REPUBLIC OF THE PHILIPPINES

ENERGY REGULATORY COMMISSION

SAN MIGUEL AVENUE, PASIG CITY

ncc

IN
THE
MATTER
OF
THE
APPLICATION FOR THE APPROVAL
OF THE
RENEWABLE
ENERGY
SUPPLY AGREEMENT AND THE
MEMORANDUM OF AGREEMENT TO
AMEND THE RENEWABLE ENERGY
SUPPLY
AGREEMENT
BETWEEN
ZAMBOANGA DEL NORTE ELECTRIC
COOPERATIVE, INC. (ZANECO) AND
ASTRONERGY
DEVELOPMENT
DIPOLOG
INC.
(ASTRONERGY),
WITH PRAYER FOR THE ISSUANCE
OF PROVISIONAL AUTHORITY,

nc-

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ERC Case No. 2016- 041 RC

ZAMBOANGA NORTE ELECTRIC
COOPERATIVE, INC. (ZANECO) AND
ASTRONERGY
DEVELOPMENT
DIPOLOG INC. (ASTRONERGY),
Applicants.
__ _______

...

APPLICATION
WITH MOTION FOR CONFIDENTIAL TREATMENT OF
INFORMATION AND PRAYER FOR ISSUANCE OF
PROVISIONALAUTHORITY
Joint Applicants, Zamboanw Node Electric Cooperative, Inc.
Development Dipolog Inc.
(ZANECO) and Astronergy
(ASTRONERGY) through counseL into this Honorable Commission,
respectfully allege, that
THE APPLICANTS
ZANECO is a non-stock, non-profit electric cooperative,
1.
organized and existing by virtue of Presidential Decree No. 269, as

amended, with principal office at General Lana St., Central Barangay,

Dipolog City, Zamboanga del Norte. It was granted a franchise by the
National Electrification Administration (NEA) to operate electric light
and power distribution services in the Cities of Dapitan and Dipolog and
in the Municipalities of Godod, Gutalac, J. Dalman, Kalawit, Katipunan,
L Postigo, La Libertad, Labason, Lioy, Manukan, Mutia, Pirian,'
Polanco, Rizal, Roxas, S. Osmena, Salug, Siayan, Sibutad, Sindangan and
Tampilisan, all in the Province of Zamboanga del Norte (Franchise
Area);
2.
ASTRONIERGY is a renewable energy generation company
duly organized and existing under the laws of the Republic of the
Philippines with principal address at Unit 201 Midway Court Building,
Brgy. Wack Wack, Greenhills 241 EDSA, Mandaluyong City. Copies of
Astronergy's Certificate of Incorporation, Articles of Incorporation, latest
General Information Sheet, latest Audited Financial Statements, and
Department of Energy Solar Service Contract for Astronergy Power Plant
attached as Annexes "A", "B", "C", and "D", respectively.
Copies of the pertinent Board Resolutions authorizing
the filing of the Application are attached hereto as Annexes
B and " CC"

ZANECO and ASTRONERGY may be served orders and

3.
other processes through the undersigned counsel/representative.
NATURE OF THE APPLICATION
The Application is filed pursuant to Rule 20(B) of the Energy
4.
Regulatory Commission's Rules of Practice and Procedure ("ERC
Rules"), and other pertinent rules and regulations, for the Honorable
Commission's Approval of the Renewable Energy Supply Agreement
(RESA) and the Memorandum of Agreement (MOA) to Amend the
Renewable Energy Supply Agreement and the MOA executed by and
between ZANECO and ASTRONERGY. Copies of the RESA and the
MOA are attached as Annexes "E" and "E-l".

COMPLIANCE WITH PRE-FILING REQUIREMENTS

5.
ZANIECO and ASTRONERGY furnished the respective
legislative bodies of the local government units where they principally
operate with copy of the Application together with all the annexes and
accompanying documents. Copies of the proof of service to the
Sangguniang Panlungsod of the Cities of Dipolog and Mandaluyong
City and the Sangguniang Panlalawigan of the Province of Zamboanga
del Norte are hereto attached as Annexes "F" "G" and "H", respectively.
6.
ZANIECO caused the publication of the instant Application
in its entirety with the exception of Annexes, in a newspaper of general
circulation within its franchise area. Copies of the corresponding
Affidavit of Publication and the newspaper are attached as Annexes "I"
and "I-i", respectively.
STATEMENT OF THE FACTS
7.
At present, ZANECO sources the majority of its power
requirements from the Power Sector Assets and Liabilities Management
Corporation (PSALM) under a contract for the Supply of Electric Energy
(CSEE) which will expire on December 2016. The remainder of its power
requirements is sourced from Therma Marine, Inc. (TMI) and Mapalad
Power Corporation (MPC).
8.
It is uncertain whether PSALM still has the capacity to
supply power requirements beyond December 2016 as PSALM is in the
process of privatizing its generation assets in Mindanao. In fact, the
contracted capacity under the current CSEE of ZANECO and PSALM is
already a reduced capacity in view Of the existence of a region-wide
power supply deficiency problem in Mindanao.
9.
This load curtailment has already resulted in daily rotating
brown-outs in the franchise area of ZANECO at an average of two (2)
hours per day.
10. Further, the energy requirements of ZANECO customers is
projected to increase in the next few years as demonstrated by
ZANECO's Distribution Development Plant, Supply-Demand Outlook
and Forecasted Demand copies of which are attached as Annexes "J"
"K" and "L", respectively.

Sometime in the year 2013, ASTRONERGY, offered to

11.
supply power to ZANECO, to partly address the latter's power supply
requirements.
12. ZANECO negotiated with ASTRONERGY because it
committed to deliver power within a short period from the issuance of
the appropriate approval by the Energy Regulatory Commission, since
the construction period for solar power plants take less than a year, a
great help in immediately addressing the power deficiency problem of
ZANECO.
13. Furthermore, the power offered by ASTRONERGY is
appropriate to ZANECO's daytime power requirement, as can be
gleaned from ZANECO's daily load profile for the past twelve months
prior to the filing of this application and projected Average Daily Load
Curve and ASTRONERGY's Solar plant load curve attached as Annexes
"M" and "N", respectively.

14. More importantly, ASTRONERGY agreed to be an

embedded generator, thus, the delivery of power from its plant provides
benefits in terms of support for ZANECO's distribution system and
savings in purchased power since there are no transmission charges and
systems losses.
15. The parties also agreed to a Build and Operate Transfer
Provision whereby ASTRONERGY will transfer the project to ZANECO
at the end of the 25 -year term. 1 ASTRONERGY shall transfer full and
complete legal title, ownership and possession of the solar-electric
generation project and all related facilities, including assignment of any
existing land leases for the project site.
16. In addition, ZANECO's utilization of a renewable energy
source like ASTRONERGY's solar power is in support of government
policy promoting the use of renewable energy so as to reduce the
emission of pollutants.
17. ZANECO and ASTRONERGY thus executed a RESA on 17
January 2014. A copy of the ZANECO Board resolution authorizing the
execution of the RESA with ASTRONERGY is attached as Annex "0".

Article 13.14, RESA

18. The RESA was amended on 22 May 2015 to reflect the

parties' subsequent agreements on the following: definition of "Forced
Outage", Guaranteed Commercial Operation Date" and "Condition
Precedent"; responsibility on the transmission service and the specific
point of Interconnection.
THE RENEWABLE ENERGY SUPPLY AGREEMENT AND THE
MEMORANDUM OF AGREEMENT MATERIAL PROVISIONS AND
OTHER RELEVANT INFORMATION
19. Project Description. In order to supply power to ZANECO
under the RESA, ASTRONERGY shall construct, own, operate, manage
and maintain the ASTRONERGY's Dipolog Solar Project (DSP) located at
Barangay La Union, La Libertad, Zamboanga del Norte. Copy of the
Department of Energy Solar Service Contract, the Department of
Environment and Natural Resources Environmental Compliance
Certificate (ECC) and the Board of Investments Certificate of Registration
covering the DSP are attached as Annex "P", "Q" and "AA".

fl

20. The DSP will be designed and constructed using six (6)
separate, 1MW strings (generating units) of monocrystalline or poly
crystalline photovoltaic modules. Each string will connect to a 1MW
inverter. All inverters on each site will be combined through a single onsite substation, before interconnecting to the ZANECO grid. Copy of the
Astronergy Limited Warranty for Crystalline PV Module is attached as
Annex "R".
21. The commercial operation date of DSP is estimated to be
within six (6) months from the date of receipt of the approval of the
Application for Provisional Authority by the Energy Regulatory
Commission.
22.

Salient Features of the RESA and the MOA.

22.1 Product. The capacity to be delivered and sold by
ASTRONERGY and received and purchased by
ZANIECO under the RESA is "As-Available Energy",
produced by the DSP (net of station service). 2 The

Article 3.1 (a) RESA

capacity provided under the RESA shall be supplied

from DSP only. 3
22.2 Delivery Term. The RESA shall remain in force and
effect for a period of twenty-five (25) years counted
from the Commercial Operation Date. 4
22.3 Contract Quantity and Guaranteed Energy
Production. ASTRONIERGY expects to deliver to
ZANECO, during each contract year 8,420 MW/h
subject to a yearly degradation rate of up to one percent
(1%) per manufacturer's module degradation factor 5 .
22.4 Contract Capacity. The "Contract Capacity" is the full
generation capacity of the Project, net of all station
service, which shall be 5MW (AC or Alternating
Current) although the "Nameplate Capacity" shall be
6MW (DC or Direct Current). This difference in
capacity is due to system losses (up to 20%) that occur
when generating in DC then converting to AC before
the delivery point. Due to the variation on weather
cycles such as the El Nino, ZANECO shall be obligated
to receive and pay for any product, as measured by
delivered energy that exceeds the contract capacity by
up to ten percent (10%) during the first five (5) years of
the delivery term. 6
22.5 Delivery Point. The Delivery Point shall be at the plant
gate of the Solar Generating Facility. 7

S
22.6 Energy Payment The energy price shall be as follows:
a.) During the first full contract year, the price for each
MW/h of energy delivered shall be Php7,250 and
Article 3.1(g), RESA
Article 3.1 (c), RESA
Article 3.1 (e), RESA
Article 3.1 (t), RESA
Article 3.1 (d), RESA

increased, each contract year thereafter, by three

percent (3%) in order to offset inflation and currency
devaluation. For each month, Buyer shall pay seller
an amount equal to the sum of each and every
megawatt-hour (MWh) of product delivered to
buyer during such month, multiplied by the
applicable monthly Energy Price per MWh. 8
22.7 Interconnection. ASTRONERGY shall be responsible
for transmission service for delivery of the power to the
delivery point by developing and constructing the
generation tie line interconnecting to ZANECO's
distribution grid. 9 Ownership of all such
interconnection facilities shall be turned over to
ZANECO at the start of the commercial operations. 10
10 ZANECO shall reimburse ASTRONERGY for the total
construction cost over a period of twenty five (25) years
at twelve percent (12%) annual rate of return in
accordance with the agreed computation in the
Transmission Facilities Price Adder. 11
22.8 Build Operate and Transfer. ASTRONIERGY shall
transfer the facility to ZANIECO at the end of the 25year term. ASTRONIERGY shall transfer full and
complete legal title, ownership and possession of the
solar-electric generation project and all related facilities,
including assignment of any existing land leases for the
project site.12
23. Rate Impact. The average rate impact of the RESA on the
blended cost of ZANECO for the year 2016 is Php 0.0007/kwh. Copy of
the Rate Impact Analysis is hereto attached as Annex "S".

Article 4.1 (a), RESA

Article 3.2 (a), RESA
10

Ibid

11

Article 3.2 (b), RESA

12

Article 13.14

Year_2016
Particulars
Without ASTRONERGY
With ASTRONERGY
Indicative Rate Impact on Generation
Add:
Transmission Facilities Price Adder

Blended Genera ti on Cost

(m Php/kWh)
5.7140
5.7482
0.0341
0.0200

Savings on Generation VAT

(0.0183)

Savings on Transmission Charge

INDICATIVE RATE IMPACT

(0.0351)
0.0007

ALLEGATIONS IN SUPPORT OF THE PRAYER FOR

PROVISIONAL AUTHORITY
Joint Applicants ASTRONERGY and ZANECO replead the
foregoing allegations and further states that:
24.
ZANECO has anurgent and pressing need for an additional
generating capacity as its franchise area has been experiencing rotating
brownouts at an average of two (2) hours per day.
Such predicament will be partly addressed by the power
25.
supplied under the RESA between ZANIECO and ASTRONERGY.
To expedite the implementation of the RESA, a provisional
26.
authority is respectfully prayed for, considering that it is necessary for
financial closing. Once financial closing is completed, it is estimated that
ASTRONERGY will be able to supply power to ZANECO alter six (6)
months.
27. Affidavits of Merit in support of the prayer for the
provisional authority are hereto attached as Annexes "T" and "T-l".
Public interest as well as the declared government policy
28.
encouraging the development - and utilization of renewable energy
resources therefore compels the immediate issuance of a provisional
authority subject to final authority that may be subsequently issued by
the Honorable Commission.

ALLEGATIONS IN SUPPORT OF MOTION FOR

CONFIDENTIAL TREATMENT OF INFORMATION
Under Rule 4 of the ERC Rules, the Honorable Commission
29.
may, upon request of a party and determination of the existence of
conditions which would warrant such remedy, treat certain information
submitted to it as confidential.
30.
In further support of the instant Application, ASTRONIERGY
and ZANIECO are submitting the following documents pursuant to the
aforementioned rule:
Description of Document
Grid Connected System: Simulation Parameters
for PSP 6MWp

Annex
U

Astronergy's Financial Model and Notes

Astronergy's Unlevered Cash Flow Model

Astronergy's Levered Cash Flow Model

Development
Astronergy's
Itemized
Construction Cost Schedule

and

'V

Astronergy's Annual Operations & Maintenance

Cost Schedule

These documents contain certain non-public information,

31.
data and projections involving business operations and financial trade
secrets reflecting ASTRONERGY's investment and business calculations.
32. Under Article 13.1(a) of the RESA, as parties to the contract,
ZANECO and ASTRONERGY undertook to ensure that non-public
terms or conditions of the RESA or any transaction under the RESA,
shall not be disclosed to a third party, except under the circumstances
mentioned under the said provision.
33. ZANECO and ASTRONERGY respectfully move that
Annexes "U", "V", "W", "X", "Y" and "Z" not be disclosed and be
treated as confidential documents in accordance with Rule 4 of the ERC
Rules.

34. ZANECO and ASTRONIERGY hereby submit one (1) copy of

Annexes "U", "V", "W", "X", "Y" and "Z" in a sealed envelope, with the
envelope and each page of the document stamped with the word
"Confidential."
PRAYER
WHEREFORE, in view of all the foregoing, it is most respectfully
prayed of this Honorable Commission that:
(1.) Upon filing of the instant Application and pending hearing
thereon, an Order be issued:
(a) Granting PROVISIONAL AUTHORITY for the immediate
implementation of the provisions of the Renewable Energy
Supply Agreement executed on 17 January 2014 and the
Memorandum of Agreement to Amend the Renewable
Energy Supply Agreement executed on 18 June 2015.
(b) Treating Annexes "U", "V", "W", "X", "Y" and "Z and the
information contained therein as CONFIDENTIAL, directing
their non-disclosure pursuant to Rule 4 of the ERC Rules, and
prescribing the guidelines for the protection thereof.
(2.) After hearing on the merits, a Decision be rendered issuing a
PERMANENT APPROVAL of. the Renewable Energy Supply
Agreement executed on 17 January 2014 as well as the Memorandum of
Agreement to Amend the Renewable Energy Supply Agreement
executed on 18 June 2015.
Other reliefs just and equitable are likewise prayed for.
Pasig City, 05 April 2016

DENNIS. R. V. EALA
PRESIDENT
Astronergy Development Dipolog Inc.

PET Y. Co

for ZANECO
0916546 01.06.15
time No. 06834 07.18.06
ROLL NO. 35379 05.30.88
MCLE 5th COMPLIANCE NO. V0000374 08.15.13

..:

VERIFICATION & CERTIFICATION

OF NON-FORUM SHOPPING

L ATTY. DENNIS R.V. EALA, of legal age, Filipino and with office
address at Unit 201 2/F Midway Court Building, 241 EDSA, Mandaluyong
City, after being sworn to according to law, depose and state that:
1.1 am the President of Astronergy Development Dipolog Inc. and
I have been duly authorized to represent by the company in the instant
application.
2. As the duly authorized officer of Astronergy Development
Dipolog Inc., I caused the preparation and filing of the foregoing
Application; I have read the allegations contained therein, and certify that
the same are true and correct based on my personal knowledge and on
authentic records in the possession of Astronergy Development Dipolog
Inc.

3. Astronergy Development Dipolog Inc. has not heretofore

commenced any other action or proceedings involving the same issues
and parties before any court, tribunal or quasi-judicial agency; to the best
of my knowledge no such action or proceeding is pending, and if I should
learn that the same or similar action or proceeding has been filed or is
pending, I undertake to report such fact to this Honorable Commission,
within five (5) days therefrom.
IN WITNESS WHEREOF, I have hereunto set my hand in
MAKATI City, this - dyApnl 2016.

DENNIS R.V. EALA

SUBSCRIBED AND
S%tRN to before me in
_____________, tiij! day of April 2016, by the aff iant who
exhibiter his
/
DocNo.
PageNo. CI
Book No._____
Series of 2016.

Any. VIRI? RBATAI

NOTARY

00hR

MAKATICITY
32

ItqtL F At!?. 140, 4S343

.3BP No..70616t UFETjMEMMBfitcR3
P1B No.S24SG5.JA4M4,O
EXECVT1VE,8L0G:TXNTEA
AvE.t0lL1uPTEfft4sMIjW

VERIFICATION & CERTIFICATION

OF NON-FORUM SHOPPING

I,ADELMO P. LAPUT, of legal age, Filipino and with office address

at ZANECO Main Office, Gen. Luna, Central Barangay, Dipolog City, after
being sworn to according to law, depose and state that:
I am the General Manager/Chief Executive Officerof
1.
Zamboangadel Norte Electric Cooperative, Inc. (ZANECO) and I have been
duly authorized to represent ZANECO in the instant application.
As the duly authorized officer of ZANECO, I caused the
2.
preparation and filing of the foregoing Application; I have read the
allegations contained therein, and certify that the same are true and correct
based on my personal knowledge and on authentic records in the
possession of ZANECO.
ZANECO has not heretofore commenced any other action or
3.
proceedings involving the same issues and parties before any court,
tribunal or quasi-judicial agency; to the best of my knowledge no such
action or proceeding is pending, and if I should learn that the same or
similar action or proceeding has been filed or is pending, I undertake to
report such fact to this Honorable Commission, within five (5) days
therefrom.
IN WITNESS WHEREOF, I have hereunto set my hand in Dipolog
City, this 15th day of April 2016.

ADEL 0 P. LAPUT
SUBSCRIBED AND SWORN to before me in Dipolog City, this Wday
of April 2016, by the affiant who exhibited to me his Driv 's License
No.J03-78-006812, issued at Dipolog City, on August 1, 2014.

DocNo. .303;
Page No. 43
Book No.\/hi\
Series of 2016.

IWBENcTO B. LEG(JIU
Ntary Public
Until D4ce.mher 31, 2016
Philja Bkitj. Catibc) St. Dipotog City
PTR O.R. No. 1098166 Jan. 4,2016
MCLE Compliance No. v.0000346
Roll of Attorneys No 28799
BP Lifetime Membership No O'

DENNIS R.V. EALA

President - Astronergy Development Dipolog, Inc.
Unit 902-903 One World Place, 32nd St., Bonifacio Global City,
Taguig Tel. No. 834-2036
E-mail: dennis@asfronergydevelopment.com