchase and Sale Agreement (PPSA)betweenApplicantsESAMELCOand GNPD,including the ratestructure therein, as applied; and (iii) that after due notice andh,earing,the instant Application, the Power Purchase and SaleAgreement and the rate structure contained therein be DULYAPPROVED.

Further, in the event that a Final Authority shall beissued after GNPD starts actual delivery of power toESAMELCOunder the terms of the subject PPSA,said FinalAuthority be retroactively applied to the date of such actualdelivery.

Other reliefs as may be just and equitable under thepremises are, likewise,most respectfullyprayed for.

The Commission has set the Application for determination ofcompliance with the jurisdictional requirements, ExpositoryPresentation, Pre-trial Conference, and presentation of evidence on19 October 2016 (Wednesday) at nine o'clock in themorning (09:00 A.M.) at ESAMELCO's principal office atCabong, Borongan, Eastern Samar.

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 ERC's 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 Application or comment thereon at anystage of the proceeding before the applicant concludes thepresentation of its evidence. No particular form of opposition orcomment is required, but the document, letter or writing should

ERC Case No. 2016-058 RCNotice of Public Hearingj2Q July 2016Page 18 Of18

contain the name and address of such person and a concisE(statementof the QPposition or comment and the grounds relied upon.

All such persons who wish to have a copy of the Applicationmay request from the applicant that they be furnished with the same,prior to the date of the initial hearing. The applicant is herebydirected to furnish all those making such request with copies of theApplication' and its attachments, subject to the reimbursement ofreasonable photocopying ,costs. Any such person may likewiseexamine the Application and other pertinent records filed with theCommission during standard office hours.

WITNESS, the Honorable Chairman JOSE VICENTE B.SALAZAR, and the Honorable Commissioners ALFREDO J. NON,GLORIA VICTORIA C. YAP-TARDC, JOSEFINA PATRICIAA. MAGPALE-ASIRIT, and GERONIMO D. STA. ANA, EnergyRegulatory Commission, this 20th day of July 2016 in Pasig City.

ATIY. NAT . MARASIGANCh if Staff

Office of the Chairman and CEO

~.NLS: ~rLS/APV