B. Applications for Approval of Power Supply Contract

Section 1. Applications for Approval of Power Supply Contract. – Applications for approval of power supply contract between a distribution utility and power producer, other than those covered by the Guidelines for the Setting and Approval of Electricity Generation Rates and Subsidies for Missionary Electrification Areas (ERC Resolution No. 11, series of 2005, dated 6 July 2005), shall include a statement of the salient provisions of the said contract, including the stipulations on the pricing, and a statement of its impact on the overall rates of the applicant-utility once said contract is approved.

Section 2. Supporting Documents and Information. - The application for approval of power supply contract shall be accompanied by the following documents and information:

(a) Articles of Incorporation of Generation Company
(b) Securities and Exchange Commission (SEC) Certificate of Registration of the said Articles of Incorporation of Generation Company
(c) Latest General Information Sheet of Generation Company
(d) Board of Investment (BOI) Certificate of Registration of Generation Company
(e) Environmental Compliance Certificate (ECC) issued by the Department of Environment and Natural Resources (DENR) to the Generation Company
(f) Power Supply Agreement/Energy Conversion Agreement Contract (PSA/ECA)
(g) Details of the PSA/ECA
1. Executive Summary
2. Sources of Funds/Financial Plans
2.1. Debt/Equity Ratio
2.2. Project Cost
2.3. Annual Interest
2.4. Computation of Return on Investment/WACC
2.5. Certification from the Bank/Lending Institution specifying the principal amortization, term and interest during the cooperation period of the loan agreement
3. Purchased Power Rate
3.1. Breakdown of the base prices of Operation and Maintenance, Capacity Fee, Fixed Operation Fee, and Energy Fee (provide computations)
3.2. Sample Computation of Power Rates with the supporting documents on the assumptions taken
3.3. If applicable, basis/rationale of indexation and level of indexation
4. Cash Flow specifying the following:
4.1. Initial Costs
4.2. Breakdown of Operating and Maintenance Expenses and
4.3. Minimum Energy Off-take (MEOT)
(i) All details on the procurement process of fuel including requests, proposals received, tender offers, etc.
(j) Copy of Related Agreements (i.e. Transmission Wheeling Contract, Fuel Supply Agreements, etc.)
(k) Certificate of Compliance (COC) issued by the ERC pursuant to the Guidelines for the issuance of COC for Generation Companies/Facilities
(l) Certification by NPC on whether or not Transition Supply Contract (TSC) capacity and energy are expected to be available during the contractual period (include relevant supporting documentation, data and analysis supporting each statement)
(m) All relevant technical and economic characteristics of the generation capacity, installed capacity, mode of operation, and dependable capacity of the plant
(n) Details on the procurement process used by the Distribution Utility leading to the selection of the Generation Company including request(s) for proposals, proposal received by the Distribution Utility, tender offers, etc.
(o) Details regarding transmission projects or grid connection projects necessary to complement the proposed generation capacity, including the parties that will develop and/or own such facilities, any costs related to such project, and specification of the parties responsible for recovery of any costs related to such projects
(p) Certification regarding the consistencies and inconsistencies between the proposed generation capacity and the Department of Energy’s (DOE) Philippine Development Plan (PDP). Any inconsistency shall be supported by relevant analysis including but not limited to, forecasts and assessment of available generation capacity and technology mix.
(q) Details regarding the load forecast projections in accordance with the latest Distribution Development Plan of the Distribution Utility and the variability of those projections over the proposed contractual period, including the estimation of the potential for a reduction in load supplied by the Distribution Utility due to retail competition. Any inconsistency shall be supported by relevant analysis.
(r) If the application is filed later than two years following the effectivity of the Guidelines for the Recovery of Costs for the Generation Component of the Distribution Utilities’ Rates, the application must include an alternative Demand Side Management (DSM) program that could be implemented by the Distribution Utilities if approved by the ERC. The Distribution Utility shall submit the projected costs and benefits of the DSM program.

Section 3. Applications for Approval of Power Supply Contract between an Electric Cooperative and a New Power Provider. - The applicant in applications for approval of power supply agreement between an electric cooperative and a new power provider (NPP), as the same is defined in the Guidelines for the Setting and Approval of Electricity Generation Rates and Subsidies for Missionary Electrification Areas (ERC Resolution No. 11, series of 2005, dated 6 July 2005), shall comply with the requirements in said guidelines pertaining to the notification by the electric cooperative of the launch of the competitive selection process and the requirements pertaining to the filing and approval of the power supply agreement (PSA) between an electric cooperative and an NPP and approval of the true cost of generation rate (TCGR).

In these applications, the Commission will render a decision within ninety (90) days from the date of the filing of the application, unless it extends the 90-day decision period for a maximum of ninety (90) days on account of extraordinary circumstances attending the application. If no decision is rendered within the original or the extended decision period, the PSA and the NPP TCGR will be deemed approved.