...

Republic of the PhilippinesENERGY REGUUATORYCOMMISSI

Pksig City

PETITION FOR,RECLASSIFICATION OFTHE NATION..;\LTRANSMISSIONCORPORATION LAPU-LAPU,

69KV GIS FEEDER 1 LINEAND THE MUELLEOSMENA WHARF LINE TOTRANSMISSION I I,

SGIJ\.ATORy Co

"' ~ "'1<'" \PApproved for1

PostingWIWI.erc.gov.ph

-I

ENERGY(PHINfA

Petitioner,

PHINMACORPORATIONENERGY),

-verSllS- ERCCASE NO. 2017-002 DR

NATIONAL TRANSMISSIONCORPORATION (TRANS CO)

Respondlmt.x----------------------------------c--x

iNOTICE OFIPUBLIC HEARING

1.

ITO ALL INTERESTED PARTIES:

INotice is hereby given that on 5 May 2017, Petitioner, Phinma

Energy Corporation (PHINMA Energy) filed the above-captionedpetition for dispute resolution against National TransmissionCorporation (TRANSCO) ovdr the sale of the following assets toMactan Electric Company, Inc. (MECO): Lapu-Lapu 69 kV GISFeeder 1and Muelle-Osmena Wharf Lines.

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In the said Petition, PHINMA ENERGY alleges the following:

PHINMA Energyl is a private corporation dulyorganized and existing under the laws of thePhilippines and it may be served with summons andother processes of this Honorable Commission atI . I

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.. .ERC Case No. 2017-002 DRNotice of Public Hearing / 6 June 2017Page 2 of 14

Level 3 PHINMA Plaza, 39 Plaza Drive, RockwellCenter, Makati City';

2. The National Transmission Corporation("TransCo") is a government instrumentalitycreated pursuant to Republic Act ("R.A.") No. 9136,otherwise known as the Electric Power IndustryReform Act of 2001 ("EPIRA"), with principal officeaddress at TransCo Main Building, Quezon Avenuecorner BIR Road, Diliman, Quezon City, where itmay be served with summons and other processesof this Honorable Commission.

3. TransCo owns the national transmission facilities,including the Lapu-Lapu 69kV GIS Feeder 1and theMuelle-Osmena Wharf Lines, which are now beingoperated by the National Grid Corporation ofthe Philippines ("NGCP");

4. NGCP is the corporhtion awarded the franchise tooperate the transmission system of TransCo underRepublic Act ("RA") No. 9511, entitled 'ltn ActGranting the National Grid Corporation of thePhilippines a Franchise to Engage in the Businessof Conveying or Transmitting Electricity throughHigh Voltage Back-bone System or InterconnectedTransmission Lines, Substations and RelatedFacilities, andfor other Purposes". As stated, NGCPoperates the Lapu-Lapu 69kV GIS Feeder 1Line andMuelle-Osmena Wharf lines.

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PHINMA Energy owns and operates the 32MWPower Barge 103 ("PB103") which is connecteddirectly to the Visayas grid through the Lapu-Lapu69kV GIS Feeder 1to Muelle-Osmena Wharf line.

IPHINMA Energy intends to transmit energy to theVisayas Grid and provide additional and much-needed Ancillary Services through its PB103.

ITHe System Impact Study' ("SIS") results for thePB103 recommended its connection to the VisayasGrid via the Lapu-Lapu 69kV GIS Feeder 1,thus:

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1 A copy of PHINMA Energy's Securities and Exchange Commission ("SEC") Certificate ofRegistration is attached hereto as Annex "A" to form an integral part hereof.2 A copy of the pertinent page of the'SIS is attached hereto as Annex "B" to form onintegral part hereof.

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,..ERC Case No. 2017-002 DRNotice of Public Hearing / 6 June 2017Page 3 of 14

"The results of this SIS show that the connection ofpower plant will not result in the degradation of theVisayas grid. The operation of the power plantactually decongests LapuLapu GIS Feeder 1 andCebu-Mandaue-LapuLapu 138 kV transmissionlines."

8. Pursuant to the said SIS, PB103 was grantedauthority by the NGGP to connect to the Lapu-Lapu69kV GIS Feeder 1 in a letter dated 11April 20173;

9. Illustrated below is the simplified connection of,PB103 to the Lapu-Lapu 69kV GIS Feeder 1 basedon the SIS:

Figure 1. 32 MW PB 103 connecied to Lapu-Lapu GIS 69 kV Feeder 1I

69kV LAPULAPU GIS SINGt£ UNE DIAGRAM

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10. As can be seen from the illustration, there are nowthree (3) users to the Lapu-Lapu 69kV GIS Feeder 1,as follows: I

a. Mactan Electric Company("MECO")

b. Mactan Enerzone Corporation("MEZ") 2 Acoland

c. PB103

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11. In view of these superivening developments, the Lapu-Lapu 69kV GIS Feeder 1 and the Muelle-OsmenaWharf lines now actually perform transmission

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3 A copy of the NGCP letter dated 11April 2017 is attached hereto as Annex "c" to forman integral part hereof.

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ERCCase No. 2017-002 DRNotice of Public Hearing /6 .rune 2017Page 4 of 14

function and should be reclassified as transmissionassets.

12. Any assets which is used by a generator anddistribution utilities ;is undoubtedly performingtransmission functions and must be reclassified assuch.

13. A reclassification of the Lapu-Lapu 69kV GIS Feeder 1and the Muelle-Osmena Wharf lines at this time is inconsonance with the Decision dated December 1, 2010of this Honorable Commission in ERC Case No.2010-032MC entitled, "In the Matter of the Petitionfor Approval of the reclassification of the NationalTransmission Corporation (TRANSCO):Subtransmission Assets Serving the Dingle-PassiLines in I/oilo": I

"Section 2, Article III of the Guidelines to theSale and Transfer of the TRANSCO'sSubtransmission Assets and the Franchising ofQualified Consortiums reads:

'Technical and Functional Criteria - theassets shall be classified based on the technicaland functional criteria enumerated in Sections 4and 6, Rule 6, Part II of the IRR of the Act,including but not necessarily limited to thefollowing: I

a) Directly Connected Generators

Lines, power tr~nsformers and otherassets held by TransCo or its Buyer orConcessionaire, which allow thetransmission of electricity to a Grid fromone or more' Directly ConnectedGenerators, shall be classified asTransmission Assets.

b) Directly ConnJcted End Users

Radial lines, power transformers,related protection equipment, controlsystems and other assets held byTransCo or its Buyer or Concessionaire,which directly connect an End-User orgroup of End-Users to a Grid and are

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ERC Case No. 2017-002 DRNotice of Public Hearing / 6 June 2017Page 5 of 14

exclusively dedicated to the service ofthat End-User or group of End-Usersshall be classified as Sub-transmissionAssets.

c) Directly Connected Load-EndSubstation I

Radial lines, power transformers,related protection equipment, controlsystems and other assets held byTransCo or its Buyer or Concessionaire,which directly connect a load-endsubstation of one or more DistributionUtilities to a Grid but 0 DirectlyConnected Generators shall be classifiedas Sub-transmission Assets.'

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Based on the foregoing provision, the Commissionmay only reclassify TRANSCO's subtransmissionasset to a transmission asset when the generatorwhich intends to translnit electricity to the Grid, isconnected to said subtransmission asset.

The present classification of the Dingle-Passi 69 kVline as a subtransmission asset is not animpediment for CASAor any generator to connectto the said asset.

xxx xxx xxx

WHEREFORE, the foregoing premises considered,the petition filed by I Central Azucarera De SanAntonio, Inc. (CASA) for approval of thereclassification of the National TransmissionCorporation's (TRANSCO) Subtransmission Assetto full transmission a~set serving the Dingle-PassiLines in Iloilo is hereby APPROVEDsubject to thecondition that CASA'sbagasse power plant shouldconnect to the Dingle-Passi 69 kV Line and only theportion of the said line where the CASA's plant isconnected shall be reclassified as transmissionasset." [Emphasis supplied]

I14. A reclassification of the Lapu-Lapu 69kV GIS Feeder 1

and the Muelle-Osmena Wharf lines is also inaccordance with the Decision dated 22 August 2011 ofthe Honorable Court in ERC Case No. 2011-019MC j,

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ERCCase No. 2017-002 DRNotice of Public Hearing /6 June 2017Page60f!4

entitled"In the Matter of the Petition for Confirmationand/or Prompt Reclas~ification of HHIC-PHIL Inc.'sPower Lines as Transmission Assets", wherein it wasdeclaredthat:

"In the Commission'SResolutionNo.41, Seriesof2006, whichclarifiedResolutionNo.25,Seriesof 2006 entitled, :A ResolutionAdoptingtheDefinition and Boundaries of ConnectionAssets',ConnectionAssets(CAs)were defined asthose assets that are put in place primarily toconnect a Customer to the Grid and used forpurposes of Transmission Connection Servicesfor the conveyanceofelectricity.CAsare facilitieswhich,if taken out of the System,willonly affectthe Customer connected to it and will haveminimal effect on the Grid, or other connectedCustomers.The said Resolution was,however, amended by Resolution No. 16,Series of 2011. In this amendedResolution, the boundary of connectionassets from transmission assets wasclearly defined considering thefunctionality of each asset. Hence, bus-inand cut-in connectionsfor load customers thatare connection aSsets were considered astransmission assets.Moreover, connectionassets for generation customersfunctioning as transmission wereconsidered to be transmission assets inthe said amended Resolution.

xxx xxx xxx!

Thus, with the entry of RPE,the Hanjin PowerLines,includingother associatedequipment, aredeemed as transmission assetsconsistent withthe guideliI\es and rulesrelated to the saleofsubtransmissionassets, particularlyERC Resolution No. 15, Series of2011, entitled "Rules for the Approval ofthe Sale and ITransfer of TransCo'sSubtransmission Assets and theAcquisition by' Qualified Consortiums"whichprovides:

'Section 2. Technical andFunctional Criteria- The assets shall be

ERC Case No. 2017-002 DRNotice of Public Hearing /6 June 2017Page70f14 '

classified based on the technical andfunctional crite'lia enumerated inSections 4 and 6, Rule 6, Part II of theIRR of the Act, including, but notnecessarilylimited to thefollowing:

• Ia. DIrectlyConnectedGenerators

Lines, power transformers andother assets held by TransCo orNGCP, which allow thetransmission of electricity to agrid from one or more directlyconnected generators, shall beclassified as transmissionassets. xxx xxx xxx.''' [Emphasissupplied]

I15. This is also in compliance with the provision of the

Philippine Grid Code ("PGC") which requires thatall Large Generating Plants such as PB103 should bedirectly connected to the Grid, to wit:

"GCR 4.4.1 GENERIC REQUIREMENTSFOR ALL LARGE GENERATINGPLANTS I

GCR4.4.1.1 Requirements Relating to theConnection Point

IGCR 4.4.1.1.1 The Large Generating Plant'sEquipment shall be directly connected to theGrid."

IThe entry of PB103 will provide much needed powerand augment the Ancillary Services supply of NGCPin the Visayas Grid; where there is a clear shortageof back-up and ancillary power.

16.

17.

ALLEGATIONS IN SUPPORTOF THE URGENT MOTION,FOR THE ISSUANCE OF ACEASE AND DESIST ORDERAGAINST TRANSCO

In a meeting calle& by NGCP in the Visayas Regionlast 14 November 2016, Mactan Electric Company

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ERC Case No. 2017-002 DRNotice of Public Hearing / 6 ,'June 2017Page 8 of14

("MECO") claimed that it owned the lines wherePHINMAEnergy waslto be connected.

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Considering this waS the first time that PHINMAEnergy heard about MECO's alleged ownership ofthe line when it has Ibeen coordinating with NGCPas regards PB103 as early as early as 13 October20154, PHINMA Energy inquired with NGCPwhether there is truth to the claim of MECO.PHINMA Energy was informed that based onNGCP's records the Lapu-Lapu 69kV GIS Feeder 1and the Muelle-Osmena Wharf lines are still ownedby TransCo and subject to NGCP's control,operation and maintenance.

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PHINMA Energy representatives also met withTransCo Subtransmission Department and LegalDepartment representatives to inquire on the status,of the subject lines. This was the time that they wereinformed that said assets are the subject of apending application for sale of subtransmissionassets before the Honorable Commission.

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Considering the substantial investments alreadymade by PHINMA Energy in the connection of itsPB103 to the Visayas Grid, any sale of the Lapu-Lapu 69kV GIS FeJder 1 and the Muelle-OsmenaWharf lines to MECO will clearly have injuriouseffects on PHINMABnergy.

Thus, PHINMAEne}gyis left with no other recoursebut to seek this Honorable Commission's authorityto issue a cease and desist order against TransCo,prohibiting TransCo from proceeding with the saleand turn-over of thJ Lapu-Lapu 69kV GIS Feeder 1and the Muelle-O~mena Wharf lines to MECO,pending the resolutibn of the present application.

22. In the event this H6norable Commission finds thatthe Lapu-Lapu 69kV GIS Feeder 1 and the Muelle-Osmena Wharf lines already perform transmissionfunctions, the subject lines should be taken out ofthe assets which T~ansCo may dispose of. TransCohas respected findings of the HonorableCommission as regards the determination of the

I.( A copy of PHINMA Energy's letter to NGCP dated 13 October 2015 is attached heretoas Annex "0" to form an integral part hereof.

ERCCaseNo. 2017-002 DR 'Notice of Public Hearing /6 June 2017Page 9 Of14

functionality of asset~, whether the same performstransmission or subtransmission functions.

23. Accordingly, a cease and desist order must be issuedto TransCo, enjoining it from proceeding with thesale and turn-over of the Lapu-Lapu 69kV GISFeeder 1and the Muelle-Osmena Wharf lines, untilafter a determination of the functions of the assets

Iare finally and completely resolved though thepresent Petition.

24. Under Section 43 of the EPIRA, the HonorableCommission has thb power to issue provisionalorders/reliefs, as follows:

"SEC. 43. Functibns of the ERC. -The ERCshall promote competition, encourage marketdevelopment, ensure customer choice andpenalize abuse of market power in therestructured efectricity industry. Inappropriate cases, the ERC isauthorized to issue cease and desistorder after due notice and hearing.Towards this end, it shall be responsible for,the following key functions in the restructuredindustry: xxx xxxxxx"

The requirements felr the issuance of a preliminaryinjunction stated iA the Revised Rules of Court("Rules of Court") may be applied suppletorily in thepresent case pursuant to Section 5, Rule lOfthe ERCRules of Practice and Procedure: I

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IJr. us. Court oflaid down the

"Rule 1, Section 5. Application of the Rules ofCourt. - In the, absence of any applicableprovision in these rules, the pertinentprovisions of the Supreme Court of thePhilippines' Rules of Court and Rules onElectronic Evidence may, in the expeditiousdisposition of the cases pending before theCommission and whenever practicable andconvenient, be applied suppletorily or byanalogy."

iIn the case of Placido Urbanes,Appealss, the Supreme Court

26.

25.

5 G.R. No. 117964,28 March 2001. I!

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ERCCase No. 2017-002 DRNotice of Public Hearing /6 June 2017Page 10 oft4

following rules on the issuance of preliminaryinjunction:

"Rule 58 of the Rules of Court provides forboth preliminary and permanent injunction. Apreliminary injunction is defined in Section 1thereof as:

,'An order granted at any stage of anaction prior to the judgment or finalorder, requiring 'a party or a court,agency or a person to refrain from aparticular act or acts.'

On the other hand, Section 9 of the same ruledefines a permanent injunction in this wise:

I .'xxx xxx xxx. If after the tnal of theaction it appe~rs that the applicant isentitled to have the act or actscomplained of permanently enjoined,the court shall grant a final injunctionperpetually restraining the party orperson enjoined from the commission orcontinuance df the act or acts orconfirming thd preliminary mandatoryinjunction.' I

xxx xxxxxx

A writ of prelimirtary injunction is generallybased solely oil initial and incompleteevidence. The eviaence submitted during thehearing on an japplication for a writ ofpreliminary injunction is not conclusive orcomplete for only a sampling is needed to givethe trial court an idea of the justification forthe preliminary injunction pending thedecision of the case on the merits. As such,the findings of fact and opinion of a courtwhen issuing the writ of preliminaryinjunction are iAterlocutory in nature andmade even before the trial on the merits iscommenced or terminated. There are vitalfacts that have yet to be presented during thetrial which may not be obtained or presentedduring the hearing on the application for theinjunctive writ. The trial court needs to

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ERC Case No. 2017-002 DR I

Notice of Public Hearing / 6 June 2017Page 11of 14

conduct substantial proceedings in order toput the main controversy to rest. It does notnecessarily proceed that when a writ ofpreliminary injunction is issued, a finalinjunction will follow. In this case, however,the Court of Appeals dismissed the mainaction for damages and injunction afterevaluating the incomplete and selectiveevidence presented during the hearing heldfor the ancillary remedy of preliminaryinjunction, notwithstanding that there stillremained for the resolution of the trial courtthe issue of whether or not the petitioner isentitled to the damages prayed for as well asthe final injunctiorL

IXxx xxx xxx

The trial court did not commit any act thatwas diametrically opposed to the time-honored legal principles. The issuance of thequestioned writ of preliminary injunction waswell-supported by sufficient evidencepresented by the petitioner during the hearingheld for that purpose. The trial courtsevaluation of the evidence presented by bothcontending parties led the said court to holdthat justice and equity would be better servedif the status quo is preserved until a finaldetermination of jthe merits of the pendingcase for damages and injunction is laiddown. We find n6thing whimsical, arbitrary,or capricious in th~ trial courts ruling."

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27. Further, in the case of Joaquin Asuncion vs.Hon. Gervacio, Jr6., the Supreme Courtsummarized the requisites for the issuance ofpreliminary injunctive relief:

"The plaintiff/petitioner must establish thefollowing requisites for preliminary injunctiverelief: (a) the invasion of the right sought to beprotected is material and substantial; (b) theright of the complainant is clear andunmistakable; (c) there is urgent andparamount necessity for the writ to preventserious damage."

6 G.R. No. 115741, 9 March 1999.

ERCCase No. 2017-002 DRNotice of Public Hearing /6 June 2017Page 12 of!4

28. It is respectfully submitted that all the requisites forthe issuance of a preliminary injunction are presentin this case. First, any sale of the Lapu-Lapu 69kVGIS Feeder 1 and the Muelle-Osmena Wharf lineswill certainly result in material and substantialinvasion of the tight of PHINMA Energyconsidering that it PB103 is already connected tothe said lines and the it has made substantialinvestment in the project. Second, the right ofPHINMA Energy as a connected generator is clearand unmistakable. In good faith, PHINMA Energyapplied with and followed the procedures set out inconnecting to the grid. It has complied with all therequirements of the Grid/Transmission System inorder for PB103 to be connected as a generator andAncillary Services provider. The sale of the Lapu-Lapu 69kV GIS Feeder 1 and the Muelle-OsmenaWharf lines will put waste all of PHINMA Energy'sinvestments and will definitely have adverse effecton the viability of the PBI03 project. Third,considering the claim of MECO, there is certainlyurgent and paramount necessity for the issuance ofthe cease and desist, order in its favor, enjoiningTransco from proceeding with the sale and turn-over of the Lapu-Lapu 69kV GIS Feeder 1 and theMuelle-Osmena Whatflines.

I29. Based on the foregoing, a cease and desist order

must be issued againh TransCo in order to protectthe rights of and prbent serious and irreparableinjury to PHINMAEriergy.

pJYER

WHEREFORE, it is IrespeCtfully prayed that thisHonorable Commission: I

1. Upon filing of the Petition issue a Cease andDesist Order enjoing TransCo from proceedingwith the sale and turn-over of the Lapu-Lapu69kV GIS Feeder 1 and the Muelle-OsmenaWharf lines to Mactan Electric Company or toany other entity;

2. After hearing on the merits, issue a decision (1)finding that the Lapll-Lapu 69kV GIS Feeder 1and the Muelle-Osmena Wharf lines actually

ERCCase No. 2017-002 DRNotice of Public Hearing/ 6 June 2017Page 13 of14

perform transmission functions, and (2)reclassifying the Lapu-Lapu 6gkV GIS Feeder 1and the Muelle-Osmena Wharf lines as"transmission assets" and not qualified for saleby TransCo as "subtransmission assets".

Other reliefs just and equitable under the premisesare likewise prayed for.

The Commission has set the said Petition for initial hearing forthe determination of compliance with the jurisdictional requirements,expository presentation, Pre-Trial Conference, and presentation ofevidence on 16 August 2017 (Wednesday) at ten o'clock in themorning (10:00 A.M.) at the ERC Hearing Room, 15thFloor, Pacific Center Buildilu.g, San Miguel Avenue, PasigCity.

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 ERe'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 Petitin or comment thereon at any stage ofthe proceeding before the Applicants conclude the presentation oftheir evidence. No particular form of opposition or comment isrequired, but the document, letter or writing should contain the nameand address of such person and a concise statement of the oppositionor comment and the grounds relied upon.

All such persons who wish :to have a copy of the Petition mayrequest the Petitioner, prior to the date of the initial hearing, thatthey be furnished with a copy of the Petition. The Petitioner is herebydirected to furnish all those mJking a request with copies of thePetition and its attachments, subject to reimbursement of reasonablephotocopying costs. Any such person may likewise examine thePetition and other pertinent records filed with the Commissionduring the standard office hours. I

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•.'ERC Case No. 2017-002 DRNotice of Public Hearing / 6 June 2017Page 14 of 14

IWITNESS, the Honorable Commissioners ALFREDO J.

NON, GLORIA VICTORIA C: YAP-TARDC, and GERONIMOD. STA. ANA, Energy Regulatory Commission, this 6th day of June2017 in Pasig City.

JOSEFINAPATC

A. MAGPALE-ASIRIT