ENERGY REGULATORY COMMISSIO

'.

1Republic of the PhilippinesENERGY REGULATORY COMMISSIO

San Miguel Avenue, Pasig City

IN THE MATTER' OF THEAPPLICATION FOR THEAPPROVAL OF THE EASTERNPANAY TRANSMISSION LINEPROJECT, WITH PRAYER FORPROVISIONAL AUTHORITY

ERC CASE NO. 2014-024 RC

NATIONAL GRID CORPORATIONOF THE PHILIPPINES (NGCP),

Applicant.)(- - - - - - - - - - - - - - - - - - - - - - - - -)(

DECISION

Before the Commission for resolution is the application filed onMarch 20, 2014 by the National Grid Corporation of the Philippines(NGCP) for the approval of its Eastern Panay Transmission LineProject, with prayer for provisional authority.

Having found said a'pplication sufficient in form and insubstance with the required fees having been paid, an Order and aNotice of Public Hearing, both dated J?pril 28, 2014, were issuedsetting the case for initial hearing on May 27, 2014.

In the same Order, NGCP was directed to cause the publicationof the Notice of Public Hearing, at its own expense, twice (2x) for two(2) successive weeks in two (2) newspapers of general circulation inthe Philippines, with the date of the last publication to be made notlater than ten (10) days before the date of the~ scheduled initialhearing. It was also directed to inform the consumers within itsfranchise area, by any other means available and appropriate, of thefiling of the instant application, its reasons therefor and of thescheduled hearing thereon.

ERC Case No. 2014-024 RCDECISION/November 24,2014Page 2 of 15

The Office of the Solicitor General (OSG), the Commission onAudit (COA) and the Committees on Energy of both Houses ofCongress were furnished with copies of the Order and the Notice ofPublic Hearing and were requested to have their respective dulyauthorized representatives present at the initial hearing.

Likewise, the Office of the Mayor of Quezon City was furnishedwith copies of the Order. and Notice of Public Hearing for theappropriate posting thereof on its bulletin board.

On May 22,2014, NGCP filed its "Pre-Trial Brief'.

During the May 27, 2014 initial hearing, only NGCP appeared.No intervenor/oppositor appeared nor was there anyintervention/opposition registered.

At the said hearing, NGCP presented its proofs of compliancewith the Commission's posting and publication of notice requirementswhich were duly marked as Exhibits "B" to "M-1", inclusive.Thereafter, it conducted an expository presentation of its application.

At the termination of the expository presentation, NGCPpresented the following witnesses: 1) Engr. Christian B. Ereno, Headof its Visayas System Planning Division; and 2) Ms. Agnes F. DelaCruz, Head of the Tariff Design and Billing Management Division ofits Revenue and Regulatory Affairs Department, who both testified insupport of the application.

In the course of their direct examinations, additional documentswere presented and duly marked as exhibits. The directexaminations having been terminated, the Commission propoundedc1arificatory questions on the said witnesses and directed thesubmission of various documents.

On June 11, 2014, NGCP filed its "Compliance with Motion forExtension of Time to File Formal Offer of Documentary Evidence".

On June 16, 2014, NGCP filed its "Manifestation" that there isan increase in the capacity design in one of the transmission lineprojects in the instant application since it adopted new designparameters for its transmission assets due to the destruction left by

"


Typhoon Yolanda that struck the islands of Visayas on November 8,2013. Hence, there would be an increase in its implementation cost.

On June 16, 2014, NGCP filed its "Formal Offer of Evidencewith Motion for Additional Markings".

On August 28, 2014, NGCP filed its "Motion for UrgentResolution" .

On October 10, 2014, NGCP filed its "Compliance andSupplementary Formal Offer of Evidence".

On October 13, 2014, NGCP filed its "Compliance withSupplementary Formal Offer of Evidence with Motion for AdditionalMarkings".

On November 10, 2014, the Commission issued an Orderadmitting NGCP's "Formal Offer of Evidence with Motion forAdditional Markings" and "Compliance and Supplementary FormalOffer of Evidence" and declaring the case submitted for resolution.

DISCUSSION

I. Project Description

Palm Thermal Consolidated Holdings Corporation(PTCHC), through its subsidiary company, Palm ConcepcionPower Corporation (PCPC), has proposed the development of acoal-fired power plant in Panay. The Concepcion Coal-FiredPower Plant (CCFPP) will be composed of two generating units,each with a maximum capacity of 135 MW. The first unit isexpected to be in commercial operation by 2015 while thesecond unit is targeted to be completed by 2016. Thegenerating facility will be located in Sitio Puntales, BarangayNipa, Municipality of Concepcion, Iloilo Province.

The major components of the project are as follows:


Substation• 1x50 MVA, 138/69-13.8 kV Transformer• 8x138 kV Gas-Insulated Switchgear• 3x69 kV Gas-Insulated Switchgear

Concepcion• Station Service Transformer and Metal-Clad SwitchgearSubstation (new) • Installation of associated protection,control and communication system

• Construction of new control building andauxiliarv building

• 4x138 kV Air-Insulated Switchgear +Barotac Viejo .AccessoriesSubstation • Installation/expansion of associated(expansion) protection, control and communication

system

Transmission Lines

Concepcion SIS • Double Circuit, Steel Tower Structures;- Barotac Viejo 2x795 MCM ACSR, 42 kmSISConcepcion SIS • Single Circuit, Steel Pole Structures,- Tapping point 1x336.4 MCM ACSR, 14.2 kmnear Sara LES

II. Rationale of the Project

One of the committed capacity additions that will connect to theProject is the Concepcion Coal-Fired Power Plant (CCFPP). It willhave (2) two generating units with a maximum capacity of 135 MWeach or a total capacity of 270 MW. The first unit is expected to be incommercial operation by 2015 while the second unit will becompleted by 2016.

The power plant will be connected to the ConcepcionSubstation which will then be connected to Barotac Viejo Substationthrough the Eastern Panay 138 kV Transmission Line. The proposedtransmission line will have a maximum transfer capacity of 360 MWper circuit which can accommodate the 270 MW generated powerfrom CCFPP even during N-1 condition.

Also, a 69 kV transmission line shall be constructed towards theexisting Panitan - Estancia 69 kV line. This is intended to providealternative source of power supply to the power customers in the


north eastern part of the Panay Grid which draws power from thePanitan Substation through single circuit transmission line. It will alsoimprove the voltage levels at various connection points.

III. Necessity of the Project

It will be noted that the proposed 2 x 135 MW ConcepcionCoal-Fired Power Plant (CCFPP) may inject power to the VisayasGrid either through the Panitan Substation or Barotac ViejoSubstation. Be that as it may, it is recommended that the proposedpower plant be connected to Barotac Viejo Substation consideringthat the latter is only about (40) kilometers away from the CCFPP ascompared to Panitan Substation's distance of approximately seventy-four (74) Kilometers.

The proposed transmission line will have a maximum transfercapacity of 360 MW per circuit which can accommodate the 270 MWgenerated power from CCFPP even during N-1 condition.

The northeastern part of the Panay Grid draws power from thePanitan Substation through single circuit transmission line. However,during the outage of existing Panitan Substation - Sara LES 69 kVLine, no power will be delivered towards the electricity consumersthat are served by ILECO III through Sara LES and Balasan LES.Tabulated below are the projected loads that will be affected duringN-1 condition:

Projected Load to be Curtailed During the Outage of Panitan-Sara 69kV Line

2015 2016 2017 2018 2019Sara LES 6.24 6.64 7.04 7.44 7.84Balasan LES 4.91 5.14 5.37 5.60 5.83

TOTAL 11.15 11.78 12.41 13.04 13.67

Therefore, a 69 kV transmission line shall also be constructedtowards the existing Panitan - Estancia 69 kV line. This is intended toprovide alternative source of power to the customers in thenortheastern part of the Panay Grid during the outage of PanitanSubstation - Sara LES 69 kV Line.

The 69 kV transmission line is also intended to improve thevoltage levels at various connection points. Tabulated below are thevoltage levels of various 69 kV substations being served by PanitanSubstation:

....:.

ERC Case No. 2014-024 RCDECISION/November 24, 2014Page 6 of 15

69 KV SUBSTATION VOLTAGE LEVELS, KV (2015)

Without the With theProject Project

Altavas 0.994 1.001

Mambusao 0.995 1.002

Dao 0.998 1.005

Panitan 1.004 1.011

Pres. Roxas 0.996 0.990

Sara 0.985 0.996

Balasan 0.980 0.992

Similarly, the proposed 69 kV transmission line will reduce thepower transmission loss in Panay as shown in the table below:

POWER TRANSMISSION LOSS (2015)

Without the With theProject Project

TransmissionLoss 10.4 MW 10.0 MW

However, NGCP did not show proof that the said project meetthe minimum criteria for reliability projects that aims to improveperformance above the minimum standard, where the criteria shouldbe B/C>1.

With the immediate completion of the proposed 138 kVtransmission facilities associated with the 2 x 135 MW CCFPP inPanay, Panay Grid will have dependable power network that canaccommodate the additional generation capacity emanating fromCCFPP which can likewise be exported to the rest of the VisayasGrid.

If the proposed 138 kV transmission line will not beimplemented, the CCFPP will not be able to dispatch its generatedpower, hence, will result to power generation curtailment equivalentto CCFPP maximum generation output of 270 MW, which


corresponds to an "Expected Energy Not Served" amounting to2,365,200 MWh per year starting 2015.

Without the Concepcion Substation - Sara 69 kV Transmissionline, the Concepcion - 8arotac Viejo 130 kV and associatedequipment are considered dedicated to CCFPP. Thus, the same isconsidered a connection asset.

In cases where the Transmission Provider provides theConnection Asset, Section 817.3 of the Open Access TransmissionService (OATS) Rules provides that:

"Module 817.3 of the Open Access TransmissionService (OATS) Rules provides that "Financing bythe Transmission Provider. xxx the End-user shallpay a Connection Charge to the TransmissionProvider based on the capital and financing costassociated with the Connection Assets. In additionthe operation and maintenance costs shall also bereflected in such Connection Charge. These shallbe treated as Excluded Services under the TWRGand the details in F(AIV) shall be applied tocompute the charges."

With the foregoing justifications, the proposed project toconnect the CCFPP to the grid through the 138 kV line to 8arotacViejo should be classified as connection asset (CA) until such timethat the subject asset connects another user grid/transmissionfunction. The provisions of the OATS Rules with regard toconnection charge shall apply.

IV. Use of Higher Wind Velocity to be Used in the Design ofTransmission Line Structures affected by Super TyphoonYolanda

Being an archipelagic country with 7,100 islands located at theso called "typhoon alley of the world', the Philippines is exposed tovery strong winds especially during the passage of tropical cyclones.

Over the years, the Philippine Atmospheric Geophysical, andAtmospherical Services Administration (PAGASA) has compiled adatabase of typhoons that crossed or made landfall in the Philippines

,"


during the past decades. The frequency of these typhoons from 1948to 2013 is presented in the following tables:

Annual Number of Tropical Cyclones in the PARPeriod: 1948-2013

40 ..-----------------------------,

35IIICIlCo 30U>.oiii 25.~Co2 20I-o:ii 15.cEi 10

5

- Number of Tropical Cyclones

- Five-year running mean

- Linear (Five-year running mean)

y = -o.026x+ 20.22

o1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013

Year

From 1948 to 2013, the annual average typhoons occurring inthe Philippine Area of Responsibility (PAR) is 19 to 20. The mostnumber of typhoons occurred in 1993 which recorded 32 while theleast number of typhoons occurred in 1998 which recorded 11.

20181614 0

012I-'010~ 8

.. ~ .•

642

o HtI48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05

Year

Records reveal that since 1948, an average of about 8 or 9typhoons make landfall annually in the country. The highest recordedincidence of landfall was in 1993 which reached 19 typhoons, whilethe lowest typhoon landfall incidence is 4.


Current NGCP Design Basis

The wind loads currently being used by NGCP in the design oftransmission towers are based on the provisions stated in the 2008Philippine Electrical Code Part 2, particularly the Basic Wind ZoningMap covering the Philippines:

Basic Wind Speed is the maximum sustained wind in kphmeasured at an interval of 3 seconds at 10m above ground.

OFFICIAL SEVERE WEATHER BULLETINS ISSUED BY NDRRMC

[ 320j

r 360 1l jr- --1l_ __.!6_0 J

C_ 360 _J[~~o1f 3~iL__._ .J[ _ ~ 390 --]

[- 360-]=360~- I

[ -320 _

~.-O_-_ - __-. -Jr- ---.------------,l 290 I

- --- -_. __. jr- ----~---J: 310l

1 6-Nov-13 8PM PACIFIC OCEAN 195 230

2 7-Nov-13 2AM PACIFIC OCEAN 215 250

3 8AM PACIFIC OCEAN 215 250

4 2 PM PACIFIC OCEAN 215 250

4A 6PM453 KM SE OF 225 260GUIUAN, SAMAR

5 8 PM290 KM ESE OF 225 260GUIUAN, SAMAR

- - - "

6 8-Nov-13 2AM 62 KM SE OF I 235 275GUIUAN, SAMAROVERDAANG

7 8AM BANTAYAN, 215 250CEBU

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

8 2PM115 KM WEST OF 215 250ROXAS CITY

. ~ --9 8 PM OVER PALAWAN 195 230

10 9-Nov-13 2AMWEST OF 175 210MINDORO

11 8AM WEST PHIL SEA 175 210

12 2 PM OUTSIDE PAR 185 220

r ~!

SEVERE MAXIMUM HIGHEST I

NvEATHER DATE TIME LOCATION OF 10-MINUTE 1-MINUTE EQUIVALENT 3- IBULLETIN CENTER SUSTAINED - MEAN SEC GUST WIND i

No. WIND (kph) GUST (kPh)_1 II

il j

As shown in the table below, it is clear that the wind velocitiescarried by Super Typhoon Yolanda were much greater than the windvelocity design used on these transmission lines, thus constituting themain cause of tower toppling.

..."

,\1\


WINDNUMBER OF VELOCITY WIND VELOCITY DURING

TRANSMISSION LINE TOPPLED USED IN YOLANDATOWERS DESIGN (10-min 13-sec)

(3-sec GUST)

Panitan-Nabas 138 kV TIL 134 240 kph 215 kph I 360 kph

Ormoc-lsabel138 kV TIL 73 270 kph 235 kph I 390 kph

Steel tower type used in this exercise:

6. TOWERDESIGNCRITERIA

6.1. FOOTING RESISTANCE

6.2. DESIGN WIND VELOCITY

6.3 WINO PRESSURE ON TOWER DUE TO :a. TRANSVERSE WIND DIRECTION, (PI)b. 45 DEGREE WIND DIRECTION, (Pt45)

6.4 WIND PRESSURE ON WIRES DUE TO :a. TRANSVERSE WIND DIRECTION, (Pw)b. 45 DEGREE WIND DIRECTION, (Pw45)

6.5. ULTIMATE DESIGN LOADINGS

1. TOWER TYPES, LINE ANGLES AND EFFECTIVE LOADING SPAN

10 ohm or lessZONE II .240 kph, for Visayas(except Ley1e, Samar & Masbale), Palawan & Mindanao

445 kg/m'315 kg/rna

167kglma84 kglm'Refer 10 loading diagrams of each tower type

WIND WEIGHT SPAN UPLIFT SPAN

TYPE CLASSIFICATIONDEf SPAN ._(meters) ___ (meters)

ANGLE .- .- .._- .~_.(meters) CONDo OHGW/OPGW CONDo OHGWIOPGW

DA Suspension O' - 2' 400 600 800 .._- ._ ••• ,., •• w •

., ._ ....•.. _¥ __ •••• __ .r --_ . -_ ... ..._- ._......,.,

08 Suspension J Strain O•• 5" 400 900 1300 400 500'.r-'

_. ____ a .. '" ,"-"\---,. ._--~~- ,---'- _ .._.- ,..

Strain 0. -15. 400 1200 1800 600 900-- .... .._- -_ .....- .__ .. ._ .....~...

--_.,~<~,

Slrain 0'.30. 400 1200 1800 600 900DO .., ~_ . .__ . ~. _ ...

Dead-End 0•• 45" 300 1200 1800 600 900

Due to the foregoing, the use of higher wind velocity in thedesign of transmission line structures are deemed necessary for thefollowing reasons:

1. There is certainly a need to increase the design windspeeds to meet the stronger winds carried by typhoons;

2. It may not be practicable to increase the design wind speedparameters up to or even greater than the maximumrecorded wind speed experienced; and


3. Striking a balance between structural adequacy and costimplications, NGCP proposed the use of the design windvelocity indicated in the table below and to this proposedproject:

WIND VELOCITY PROPOSED DESIGN WINDTRANSMISSION LINE USED IN DESIGN VELOCITY

(3-SEC GUST) (3-SEC GUST)

Panitan-Nabas 138 kV TIL 240 kph 270 kph

Ormoc-Isabel 138 kV TIL 270 kph 300 kph

v. Project Cost

The capital investment for the proposed project and relatedactivities amounts to One Billion Two Hundred Seventy-One MillionSeven Hundred Three Thousand Four Hundred Eighty-Nine and33/100 Pesos (PhP1 ,271,703,489.33).

As discussed in the earlier section, NGCP is upgrading itsdesign for its transmission line for the use of higher wind velocity,thus, the table below shows the increase in cost for the followingcomponents:

PROJECT COMPONENTCost Estimate as applied Cost Estimate Revised

in PhP in PhP

TRANSMISSION LINE PORTIONConcepcion-Barotac Viejo SIS 138 kVLine 352,980,619.00 515,120,523.79Concepcion SIS Tapping Point nearSara Load End SIS 69 kV 65,421,602.48 95,383,741.26Tapping point at Panitan-Estancia 69kV Line 10,000,000.00 341,236.87

SUBSTATION

CONCEPCION SUBSTATION (NEW)

Substation Components 310,414,031.48 524,773,792.28

Communication Plant 6,926,742.00

Meterinq Eauipment 3,455,292.00BAROTAC VIEJO SUBSTA TlON(EXPANSION)

Substation Components 47,931,660.93 46;660,973.92

Communication Plant


6,926,742.00

CUSTOM DUTY 95,744,150.66

TOTAL DIRECT COST 804,056,689.89 1,278,024,418.78

Pre-Construction Expenses 71,246,000.00

Design Works 10,000,000.00

Procurement of Contracts 5,000,000.00

Management and Supervision Fee 180,000,000.00

General Admin Expenses 71,246,000.00 54,000,000.00

Contingency 92,500,000.00 170,000,000.00

TOTAL CONSTRUCTION COST 967,802,689.89 1,768,270,418.78

ROW 110,475,000.00 110,475,000.00

RVAT 122,100,000.00 (inclusive of RVAT)

TOTAL ESTIMATED PROJECT COST 1,200,377 ,689.89 1,878,745,418.78

With the exclusion of the 69 kV component of the projectamounting to PhP95,724,978.13, accordingly, the estimated projectcost of PhP1,878,745,418.78 is adjusted to PhP1,783,020,440.65.This project cost estimate, which is essential in computing for thepermit fee, was based on cost per kilometer for the transmission linederived from previous contracts. Included in the estimated cost arethe technical services such as cost of route/topological survey,geologic investigation, Right-Of-Way (ROW)negotiations/acquisitions, environmental related cost, permit fee,Reformed Valued Added Tax (RVAT) for local purchases and sitemanagement.

The contract for the supply of materials for the proposedprojects will be assigned to qualified suppliers and contractorsfollowing a competitive bidding and selection process. The fundingwill be sourced through NGCP's Internal Cash Generated (ICG) fund.

The proposed Project will be subject to optimization followingthe principles in the Rules for Setting the Transmission WheelingRates (RTWR).


A perusal of the evidence presented herein showed that theapproval of NGCP's Eastern Panay Transmission Line Project is inaccordance with the provisions of Republic Act No. 9136 and the"Resolution Amending the Rules for Approval of Regulated Entities'Capital Expenditure Projects" and will redound to the benefit of itsconsumers in terms of continuous, reliable and efficient power supplyas mandated by Republic Act No. 9136 or the Electric PowerIndustry Reform Act of 2001 (Section 2. Declaration of Policy - (b)"to ensure the quality, reliability, security and affordability of thesupply of electric power'?

WHEREFORE, the foregoing premises considered, theapplication filed by the National Grid Corporation of the Philippines(NGCP) for the approval of its Eastern Panay Transmission LineProject, with prayer for provisional authority, is hereby APPROVED,subject to the following conditions:

a. The approved project will be classified as CA until such timethat the asset ceases to become dedicated only to one user;

b. The connected user CCFPP shall pay Connection Chargeto NGCP in accordance with Module F(AIV)4 of the OpenAccess Transmission (OATS) Rules as long as the subjectasset is still classified as CA;

c. The approved project shall be subject to optimization basedon its actual use and/or implementation during the resetprocess for the next regulatory period following theprocedures stated in the RTWR and other relevantissuances of the Commission; and

d. The 69 kV Transmission Line and the associated 69 kVtransformer and accessories is deferred and may beincluded in its next application with additional justification.

Relative thereto, NGCP is hereby directed to remit to theCommission, within fifteen (15) days from receipt hereof, a totalpermit fee in the amount of Thirteen Million Three HundredSeventy-Two Thousand Six Hundred Fifty-Three Pesos(PhP13,372,653.00), computed as follows:

..-ERC Case No. 2014-024 RCDECISION/November 24,2014Page 14 of 15

PhP1,783,020,440.65------------------------------ x PhPO.75 = PhP13,372,653.00

PhP100.00

Further, NGCP is directed to conduct competitive bidding forthe purchase of major materials in the implementation of theapproved project.

SO ORDERED.

Pasig City, November 24, 2014.

J~<J.A ;. /(kVI,. ENAIDA G. CRUZ-DUqUT

Chairperson r

yALFRE 0 J. NON

Commissioner

(), -f!~z[1~IVICTORI .' YAP-TARUC

Commls loner

(On Leave)JOSEFINA PATRICIA A. MAGPALE-ASIRIT

Commissioner

LVBJM~~CPIERC CASENO.'014.0'4 Ro-D_;o'


Copy Furnished:

1. Attys. Luis Manuel U. Bugayong, Ronald Dylan P.Concepcion, Mark Anthony S. Actub, Raycell D.Baldovino, and Ari Vergil P. FabrosCounsels for ApplicantNational Grid Corporation of the Philippines (NGCP)NGCP Building, Quezon Avenue cor. SIR RoadDiliman, Quezon City, Metro Manila

2. THE OFFICE OF THE SOLICITOR GENERAL234 Amorsolo Street, Legaspi Village, Makati CityMetro Manila

3. THE COMMISSION ON AUDITDon Mariano Marcos AvenueDiliman, Quezon City, Metro Manila

4. THE COMMITTEE ON ENERGYHouse of the SenateGSIS Building, Roxas Blvd., Pasay City, Metro Manila

5. THE COMMITTEE ON ENERGYHouse of RepresentativesSatasan Hills, Quezon City, Metro Manila

6. OFFICE OF THE CITY MAYORQuezon City

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ENERGY REGULATORY COMMISSIO