noticeofpublic hearing toall interested … erc case no. 2014... · san gabriel power plant (the...

Republic of the PhilippinesENERGY REGULATORY COMMISSION

San Miguel Avenue, Pasig City

IN THE MATTER OF THEAPPLICATION FOR AUTHORITYTO DEVELOP, OWN, ANDOPERATE DEDICATED POINT-TO-POINT LIMITED FACILITY TOCONNECT TO THE EXISTINGSAN LORENZO SWITCHYARD,WITH PRAYER FORPROVISIONAL AUTHORITY,

ERC CASE NO. 2014-117 MC

FIRST NATGAS POWERCORPORATION (FNPC),

Applicant.x----------------------- x

NOTICE OF PUBLIC HEARING

TO ALL INTERESTED PARTIES:

Notice is hereby given that on December 1, 2014, the FirstNatGas Power Corproation (FNPC) filed the Commission anapplication for authority to develop, own and operate dedicated point-to-point limited facilities to connect to the existing San LorenzoSwitchyard, with prayer for provisional authority.

In the said application, FNPC alleged, among others, thefollowing:

1. It is a power generation company duly organized andexisting under and by virtue of the laws of the Republic ofthe Philippines, with principal office address at 3rd Floor,Benpres Building, Exchange Road, corner MeralcoAvenue, Pasig City;

ERC CASE NO. 2014-117 MCNotice of Public Hearing/January 26, 2015 of 14

2. It is engaged in the business of generating power, derivedfrom coal, fossil fuel, geothermal, nuclear, natural gas,hydroelectric and other viable sources of power, for lightingand power purposes and whole selling the electric power toany power corporation, public electric utilities and electriccooperatives, and for the carrying of all business incidentthereto, and to acquire, build, construct, own, maintain andoperate all necessary and convenient buildings, structures,dows, machinery sub-stations, transmission lines, poles,wires and other things and devices, and to acquire andhold, water and flowage rights and to acquire, lease, hold,occupy or use lands rights of way and easements therein;

3. In its 2013 Supply-Demand Outlook, the Department ofEnergy (DOE) recognized the growing demand for power inthe Philippines. For the Luzon Grid, the DOE projected theenergy demand to increase at an average annual growthrate of 4.13%, from 7,969 MW in 2012 to 10,693 MW in2020 and will increase further t016,477 MW in 2030. TheDOE projects that an additional capacity of 500 MW will beneeded by 2016. This projection assumes that thecommitted plants for 2014 and 2015 are timely completed.Otherwise, additional capacity will be needed as early as2015;

4. To help address the need for additional capacity in theLuzon Grid, FNPC is developing an approximately 450 MWSan Gabriel Power Plant (the Plant), a natural gas-firedpower plant capable of operating in combined cycle locatedwithin the Santa Rita and San Lorenzo power plantcomplex in Barangays Sta. Rita Karsada and Sta. RitaAplaya, adjacent to the existing Santa Rita Power Plantand San Lorenzo Power Plant, in Batangas City. The Plantis intended to achieve commercial operations by April 1,2016;

5. It has already secured the endorsement of the localgovernment of Batangas City for the Plant. It obtainedcertifications from the Offices of the Barangay Chairman ofBarangay Sta. Rita Aplaya and Barangay Sta. RitaKarsada, on July 8, 2014 and August 16, 2014,respectively, confirming that their offices interpose noobjection to the construction and operation of the Plant. OnNovember 29, 2013, the Office of the City Mayor of

ERC CASE NO. 2014-117 MCNotice of Public Hearing/January 26,2015 of 14

Batangas City approved its application for the issuance ofthe Zoning/Locational Clearance for the Plant;

5.1. On January 24, 2014, it obtained its Mayor's Permitfrom the Business Permits and Licensing Officeunder the Office of the City Mayor of Batangas City,including related permits such as Fire SafetyInspection Certificate from the Bureau of FireProtection, Region 4-A Calabarzon, Province ofBatangas and Sanitary Permit to Operate from theOffice of the City Health Officer of Batangas City.

5.2 On December 19, 2005, it obtained theEnvironmental Compliance Certificate (ECC) for thePlant from the Department of Environment andNatural Resources (DENR). On September 3, 2012,the DENR granted its request for the extension ofthe validity of the ECC granted in 2005. On March17, 2014, the DENR approved the amendment ofthe ECC to downgrade the capacity of the Plantfrom 550 MW consisting of two (2) gas turbinecombined cycle units to 450 MW consisting of one(1) gas turbine combined cycle unit. In addition, onJanuary 24, 2014, the City Environmental Permit toOperate was issued to it by the City Environmentand Natural Resources Office of the CityGovernment of Batangas.

5.3. It is also in the process of obtaining the otherrequired permits for the development andconstruction of the Plant and will apply for thepermits necessary for the operation of the Plant,including the Certificate of Compliance (COC), atthe times required by the relevant law andregulations with respect to such permits.

6. To test, commission, and dispatch the Plant soon aftercompletion, it proposes a connection where the Plant will beconnected to the existing San Lorenzo switchyard (SLSwitchyard) through a dedicated point-to-point limitedconnection facility (San Gabriel - SL Connection Facility).The San Gabriel - SL Connection Facility will be connectedto the transmission system of the National Grid Corporationof the Philippines (NGCP) via the existing SL Switchyard.


6.1. The SL Switchyard is owned by FGP Corp., an affiliateof FNPC.

6.2. The connection of the San Gabriel - SL ConnectionFacility will consist of approximately two hundredtwenty (220) meter-long overhead line with a 230 kVsingle circuit steel structure strung with bundle of two(2) conductors per phase of 795 MCM ACSR providedwith Overhead Optical Ground Wires (OPGW).

6.3. As will be further discussed below, FNPC confirms thatthe proposed connection is the shortest and mostviable connection scheme for the Plant.

7. The cost for the San Gabriel - SL Connection Facility isincorporated in the total cost of the Equipment SupplyContract, as amended (Supply Contract), between theapplicant and Siemens Aktiengesellschaft dated December16, 2013 and the Construction Services Contract betweenthe applicant and Siemens, Inc. dated December 16, 2013for the engineering, design, procurement, manufacturing,transport, testing and supply of equipment and services forthe Plant. The costs in relation to the transmission line andthe expansion of the SL Switchyard are as follows: (a)Supply and delivery - Php75,463,123.34 and (b) Delivery,erection, installation, testing and commissioningPhp42,409,661.40. The San Gabriel - SL ConnectionFacility is projected to be completed by June 2015;

8. On and will timely apply for the permits and certificatesnecessary for its operation, including the Certificate ofCompliance;

The San Gabriel - SLConnection Facility is adedicated point-to-pointconnection facility and willbe used exclusively byFNPC

9. To reiterate, the San Gabriel - SL Connection Facility isdesigned for the sole purpose of connecting the Plant to theGrid through the SL Switchyard. The single-line diagram ofthe proposed interconnection shows that the San Gabriel -


SL Connection Facility will be exclusively used by FNPCand is not designed and configured to serve end-users;

10. The San Gabriel - SL Connection Facility is also classifiedas a "Connection Asset" under the Commission'sResolution since it is primarily designed to connect the Plantto the Grid and will be used for the conveyance of electricityfrom the Plant to the Grid. If the San Gabriel - SLConnection Facility is taken out of the transmission systemof NGCP, such disconnection will only affect FNPC and willhave minimal effect on the Grid, or other connectedcustomers;

The San Gabriel - SL ConnectionFacility is part of and consistentwith the 2013 TransmissionDevelopment Plan

11. The proposed San Gabriel - SL Connection Facility is partof and consistent with the TOP. The TOP refers to theprogram for managing the transmission system throughefficient planning for its expansion, upgrading,rehabilitation, repair, and maintenance, formulated by theDOE and implemented by the NGCP. The 2013 TOPidentifies the Plant as one of the proposed generatingplants in Luzon, and provides that said Plant is to beconnected to the Grid via the SL Switchyard. The 2013TOP states:

"Generation Capacity Addition

This section shows the proposed generatingplants in Luzon, Vizayas and Mindanao Gridsbased on DOE List of Private Sector-InitiatedPower Projects as of December 13, 2013 (the2012 PDP Update)."

Thus, there will be three (3) generation projectclassifications, as follows:

a. Committed - These are the projects that haveservice contracts in place and are in the


development/commercial stage and have financialclosing already.

b. Indicative - Projects with service contracts are inthe developmenUcommercial stage but with nobank financing yet.

c. Prospective - Projects with DOE clearance toundertake SIS and service contracts and on thepredevelopment stage. These projects are notincluded in the official list of DOE's "Private Sector-Initiated Power Projects".

List of Luzon Generation Capacity Addition(DOE List of Private Sector-Initiated Power Projects

as of December 13,2013)

ProposedComm. Year Generation Facilit

2015 San GabrielNatural Gas

550

LocationSanGabriel,Batangas

11.1 The 2013 TOP further provides that the Plantwill be connected to the Luzon Grid via theSL Switchyard:

With the projected increase in demand inLuzon Grid, generation capacity expansionsare programmed in Batangas, as shownabove. The proposed Puting Bato andBatangas [Coal-Fired Power Plant] will beconnected to the grid through CalacaSubstation, while San Gabriel NGPP will beconnected to the grid via the San Lorenzo[Combined Cycle Power Plant] Switchyard.

12. The Plant is also included as one of the committedprojects in the DOE List of Private Sector-Initiated PowerProjects for Luzon as of September 30, 2014;

The San Gabriel - SL ConnectionFacility is technically feasible

13. The System Impact Study (SIS) conducted by the NationalGrid Corporation of the Philippines (NGCP) shows that the


connection of the Plant, through the San Gabriel - SLConnection Facility, to the SL Switchyard and ultimately toNGCP's transmission system is technically feasible.

13.1 NGCP conducted the SIS to determine the technical. feasibility of the additional generation capacity ofthe Plant at the proposed connection in the LuzonGrid with due consideration of the following powerplant projects:

TargetPower Plant Capacity Year of Connection Proponent

Entry Point1 Puting Bato 135 MW 2014 Calaea 230 kV South Luzon

Coal-Fired (StaQe I) Substation (via ThermalPower Plant 135 MW 2015 Calaea-Steel Energy

(Stage II) Asia Line) Corporation(SLTEC)

2 Batangas 300 MW 2014 Calaea 230 kV SouthwestCoal-Fired (StaQe I) Substation Luzon PowerPower Plant 300 MW 2016 Generation

(Stage II) Corporation(SLPGC)

3 San Gabriel 450 MW 2015 San Lorenzo First NatgasNatural Gas (U70) 230 kV PowerPlant Substation Corporation

(FNPC)4 Batangas 115 MW 2014 Sta. Rita 230 First Gen

Combined kV Substation CorporationCycle Power (FGC)PlantTOTAL 1,435 MW

13.2 The SIS concluded that the San Gabriel - SLConnection Facility is technically feasible to beconnected to the Grid without the need for gridreinforcement provided that the other newgeneration capacities connected in Batangas Areaare Puting Bato Coal Plant Stage 1 (135 MW) andAvion Plant (115 MW) only.

13.3 The SIS explained:

Overall, San Gabriel Plant is technically feasible tobe connected to the Grid without the need for gridreinforcement provided that the other new


generation capacities connected in Batangas Areaare Puting Bato Coal Plant Stage 1 (135 MW)) andAvion Plant (115 MW) only. Under this scenario, theopening of the tie-line between Sta. Rita and SanLorenzo 230 kV Substations is required in order tomaintain the N-1 contingency provision for SanLorenzo-Batangas 230 kV Line.

In the scenario where generation capacity additionsother than Puting Bato Coal Plant Stage 1 (135MW) and Avion Plant (115 MW) are already in placeahead of San Gabriel Plant, the connection of SanGabriel Plant would already require the completionof the Calaca - Dasmarifias 230 kV TransmissionLine Project. Even though San Gabriel Plant mayuse the San Lorenzo-Batangas-Makban 230 kVLine as a separate corridor for its generationthrough the split operation of Sta. Rita and SanLorenzo Substations, the scheme would result in N-1 contingency violations in the existing 230 kVtransmission lines form Calaca Substation until thecompletion of Calaca - Dasmarifias 230 kVTransmission Line Project.

13.4 As of the date of the instant application, nogeneration capacity aside from Puting Bato CoalPlant Stage 1 (135 MW) and Avion Plant (115 MW)is expected to be in place ahead of the Plant. Theconstruction of the Plant is progressing andcompletion is on pace for targeted testing andcommission in January 2016.

13.5 A Facility Study ("FS") conducted by FNPC for theconnection of the Plant to the SL Switchyard, wasreviewed and approved by NGCP on November 25,2013. The FS specified and estimated the worksrequired to implement the conclusions in the SISrevalidation run conducted by NGCP on October 30,2013 for the interconnection of the Plant to the SLSwitchyard. The FS provides:

Based on the NGCP-approved SIS, NGCPrecommended the opening of the interconnectionbetween the Santa Rita and San Lorenzo 230 kVswitchyards. The existing network will be split intotwo different power transmission corridors: 1) the


Calaca - Dasmarifias I Bifian and 2) the Batangas -Bay corridors for transfer of power out of the region.The Calaca - Dasmarifias/Bifian corridor willtransfer power out of Calaca and Santa Rita, whilethe Batangas - Bay corridor will transfer power outof Batangas and San Lorenzo including the powergenerated from the [Plant].

14. It proposed the transmission line connection to SLSwitchyard because of the proximity and availability ofbays for the connection of the Plant. The SL Switchyardwas chosen since, as shown by the SIS conducted byNGCP, the connection to the SL Switchyard, provided thatthe Santa Rita and SL tie line is open, will not cause: (a)voltage problems, (b) overstress or exceed the existingpower circuit breaker's rated interrupting capacity, and (c)transient instability to the NGCP Grid in the near term.

14.1 Connection to the existing Calaca and MahabangParang Substations was not considered because itwill require a longer transmission line. There willalso be issues on right-of-way which may lead todelays on the commissioning date of the Plant.Moreover, this option may also increase the capitalexpenditure for the Plant.

15. FNPC and NGCP have also executed a ConnectionAgreement notarized on July 1, 2014;

16. FNPC has likewise ensured that the design and technicalspecifications for the San Gabriel - SL Connection Facilityare consistent with the standards of the Philippine GridCode;

FNPC has the technical andfinancial capability to develop,construct, operate, and maintainthe San Gabriel - SL ConnectionFacility

17. FNPC has the technical capability to develop, construct,operate, and maintain the San Gabriel - SL ConnectionFacility.


17.1 FNPC is wholly-owned by First Gen Corporation(First Gen) through AlliedGen Power Corp. FirstGen's core business activity is power generationand steam extraction through its subsidiaries. FirstGen has a portfolio of 15 power generation plantswith a combined capacity of 2,763 MW. FNPC will .benefit from the vast experience of its parentcompany in its development, construction,operation, and maintenance of the San Gabriel - SLConnection Facility.

17.2 Leading the technical team of FNPC are Mr.Nicanor F. Panganiban, Mr. Eduardo L. Carpio andMr. Dennis M. Badillo.

a) Mr. Nicanor F. Panganiban is currently theElectrical Engineering Discipline Head of First Gen.Part of his role is to provide technical andengineering support to all the power plants of FirstGen and First Gen's affiliates and subsidiaries.With 26 years of experience in both power plantconstruction, and operations and maintenance, Mr.Panganiban will provide immense technicalknowledge for FNPC. His experience includesmanagement and supervision for the functional testand commissioning of major electrical equipment,and maintenance, repair, improvement,troubleshooting and testing of existing power plantmachineries. Before working for First Gen, he wasthe Electrical Manager for the rehabilitation of the150 MW BACMAN Geothermal Power Plant. Healso worked for the 215 MW Diesel Power Plantowned by Bauang Private Power Corporation indifferent capacities such as Electrical MaintenanceManager, Operations Shift Manager, and Electricaland Instrumentation & Control Manager.

b) Mr. Eduardo L. Carpio, a mechanical engineer iscurrently the Head of the Maintenance Departmentof the 1500 MW Combined Cycle Power Plant inBatangas City of First Gas Power Corporation(FGPC) and FGP Corp., which are subsidiaries ofFirst Gen similar to FNPC. He has 37 years ofexperience in both power plant construction, andoperation and maintenance of various plants, ofwhich 15 years is on gas turbine plants. His


experience includes project management at theSanta Rita and San Lorenzo Power Plants, over-allsupervision of the construction of the mechanicalaspects of the 600 MW Masinloc Thermal PowerPlant, supervision of the rehabilitation andoperations of the Ambuklao Hydroelectric Plant, andsupervision of the re-powering of the RockwellThermal Power Station.

c) Mr. Dennis M. Badillo, an electrical engineer, iscurrently the Senior Manager/Maintenance andOutage Planning Senior Engineer of FGPC. He hasover 20 years of experience in project managementand direct supervision of 230 kV transmission linesand substations. His experience includessupervision of the electrical activities or works of theO&M Contractor, supervision of the maintenance ofthe SR - Calaca 230 kV Overhead TransmissionLines and Calaca Substation Bays 85 and 86. Heheld various positions in Meralco IndustrialEngineering Services Corporation such as ElectricalEngineer - Construction Management for the 215MW Bauang Diesel Power Plant Project and ProjectHead of the 230 kV Transmission Line Projects. Hewas also the Owner's Representative for theconstruction of the SR - Calaca 230 kVTransmission Line.

18. It likewise has the financial capability to undertake thedevelopment, construction, operation, and maintenance ofthe San Gabriel - SL Connection Facility.

18.1 As discussed, the cost for the development andconstruction of the San Gabriel - SL ConnectionFacility was included, in the total cost of the EPCContract. The said contract was funded by 48%equity of First Gen and by loan of the remainingamount. As of December 31, 2013, First Gen's totalequity is One Billion Five Hundred Sixty MillionSeven Hundred Fifty One Thousand Dollars(US$1,560,751,OOO.00).

18.2 FNPC will subsequently fund the operation of theSan Gabriel - SL Connection Facility from its powergeneration sales.


19. The foregoing clearly shows that the proposed San Gabriel- SL Connection Facility complies with Section 9 of theEPIRA and the relevant regulations of this Commission;

Motion for Provisional Authority and Allegations in Support ofPrayer for Provisional Authority

20. Rule 14 of the Commission's Rules of Practice andProcedure authorizes the issuance of a provisionalauthority or an interim relief prior to a final decision,provided that the facts and circumstances warrant theissuance of the same;

21. It will be implementing an aggressive project schedule forthe engineering, procurement, and construction of the Plantto ensure that additional capacity for the Luzon Grid will beavailable by 2016. The Plant is expected to commence thecommissioning and related tests by January 2016.Consistent with this timeline, it intends to complete thedevelopment and construction of the San Gabriel - SLConnection Facility on an equally aggressive timeframe toachieve completion by June 2015;

22. Given the urgent need for additional capacity by 2016 asprojected by the DOE, the completion of the Plant and theSan Gabriel - SL Connection Facility within the projectedtimeframe is critical to ensure that additional capacity willbe available for the Luzon Grid in a timely manner. FNPCrespectfully prays that the Commission provisionallyauthorize the development, ownership, and operation of theSan Gabriel - SL Connection Facility in light of theimpending power crisis as projected by the DOE. Withoutthe San Gabriel - SL Connection Facility, the Plant maybecome idle and its capacity put to waste. Moreimportantly, the projected power demand of the country willnot be met to the detriment of the general public;

23. It is in such context that it respectfully prays that aprovisional authority be immediately issued for thedevelopment and construction of the proposed San Gabriel_ SL Connection Facility. Further thereto, in the interest ofensuring that the San Gabriel - SL Connection Facility iscompleted by the target completion date of June 2015, itlikewise prays that this Commission authorizes it toproceed with the construction of the San Gabriel - SL


Connection Facility pending the issuance of the provisionalauthority;

24. In support of the foregoing allegations for the immediateimplementation of the San Gabriel - SL ConnectionFacility, a copy of the judicial affidavits of Mr. Gerald T.Cajucom and Mr. Dennis M. Badillo are attached to theapplication as Annexes "Z" and "AA", respectively;

25. It prays that the Commission:

a. Issue an order authorizing it to construct the San Gabriel -SL Connection Facility pending the issuance of theprovisional authority to implement the development,ownership and operation of the San Gabriel - SLConnection Facility; and

b. After due notice and hearing, issue an order making theprovisional authority a permanent authority to develop,own and operate the San Gabriel - SL ConnectionFacility.

The Commission has set the application for jurisdictionalhearing, expository presentation, pre-trial conference and evidentiaryhearing on February 23, 2015 (Monday) at two o'clock in theafternoon (2:00 P.M.) at the ERC Hearing Room, 15th Floor,Pacific Center Building, San Miguel Avenue, Pasig City.

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 any


stage 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 shouldcontain the name and address of such person and a concisestatement of the opposition or comment and the grounds relied upon.

All such persons who may wish to have a copy of theapplication may request the applicant, prior to the date of the initialhearing, that they be furnished with a copy of the application. Theapplicant is hereby directed to furnish all those making such requestwith copies of the application and its attachments, subject toreimbursement of reasonable photocopying costs. Likewise, anysuch person may examine the application and other pertinent recordsfiled with the Commission during the usual office hours.

WITNESS, the Honorable Chairperson, ZENAIDA G. CRUZ-DUCUT, and the Honorable Commissioners, GLORIA VICTORIA C.YAP-TARUC, ALFREDO J. NON, and JOSEFINA PATRICIA A.MAGPALE-ASIRIT, Energy Regulatory Commission, this 26th dayof January, 2015 at Pasig City.

IS SATURNINO C. JUANecutive Director

~'INJS/ERC CASENO.2014-117MCFNPCNPH.doc.

noticeofpublic hearing toall interested … erc case no. 2014... · san gabriel power plant (the...

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