ENERGY REGULATORY COMMISSION Pasig City

Republic of the Philippines ENERGY REGULATORY COMMISSION

Pasig City IN THE MATTER OF THE APPLICATION FOR AUTHORITY TO DEVELOP, OWN, AND/OR OPERATE DEDICATED POINT-TO-POINT LIMITED TRANSMISSION FACILITIES TO CONNECT THE 20MW HERMOSA SOLAR POWER PLANT TO THE HERMOSA 69 KV SUBSTATION, WITH PRAYER FOR PROVISIONAL AUTHORITY

ERC CASE NO. 2021-005 MC

SOLANA SOLAR ALPHA INC. (SSAI),

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

DECISION

Before the Commission for resolution is the Application dated 14 January 2021 filed on 04 February 2021 by Solana Solar Alpha Inc. (SSAI), seeking the Commission’s approval of its authority to develop, own, and/or operate dedicated point-to-point limited transmission facilities to connect its 20 MW Hermosa Solar Power Plant (HSPP) Project via direct connection to the Hermosa Substation of the National Grid Corporation of the Philippines (NGCP).

FACTUAL ANTECEDENTS

The pertinent allegations in the Application are hereunder quoted, as follows:

I. APPLICANT

1. SSAI is a corporation duly organized and existing by virtue of and under the laws of the Republic of the Philippines with

apsinlao

Stamp

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Stamp

ERC CASE NO. 2021-005 MC DECISION / 21 July 2021 PAGE 2 of 44

principal office address at Solanaland Building, Jose Abad Santos Avenue, Barangay Magliman, City of San Fernando, Pampanga. Copies of SSAI's Certificate of Incorporation dated 20 May 2015 with attached Articles of Incorporation and By-Laws both dated 7 May 2015 and latest General Information Sheet dated 20 July 2020 are attached hereto and made integral parts hereof as Annexes “A” and “B”, respectively.

2. SSAI may be served orders, notices, and other processes

through undersigned counsel at its address indicated below.

II. NATURE OF APPLICATION

3. This Application is submitted to this Honorable Commission pursuant to Section 9 of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act (“EPIRA”),1 for its consideration and approval of SSAI's proposed development, ownership, and operation of interconnection facilities, which shall connect the 20MWAC photovoltaic solar power plant located at Barangay Balsik, Municipality of Hermosa, Province of Bataan (“Solar Power Plant”) to the Luzon Grid through a direct connection to the National Grid Corporation of the Philippines’ (“NGCP”) Hermosa 69 kV Substation via a 0.5 kilometer 69 kV Single Phase-Single Circuit transmission line with a 1-336.4 MCM ACSR conductor (“Dedicated Facility Project”).

A copy of the Secretary's Certificate dated 12 March 2020 on the resolutions adopted by SSAI's Board of Directors, authorizing the filing of the instant Application and appointing the authorized representative therefor, is attached hereto and made an integral part hereof as Annex “C”.

III. STATEMENT OF FACTS

4. SSAI is a duly registered Renewable Energy Developer of

Solar Energy Resources and the holder of Solar Energy Service Contract No. 2015-10-260 (“SESC”) dated 23 December 2015, executed between the Republic of the Philippines, through the Department of Energy (“DOE”), and SSAI, by virtue of which SSAI was granted the right to explore, develop, and utilize Solar Energy Resources within the designated Contract Area located in the Municipality of Hermosa, Province of Bataan, and the Municipality of Lubao, Province of Pampanga.

1 Section 9. Function and Responsibilities. xxx (f) xxx A generation company may develop and own or operate dedicated point to point limited

transmission facilities that are consistent with the TDP: Provided, That such facilities are required only for the purpose of connecting to the transmission system, and are used solely by the generating facility, subject to prior authorization by the ERC: xxx.


Copies of the Certificate of Registration issued by the DOE and the SESC, both dated 23 December 2015, are attached hereto and made integral parts hereof as Annexes “D” and “E”, respectively.

5. Pursuant to the SESC, SSAI is developing the Solar Power Plant, which is targeted to commence commercial operations by 31 December 2021. Copies of the Certificate of Confirmation of Commerciality No. SCC-2019-08-080 issued by the DOE on 30 September 2019 for the development of the Solar Power Plant under the SESC, the Summary of Relevant Dates indicating the dates of start and completion of construction, testing and commissioning, and commercial operations of both the Solar Power Plant and Dedicated Facility Project, and the Certificate of Non-Coverage No. CNC-OL-R03-2020-11-05438 issued by the Department of Environment and Natural Resources on 6 November 2020 for the 69kV Transmission Line are hereto attached and made integral parts hereof as Annexes “F”, “G”, and “H”.

6. In order to test, commission, and dispatch the electricity generated from the Solar Power Plant, SSAI needs to develop, construct, and operate the Dedicated Facility Project.

A copy of the Secretary's Certificate dated 12 March 2020 on the resolutions adopted by SSAI's Board of Directors, approving the construction of the Dedicated Facility Project is hereto attached and made an integral part hereof as Annex “I”.

6.1. The Dedicated Facility Project involves the

construction of a 0.5 kilometer 69 kV SP-SC transmission line with a 1-336.4 MCM ACSR conductor extending from the Solar Power Plant to the NGCP Hermosa 69kV Substation, Hermosa, Bataan. The power generated from the generator unit will be stepped up from 34.5 kV to 69 kV utilizing a 20 MVA transformer. Copies of the Project Description and the Single Line Diagram of the Dedicated Facility Project are hereto attached and made integral parts hereof as Annexes “J” and “K”, respectively.

6.2 The estimated cost of the construction of the Dedicated

Facility Project is One Hundred Fourteen Million Two Hundred Five Thousand One Hundred Ninety-Eight and 50/100 Pesos (PhP114,205,198.50) with the following major cost components:

Project Component Cost in PHP

1 Solana Substation 82,408,087.96

2 Transmission Line (500 meters) 5,230,812.95

3 Solana Assets at NGCP Substation 26,566,297.59

TOTAL PROJECT COST PhP114,205,198.50


Copies of the detailed breakdown of the Dedicated Facility Project Cost Estimate, as well as the bill of materials for the project components, and an overview of the Philippine power demand-supply scenario are attached hereto and made integral parts hereof as Annexes “L”, “L-1”, and “M”.

6.3. The Dedicated Facility Project will be exclusively

funded by SSAI and will, therefore, not impact any regulated charges.

6.4. The construction of the Dedicated Facility Project is

intended to commence on 01 October 2021. SSAI is currently on its contractor selection process for the Facility Construction and considers MN Electro Industrial Supply and Services Inc. as its preferred bidder to construct the Dedicated Facility Project. The company profile of MN Electro Industrial Supply and Services Inc. is attached hereto and made integral part hereof as Annex “N”.

6.5. The construction of the Dedicated Facility Project is

estimated to be completed on 30 November 2021. Copies of the Conceptual Engineering Design and Drawings, and the Gantt Charts are attached hereto and made integral parts hereof as Annexes “O” and “P”, respectively.

7. SSAI respectfully submits that the Dedicated Facility Project

is the most viable option for connecting the Solar Power Plant in view of its proximity to the NGCP Hermosa 69kV Substation, Hermosa, Bataan.

A summary of options considered for the connection facility is hereto attached and made an integral part hereof as Annex “Q”.

7.1. To evaluate the technical feasibility of the Dedicated

Facility Project, a System Impact Study (“SIS”) was conducted by NGCP in 2017, which was subsequently updated in 2019, wherein the interconnection of the Solar Power Plant to the Luzon Grid through the Dedicated Facility Project was found to be technically feasible. It is worth noting that the SIS shows that the Dedicated Facility Project was the only option considered for the interconnection of the Solar Power Plant to the grid. NGCP has also confirmed the technical feasibility of the Dedicated Facility Project in its letter dated 23 December 2019. Copies of the NGCP letter on the SIS Final Review Report dated 20 February 2017 and the SIS dated 20 February 2017, as well as the NGCP letter dated 23 December 2019 on the SIS Final Review Report and the updated SIS dated November 2019 are attached hereto


and made integral parts hereof as Annexes “R”, “S”, “T”, and “U”, respectively.

7.2. A Facilities Study (“FS”) was also undertaken to ensure that the equipment to be installed will satisfy the recommendations in the SIS, and that the Dedicated Facility Project complies with the Philippine Grid Code. The Facility Study had been reviewed by NGCP, the results of which had been communicated to SSAI under letter dated 30 June 2017. An updated FS was also undertaken in February 2020 and the results were communicated to SSAI under a letter dated 28 October 2020. Copies of the FS dated September 2016, the corresponding NGCP letter dated 30 June 2017 on its review of the FS, the updated FS dated February 2020, and the corresponding NGCP letter dated 28 October 2020 on its review of the updated FS are hereto attached and made integral parts hereof as Annexes “V”, “W”, “X”, and “Y”, respectively.

7.3. The connection of the Solar Power Plant through the

Dedicated Facility Project has also been considered in NGCP's Transmission Development Plan. A copy of the excerpts from NGCP's Transmission Development Plan for 2020 to 2040 reflecting the Solar Power Plant among the Indicative Power Plants included in the projection for the Luzon Generation Capacity Addition is attached hereto and made an integral part hereof as Annex “Z”.

8. SSAI has entered into a Connection Agreement with NGCP on

25 January 2018 for the interconnection of the Solar Power Plant to the Luzon Grid through a direct connection to the Hermosa 69 kV Substation. A copy of the Connection Agreement between SSAI and NGCP is hereto attached and made an integral part hereof as Annex “AA”.

9. SSAI is also in the process of signing a Transmission Service

Agreement and Metering Service Agreement (collectively, “Service Agreements”) with NGCP. A copy of the NGCP Certification dated 27 February 2020, stating that NGCP and SSAI have agreed in principle on the terms and conditions of the Service Agreements and are about to finalize the same, is attached hereto and made an integral part hereof as Annex “BB”.

10. SSAI is currently in discussion with NGCP for the provision of

operation and maintenance services for the Dedicated Facility Project upon completion thereof and commencement of the commercial operations of the Solar Power Plant.

Copies of the letter dated 01 September 2020 sent to NGCP in relation to the operations and maintenance of the Dedicated


Facility Project and NGCP's e-mail acknowledgement dated 02 September 2020 are attached hereto and made integral parts hereof as Annexes “CC” and “CC-1”.

11. As of date, SSAI has secured or is in the process of securing all

other necessary permits, licenses, and authority from the appropriate regulatory agencies for the Dedicated Facility Project. SSAI hereby further undertakes to file an application for the issuance of a Certificate of Compliance with this Honorable Commission for the Solar Power Plant in accordance with ERC Resolution No. 16, Series of 2014 in due course.

The Sworn Statement of SSAI's President, Vicente S. Perez Jr., dated 12 March 2020 attesting to the fact that SSAI has filed or shall file applications for necessary permits, licenses, and authority with all the regulatory agencies that may have an interest in the Dedicated Facility Project is hereto attached and made an integral part hereof as Annex “DD”.

12. In light of the foregoing, SSAI respectfully seeks the

confirmation and approval of the Honorable Commission that the connection of the Solar Power Plant to the Hermosa 69 kV Substation through the Dedicated Facility Project is the most viable option for the interconnection of the Solar Power Plant to the Luzon Grid.

IV. ALLEGATIONS IN SUPPORT OF PRAYER FOR

PROVISIONAL AUTHORITY

13. As Republic Act No. 9513, otherwise known as the Renewable Energy (“RE”) Act of 2008 (“RE Act”), aims to accelerate the development of the country's renewable energy resources and increase the utilization of renewable energy, it is in the interest of the government to help RE developers such as SSAI to achieve commerciality and commence operations at the soonest practicable time. Needless to state, the construction of the Dedicated Facility Project is a pre-requisite for the testing and commissioning, and ultimately, the commercial operations of the Solar Power Plant. A provisional authority is thus urgently needed to enable SSAI to achieve the target commercial operations date of the Solar Power Plant by 31 December 2021 and avoid adverse consequences to SSAI.

14. After all, the RE Act has declared it the policy of the State to

“[a]ccelerate the exploration and development of renewable energy resources such as, but not limited to, biomass, solar, wind, hydro, geothermal and ocean energy sources, including hybrid systems, to achieve energy self-reliance, through the adoption of sustainable energy development strategies to reduce the country's dependence on fossil fuels and thereby minimize the country's exposure to price fluctuations in the international markets, the effects of which spiral down to


almost all sectors of the economy [Emphasis supplied].”2 It is in support of this policy that SSAI was established to generate, transmit, and distribute power derived from solar energy resources.

A copy of the Affidavit executed by Vicente S. Perez Jr. on 12 March 2020 in support of the prayer for issuance of provisional authority is hereto attached and made an integral part hereof as Annex “EE”.

15. Considering the foregoing, SSAI submits that there is clear and sufficient basis for the grant of a provisional authority for the development, ownership, and operation of the Dedicated Facility Project by SSAI to connect the Solar Power Plant to the Luzon Grid, pending the Honorable Commission's issuance of a final decision on the instant Application.

PRAYER

WHEREFORE, premises considered, Applicant Solana Solar

Alpha Inc. respectfully prays of this Honorable Commission to:

1. GRANT SSAI provisional authority to develop, own, and operate the Dedicated Facility Project to connect the Solar Power Plant to the Luzon Grid; and

2. APPROVE the instant Application to develop, own, and

operate the Dedicated Facility Project to connect the Solar Power Plant to the Luzon Grid, after hearing on the merits.

Other just and equitable reliefs are likewise prayed for.

On 19 February 2021, the Commission issued an Order and Notice of Virtual Hearing, both dated 11 February 2021, setting the case for hearing for the determination of compliance with the jurisdictional requirements and expository presentation on 16 April 2021, and the pre-trial conference and presentation of evidence on 23 April 2021.

On 08 April 2021, SSAI electronically filed its Pre-Trial Brief and Compliance of even date.

During the 16 April 2021 hearing, SSAI appeared. There was no intervenor or oppositor who appeared nor was there any intervention and opposition that was filed.

2 Section 2 (a), Republic Act 9513.


Thereafter, SSAI presented documents as proof of its compliance with the Commission’s publication and posting of notice requirements, to wit:

1. Affidavit of Publication executed by Leena C. Chua, News Editor of The Manila Times, dated 25 January 2021, attesting the publication of the Notice of Virtual Hearing on The Manila Times;3

2. Copy of the 19 March 20214 issue of The Manila Times

where the Notice of Virtual Hearing was published; 3. Certification issued by the Offices of the Provincial

Governor5 and Sangguniang Panlalawigan of the Province of Bataan,6 and the Offices of the Municipal Mayor7 and Sangguniang Bayan of the Municipality of Hermosa, Bataan;8

4. Certification issued by the Offices of the Provincial

Governor9 and Sangguniang Panlalawigan of the Province of Pampanga,10 the Offices of the Municipal Mayor11 and Sangguniang Bayan of the Municipality of Lubao;12 and the Office of City Mayor13 and Sangguniang Panlungsod of San Fernando, Pampanga;14

5. Certification15 dated 30 March 2021 of SSAI’s Solar

Engineer, Mark Alvin Dave Soriano, attesting to the posting of a tarpaulin at the front gate of SSAI’s Solar Power Plant, informing consumers about the filing of the Application, its reasons therefor and of the scheduled hearing thereon;

6. Affidavit of Service16 of Rey P. Mariñas, messenger of

Puyat Jacinto & Santos Law Office (PJS Law), counsel of SSAI, attesting to the service of a copy of Order and the Notice of Virtual Hearing to the Office of the Solicitor

3 Exhibit “GG”. 4 Exhibit “GG-1”. 5 Exhibit “HH”. 6 Exhibit “II”. 7 Exhibit “JJ”. 8 Exhibit “KK”. 9 Exhibit “LL”. 10 Exhibit MM”. 11 Exhibit “NN”. 12 Exhibit “OO”. 13 Exhibit “PP”. 14 Exhibit “QQ”. 15 Exhibit “RR”. 16 Exhibit “SS”.


General (OSG), Commission on Audit (COA), and House of Representative Committee on Energy, with receiving copies of the Order and Notice of Virtual Hearing;

7. Affidavit of Service17 of Michael A. Sanchez, messenger of

Puyat Jacinto & Santos Law Office (PJS Law), counsel of SSAI, attesting to the service of a copy of Order and the Notice of Virtual Hearing to the Office of the Senate Committee on Energy, with receiving copies of the Order and Notice of Virtual Hearing;

8. Affidavit of Service18 of Stephanie Ann B. Go, an associate

of Puyat Jacinto & Santos Law Office (PJS Law), counsel of SSAI, attesting to the service of a copy of Order and the Notice of Virtual Hearing to the Office of the Senate Committee on Energy, with receiving copies of the Order and Notice of Virtual Hearing; and

9. Certification19 dated 06 April 2021 of SSAI’s

Administrative and Office Manager, Rowena M. Olano, attesting to the posting on the bulletin boards of SSAI of the scanned copies of proof of compliance with the jurisdictional requirements, together with photographs of the posting.

Upon perusal of the documents submitted, the Clerk of the Commission verified that SSAI had complied with the Commission’s publication and posting of notice requirements in accordance with the Order dated 11 February 2021. Thus, the Commission declared that it acquired jurisdiction over the instant Application.

Thereafter, Applicant, through Mr. Mark Alvin Dave Soriano (Mr. Soriano) conducted its expository presentation under oath, discussing in detail the following: (a) Company Profile; (b)Project Location; (c) Project Description; (d) Single Line Diagram; (e) Connection Options; (f) Feasibility of Connection; (g) Project Cost; and (h) Permits and Agreements.

In the course of the presentation, the Commission propounded questions relative thereto. Thereafter, the expository presentation was terminated and the 16 April 2021 hearing was adjourned.

17 Exhibit “TT”. 18 Exhibit “UU”. 19 Exhibit “VV”.


On 23 April 2021, the hearing proceeded with the conduct of the pre-trial conference wherein the Applicant moved for a declaration of general default, in light of the absence of any intervenor or oppositor on record. Likewise, Applicant moved to adopt the facts and issues stated in its Pre-trial Brief. The Commission granted both motions.

Thereafter, Applicant presented its witness, Mr. Soriano, who testified under oath the following:

1. That the Applicant is financially capable to develop, own and operate the dedicated point-to-point limited transmission facility, which shall connect the 20MVAC, photovoltaic solar power plant located at Barangay Balsok, Municipality of Hermosa, Province of Bataan (Hermosa Solar Power Plant) to the Luzon Grid via a direct connection to the Hermosa 69 kV Substation of the NGCP (Dedicated Facility Project);

2. That there is commercial necessity, feasibility, and

desirability of the Dedicated Facility Project; 3. That the Applicant will undertake the Dedicated Facility

Project solely for the purpose of connecting the Hermosa Solar Power Plant to the Luzon Grid; and

4. All other material allegations in support of the instant

Application.

In the course of his direct examination, Mr. Soriano identified his Judicial Affidavit and his signature therein, which were duly marked as Exhibits “EE” and “EE-1”.

After the direct examination, the Commission propounded clarificatory questions to the witness. Likewise, the Commission directed the Applicant to submit its Formal Offer of Evidence (FOE) and the Solar Energy Operation Contract (SEOC) within fifteen (15) days and ten (10) days, respectively, from 23 April 2021.

On 29 April 2021, SSAI electronically filed its Compliance with the directive during the 23 April 2021 hearing to submit the SEOC, which was attached therein.

On 07 May 2021, SSAI filed its FOE, attaching thereto its documentary evidence, to wit:


Exhibit Document Purposes A SSAI’s Certificate of

Incorporation dated 20 May 2015

To prove the following: 1. The authenticity and existence of

the document; 2. That the Applicant is a

corporation duly organized and existing by virtue of and under the laws of the Republic of the Philippines, authorized to carry on the general business of generating, transmitting, and distributing power derived from renewable energy resources, such as solar energy resources, for lighting and power purposes and trading the electricity to any power corporation, public electric utilities, electric cooperatives and markets, among others; and

3. All other material allegations in support of the Application.

A-1 SSAI’s Articles of Incorporation dated 7 May 2015

A-2 SSAI’s By-Laws dated 7 May 2015

B Department of Energy (DOE) Certificate of Registration dated 23 December 2015


the document; 2. That the Applicant is registered

with the DOE as a Renewable Energy Developer of Solar Energy Resources with Solar Energy Service Contract No. 2015-10-260; and


C Solar Energy Service Contract No. 2015-10-260 dated 23 December 2015


the document; 2. That the Applicant is the holder

of Solar Energy Service Contract No. 2015-10-260, granting it the right to explore, develop, and utilize Solar Energy Resources within the designated Contract Area located in the Municipality of Hermosa, Province of Bataan,


Exhibit Document Purposes and the Municipality of Lubao, Province of Pampanga; and


D SSAI’s latest General Information Sheet dated 20 July 2020


the document; 2. That Applicant is a wholly owned

subsidiary of Solar Pacific Energy Corporation;

3. Applicant’s current capital structure;

4. That Applicant is financially capable of developing, owning, and operating the Dedicated Facility Project; and


E Secretary’s Certificate dated 12 March 2020 showing that SSAI has been authorized by its Board of Directors to cause the application to develop, own and/or operate the Dedicated Facility Project with the Honorable Commission


the document; 2. The authority of the Applicant to

file the instant Application with the Honorable Commission, including the appointment of its authorized representative for that purpose; and


E-1 Signature of Marie Antonette A. De Guzman

F Secretary’s Certificate dated 12 March 2020 showing that SSAI has been authorized by its Board of Directors to develop, construct, and operate the Dedicated Facility Project


the document; 2. The authority of the Applicant to

develop, construct, and operate the Dedicated Facility Project; and


F-1 Signature of Marie Antonette A. De Guzman

G Department of Environmental and Natural Resources (DENR) Certificate of Non-Coverage CNC-OL-


the document;


Exhibit Document Purposes R03-2020-1-05438 issued to SSAI on 6 November 2020

2. To prove that the Applicant has secured a certificate of non-coverage from the DENR for its Dedicated Facility Project; and


H Sworn Statement dated 12 March 2020


the document; 2. That SSAI has obtained and will

obtain all the necessary permits from the concerned government agencies that may have an interest in the Dedicated Facility Project; and


H-1 Signature of Vicente S. Perez, Jr.

I Confirmation of Commerciality No. SCC-2019-08-080 dated 30 September 2019


the document; 2. That the Applicant has secured a

Confirmation of Commerciality from the DOE to develop, operate, and maintain the Hermosa Solar Power Plant; and


J Excerpts from NGCP’s Transmission Development Plan for 2020 to 2040


the document; 2. That the Hermosa Solar Plant is

one of the projects considered in, and is consistent with, NGCP’s 2020-2040 TDP; and


K Project Description of the Dedicated Facility Project


the document; 2. The details and specifications of

the Dedicated Facility Project;

L Single Line Diagram of the Dedicated Facility Project


Exhibit Document Purposes M Conceptual Engineering

Design and Drawings for the Dedicated Facility Project

3. The technical viability of the design of the Dedicated Facility Project;

4. The fact of SSAI’s compliance with this Honorable Commission’s Rules, particularly the requirements of the Regulatory Operations Service regarding the development, ownership, or operation of a limited dedicated point-to-point transmission facility; and


N Gantt Chart for the Dedicated Facility Project


the document; 2. The details and specifications of

the Dedicated Facility Project; 3. The technical viability of the

design of the Dedicated Facility Project;

4. The material dates involved for the construction, development, and operation of the Dedicated Facility Project;

5. The fact of SSAI’s compliance with this Honorable Commission’s Rules, particularly the requirements of the Regulatory Operations Service regarding the development, ownership, or operation of a limited dedicated point-to-point transmission facility; and


O Summary of Point-to-Point Project Interconnection Options for SSAI’s 20 MW Solar Power Plant


the document; 2. That another option was

considered by SSAI for the


Exhibit Document Purposes connection of the Hermosa Power Plant to the Luzon Grid;

3. That of the alternative connection schemes considered by SSAI, the Dedicated Facility Project is the most viable option for connecting the Hermosa Solar Power Plant to the Luzon Grid; and


P System Impact Study (SIS) Report dated December 2016


the document; 2. The technical feasibility of the

Dedicated Facility Project; 3. That in 2016, NGCP has

conducted and approved the SIS for the Dedicated Facility Project; and


P-1 NGCP letter dated 20 February 2017 Re: Final Review Report of the System Impact Study for SSAI’s 20MW Hermosa Solar Power Plant Project

P-1-a Signature of Ma. Cynthia Y. Manrique

Q Updated System Impact Study Report dated November 2019



Dedicated Facility Project; 3. That in 2019, NGCP has

conducted and approved a re-run of the SIS for the Dedicated Facility Project; and


Q-1 NGCP letter dated 23 December 2019 Re: System Impact Study Final Review Report for the 20MW Hermosa Solar Power Plant Project

Q-1-a Signature of Ma. Cynthia Y. Manrique

Q-1-b Signature of Vicente S. Perez, Jr.

R Facilities Study (FS) Report dated September 2016



Dedicated Facility Project; 3. That the Dedicated Facility

Project conforms to the

R-1 NGCP letter dated 30 June 2017 Re: Review of Facilities Study for the 20MW Solar Power Plant Project in Hermosa Bataan


Exhibit Document Purposes R-1-a Signature of Ma. Cynthia

Y. Manrique specifications prescribed in the System Impact Study;

4. That NGCP has approved the FS conducted for the Dedicated Facility Project; and


S Updated Facilities Report February 2020



Dedicated Facility Project; 3. That the Dedicated Facility

Project conforms to the specifications prescribed in the System Impact Study;

4. That NGCP has approved the FS re-run conducted for the Dedicated Facility Project; and


S-1 NGCP letter dated 28 October 2020 Re: Interconnection Facilities Study Report for the 20MW Hermosa Solar Power Plant Project - SSAI

S-1-a Signature of Ma. Cynthia Y. Manrique

T Solana Solar Alpha, Inc. 20 MW Solar Power Plant Point-to-Point Connection Project Cost Estimate


the document; 2. The estimated amount of costs to

be incurred by SSAI for the Dedicated Facility Project; and


U Solana Solar Alpha, Inc. 20 MW Solar Power Plant Point-to-Point Connection Project Bill of Materials

V MN Electro’s Company Profile


the document; 2. The expertise and capability of

SSAI’s Contractor to construct the Dedicated Facility Project;

3. That SSAI’s Contractor has completed projects similar to the Dedicated Facility Project; and


W SSAI letter dated 1 September 2020 Re:

To prove the following:


Exhibit Document Purposes Solana Solar Alpha Inc. – Letter of Intent for Operation of Dedicated Facility Project

1. The authenticity and existence of the document;

2. That SSAI is currently in discussion with NGCP for the provision of operation and maintenance services for the Dedicated Facility Project; and


W-1 Signature of Vicente S. Perez, Jr.

X E-mail from Sherry Ann N. Aguirre with e-mail address [email protected] to Reyma Rufo-Alolod with e-mail address [email protected] dated 2 September 2020 Re: Solana Solar – LOI Dedicated Facility O&M

Y Connection Agreement between NGCP and Solana


the document; 2. That SSAI has entered into a

Connection Agreement with the NGCP for the interconnection of the Hermosa Solar Power Plant through the Dedicated Facility Project; and


Y-1 Signature of Gian Carlo L. Valerio

Y-2 Signature of Anthony L. Almeda

Z NGCP Certification dated 27 February 2020


the document; 2. That NGCP and SSAI have

already agreed, in principle, to the general terms and conditions of the Transmission Service Agreement and the Metering Service Agreement, and are finalizing the same; and


Z-1 Signature of Ma. Cynthia Y. Manrique

Z-2 Signature of Vicente S. Perez, Jr.

AA Overview of the Philippine Power Demand-Supply


the document;


Exhibit Document Purposes 2. The commercial viability of the

Dedicated Facility Project; and 3. All other material allegations in

support of the Application. BB Summary of Relevant

Dates for SSAI’s Hermosa Solar Power Plant and the Dedicated Facility Project


the document; 2. That the Dedicated Facility

Project is commercially viable; 3. The material dates involved for

the construction, development, and operation of the Dedicated Facility Project; and


CC Sworn Statement dated 12 March 2020


the document; 2. That there is clear and sufficient

basis for the issuance of a Provisional Authority; and


CC-1 Signature of Vicente S. Perez, Jr.

DD Judicial Affidavit of Mark Alvin Dave Soriano


the document; 2. That Applicant is financially

capable to develop, own, and operate the dedicated point-to-point limited transmission facility, which shall connect the Solar Power Plant to the Luzon Grid via the Dedicated Facility Project;

3. The commercial necessity, feasibility, and desirability of the Dedicated Facility Project;

4. That Applicant will undertake the Dedicated Facility Project solely for the purpose of connecting the Hermosa Solar Power Plant to the Luzon Grid; and

DD-1 Signature of Mark Alvin Dave Soriano


Exhibit Document Purposes 5. All other material allegations in

support of the instant Application; and

6. To identify and authenticate Applicant’s documentary evidence in support of the Application.

EE Judicial Affidavit of Alexander Santella


the document; 2. That Applicant is financially

capable to develop, own, and operate the dedicated point-to-point limited transmission facility, which shall connect the Solar Power Plant to the Luzon Grid via the Dedicated Facility Project;

3. The necessity, feasibility, and desirability of the connection of the Hermosa Solar Power Plant to the Luzon Grid via the Dedicated Facility Project over the other interconnection options considered by SSAI;

4. That Applicant will undertake the Dedicated Facility Project solely for the purpose of connecting the Hermosa Solar Power Plant to the Luzon Grid;

5. That there is an urgent need for provisional authority and immediate approval of the instant Application to provide commercial viability to SSAI;

6. All other material allegations in support of the instant Application; and

7. To identify and authenticate Applicant SSAI’s documentary evidence in support of the Application.

EE-1 Signature of Alexander Santella

FF Expository Presentation material



Exhibit Document Purposes 1. The authenticity and existence of

the document; 2. To support all material

allegations of the Application; and

3. To comply with the directives of the Honorable Commission, stated in its Order dated 11 February 2021 (“Order”).

GG Affidavit of Publication of Leena C. Chua, News Editor of The Manila Times dated 23 March 2021


the document; and 2. That the Honorable

Commission’s Notice of Virtual Hearing dated 11 February 2021 (“Notice of Virtual Hearing”) was published in a newspaper of nationwide circulation no later than ten (10) days before the date of the initial hearing, in compliance with the Order.

GG-1 Copy of the issue of The Manila Times dated 19 March 2021

HH Certification from the Office of the Provincial Governor of Bataan attesting to its receipt and posting of the Order and Notice of Virtual Hearing


the document; and 2. That copies of the Order and

Notice of Virtual Hearing were duly posted by the Offices of the Provincial Governor, the City and Municipal Mayors, and the LGU Legislative Bodies of the affected areas, in compliance with the Order.

II Certification from the Office of the Sangguniang Panlalawigan of Bataan attesting to its receipt and posting of the Order and Notice of Virtual Hearing

JJ Certification from the Office of the Municipal Mayor of Hermosa, Bataan attesting to its receipt and posting of the Order and Notice of Virtual Hearing

KK Certification from the Office of the


Exhibit Document Purposes Sangguniang Bayan of Hermosa, Bataan attesting to its receipt and posting of the Order and Notice of Virtual Hearing

LL Certification from the Office of the Provincial Governor of Pampanga attesting to its receipt and posting of the Order and Notice of Virtual Hearing

MM Certification from the Office of the Sangguniang Panlalawigan of Pampanga attesting to its receipt and posting of the Order and Notice of Virtual Hearing

NN Certification from the Office of the Municipal Mayor of Lubao, Pampanga attesting to its receipt and posting of the Order and Notice of Virtual Hearing

OO Certification from the Office of the Sangguniang Bayan of Lubao, Pampanga attesting to its receipt and posting of the Order and Notice of Virtual Hearing

PP Certification from the Office of the City Mayor of San Fernando, Pampanga attesting to its receipt and posting of the Order and Notice of Virtual Hearing

QQ Certification from the Office of the Sangguniang


Exhibit Document Purposes Panlungsod of San Fernando, Pampanga attesting to its receipt and posting of the Order and Notice of Virtual Hearing

RR Certification dated 30 March 2021 of SSAI’s Solar Engineer, Mark Alvin Dave Soriano, attesting to the posting of a tarpaulin at the front gate of SSAI’s Solar Power Plant, informing consumers about of the filing of the Application, its reasons therefor and of the scheduled hearing thereon


the document; and 2. SSAI’s compliance with the

Honorable Commission’s directive in its Order to inform the consumers within the affected areas, by other means available and appropriate, of the filing of the Application, its reasons therefor and of the scheduled hearings thereon.

RR-1 Photograph of the tarpaulin posted at the gate of SSAI’s Solar Power Plant informing consumers about of the filing of the Application, its reasons therefor and the scheduled hearing thereon

SS Affidavit of Service of Rey P. Mariñas dated 16 March 2021 attesting to the service of a copy of the Order and the Notice of Virtual Hearing on the OSG, COA, and House of Representative Committee on Energy, with receiving copies of the Order and Notice of Virtual Hearing


1. The authenticity and existence of the document; and

2. SSAI’s compliance with the Honorable Commission’s directive in its Order to furnish copies of the Order and Notice of Virtual Hearing to the government entities indicated in the Order.

TT Affidavit of Service of Michael A. Sanchez dated 16 March 2021 attesting to the service of a copy of the Order and Notice of Virtual Hearing on the


Exhibit Document Purposes Senate Committee on Energy, with receiving copies of the Order and Notice of Virtual Hearing

UU Affidavit of Service of Stefanie Ann B. Go dated 8 April 2021 attesting to the service of a copy of the Order and Notice of Virtual Hearing on the Philippine Chamber of Commerce and Industry (PCCI) through electronic mail, with a copy of the electronic mail sent to PCCI dated 10 March 2021



2. That copies of the Order and Notice of Virtual Hearing were served on PCCI.

VV Certification dated 6 April 2021 of SSAI’s Admin. and Office Manager, Rowena M. Olano, attesting to the posting on the bulletin boards of SSAI of the scanned copies of proof of compliance with the jurisdictional requirements, together with photographs of the posting



2. That scanned copies of the proof of compliance with jurisdictional requirements, were posted on the bulletin boards of SSAI, in compliance with the Order.

WW Solar Energy Operating Contract No. 2021-02-579 (formerly Solar Energy Service Contract No. 015-10-260) dated 8 April 2021


the document; 2. That the Applicant is the holder

of Solar Energy Operating Contract No. 2021-02-579, granting it the right to explore, develop, and utilize Solar Energy Resources within the designated Contract Area located in the Municipality of Hermosa, Province of Bataan, and the Municipality of Lubao, Province of Pampanga; and


Exhibit Document Purposes 3. All other material allegations in

support of the Application. *All the allegations stated above are directly quoted from the FOE of the Applicant.

The Commission found the foregoing exhibits contained in SSAI’s FOE relevant and material in the final resolution of the case. Thus, the Commission admitted the same and declared the instant case submitted for resolution.

ISSUES

The issues for the Commission’s resolution are the following:

1. Whether or not to approve the instant Application and authorize SSAI to develop and own the subject facilities to connect its 20 MW HSPP Project to the Luzon Grid through the Hermosa Substation of NGCP;

2. Whether or not the Commission should authorize SSAI to

operate and maintain the subject facilities; and

3. In case the subject assets are required for competitive purposes and ownership of the same is transferred to the National Transmission Corporation (TRANSCO) or NGCP, how should the cost be treated or recovered?

THE COMMISSION’S RULING

After due deliberation and thorough evaluation of all the evidence submitted and all the information gathered by the Commission pursuant to its regulatory powers, the Commission hereby resolves the issues presented as follows:

1. The Application for authority of SSAI to develop and own the subject facilities to connect its 20 MW HSPP to the Luzon Grid through the Hermosa Substation of NGCP is hereby APPROVED;

2. The Application for authority of SSAI to operate and

maintain the subject facilities is hereby DENIED. NGCP shall operate and maintain the subject dedicated point-to-point limited facilities, subject to applicable charges to SSAI; and


3. In case the subject assets are required for competitive purposes, ownership of the same shall be transferred to TRANSCO or NGCP at a fair market price, subject to optimization.

DISCUSSION

In determining the merits of the instant Application, the Commission focused its evaluation on five (5) major aspects: (1) the proposed project; (2) the legal basis of SSAI’s authority to develop and own the dedicated point-to-point limited transmission facilities; (3) the technical capability of SSAI to develop the subject facilities; (4) the operation of the dedicated point-to-point limited transmission facility; and (5) the mode of recovery of cost in case the subject assets are required for competitive purposes and ownership of the same is transferred to TRANSCO or NGCP.

1. The proposed project

1.1 The Power Plant

SSAI is a generation company engaged in the development of clean and renewable energy sources for power generation facilities and is registered with the Department of Energy (DOE) as Renewable Energy Developer for its 20 MW HSPP project. On 08 April 2021, the DOE signed with SSAI a Solar Energy Operating Contract No. 2021-02-579 (RE Contract) for the said 20 MW HSPP project.

Pursuant to the said RE Contract, SSAI was authorized to engage in the development, construction, installation, commissioning, and operation of the 20 MW HSPP located at Brgy. Balsik, Hermosa, Bataan.

SSAI intends to dispatch the generated energy of the PSPP to the Grid through the Wholesale Electricity Spot Market (WESM).

On 06 November 2020, the Department of Environment and Natural Resources (DENR) issued a Certificate of Non-Coverage with No. CNC-OL-R03-2020-11-05438 to SSAI which covers the 69 kV transmission line.


1.2 Project Description

1.2.1 Technical Configuration

In the Application, it was alleged that for SSAI to fully dispatch the generated power of its 20 MW HSPP to the Luzon Grid, the Plant shall be connected to the 69 kV Bay 56 of NGCP’s Hermosa Substation.

The components of the subject facilities to be constructed by SSAI are the following:

(1) A Substation composed of 25 MVA, 34.5 kV/69 kV Power Transformer including its associated accessories;

(2) A 500 meters, single circuit 69 kV transmission line utilizing 336.4 MCM ACSR; and

(3) Protection, metering, and telecommunication

equipment.

Aside from the construction of the subject facilities, SSAI would likewise install additional circuit breakers and associated accessories at the 69 kV Bay 56 of the Hermosa Substation of NGCP.

1.2.2 Single Line Diagram

Figure 1 shows the detailed Single Line Diagram (SLD) of the connection of SSAI’s HSPP to the Hermosa Substation of NGCP.

(This space is intentionally left blank.)


Figure 1: Single Line Diagram (SLD) of SSAI’s Connection Scheme

Based on Figure 1, the connection of SSAI is via direct connection to the NGCP Hermosa Substation. Moreover, the SLD in Figure 1 includes the assets to be installed by SSAI at the 69 kV Bay 56 of Hermosa Substation.

1.2.3 Project Cost

Based on its Application, SSAI estimated the total cost of the project in the amount of One Hundred Fourteen Million Two Hundred Five Thousand One Hundred Ninety-Eight Pesos and Fifty Centavos (PhP114,205,198.50). The breakdown of the submitted estimated cost is shown in Table 1:


2

1

3

4


Table 1: Estimated Cost Breakdown

Item No. Description Total Cost (PhP) A. Solana Substation

1 Engineering and procurement 57,685,661.57 2 Installation and construction 24,722,426.39

Sub-total 82,408,087.96 B. Transmission Line


Sub-total 5,230,812.95 C. Assets at NGCP Substation


Sub-total 26,566,297.59 Grand Total Cost (PhP) 114,205,198.50

It must be noted that SSAI included in its estimated total cost the assets to be installed at the NGCP Hermosa Substation, which are not considered dedicated point-to-point facilities as discussed in item 2.2 of this Decision. These assets are for protection purposes to comply with the requirements of the Philippine Grid Code (PGC) and the NGCP.

It should be emphasized that the aforementioned amounts are not necessarily the fair market value that should be used in case the subject assets, which are considered dedicated point-to-point limited transmission facilities, are eventually required for competitive purposes, and ownership of the same is transferred to TRANSCO or NGCP.

2. The legal basis of SSAI’s authority to develop and own the dedicated point-to-point limited transmission facilities

As a general rule, TRANSCO or its Concessionaire, the NGCP, has the responsibility to provide grid interconnection for generating facilities pursuant to Sections 8 and 21 of the EPIRA, to wit:


Section 8. Creation of the National Transmission Company. – x x x. The TRANSCO shall assume the authority and responsibility of NPC for the planning, construction and centralized operation and maintenance of its high voltage transmission facilities, including grid interconnections and ancillary services. x x x.

Section 21. TRANSCO Privatization, – x x x. The buyer/concessionaire shall be responsible for the improvement, expansion, operation, and/or maintenance of its transmission assets and the operation of any related business. x x x.

However, Section 9 of the same law provides for an exception, to wit:

x x x. A generation company may develop and own or operate dedicated point-to-point limited transmission facilities that are consistent with the [Transmission Development Plan (TDP)]: Provided, that such facilities are required only for the purpose of connecting to the transmission system, and are used solely by the generating facility, subject to prior authorization by the [Energy Regulatory Commission (ERC)]: x x x

In the instant Application, SSAI opted to avail of the exception under Section 9 of the EPIRA to connect its HSPP to the Luzon Grid. In order for SSAI’s proposed project to qualify under the said exception, it must be able to comply with the parameters set forth in the above-quoted provision, namely: (1) such facilities are required only for the purpose of connecting to the transmission system; (2) the same will be used solely by the generating facility; and (3) the project is with prior approval of the Commission.

In view of the abovementioned provision, SSAI filed the instant Application.

2.1 Necessity of the Proposed Project to Connect SSAI’s HSPP to the Luzon Grid

As of 30 June 2020, the 20 MW HSPP of SSAI was included in the indicative power project, as declared by the DOE in its website.20

20https://www.doe.gov.ph/sites/default/files/pdf/electric_power/luzon_indicative_2020_june.pdf.


As of June 2021, NGCP registered an actual system peak demand of 11,640 MW in the Luzon Grid. Moreover, the installed and dependable capacities are 17,344 MW and 15,645 MW, respectively, based on DOE’s generator list in Luzon for the same period, as shown in Table 2, to wit:

Table 2: Demand Supply Scenario in Luzon Grid

Year Capacity (MW)* Peak Demand

(MW)** Installed Dependable 2019 17,289 15,598 11,344 2020 17,344 15,645 11,103 2021

(June 2021) 17,344 15,645 11,640

*Based on DOE's Generator List for Luzon Grid

**Based on NGCP’s Actual System Peak Demand for Luzon Grid

SSAI’s HSPP will deliver its committed capacity to the Luzon Grid once it starts its commercial operations. This committed capacity will help in fulfilling the supply requirements of the Luzon Grid.

For SSAI to commence its commercial operations, the HSPP must be connected to the Luzon Grid. Hence, the development of the subject facility is necessary for the said connection.

Moreover, on 25 January 2018, SSAI and NGCP executed a Connection Agreement for the connection of the 20 MW HSPP of SSAI to the Luzon Grid.

2.2 Functions of the Subject Facilities

The second parameter required under Section 9 of the EPIRA is that the subject facility must be a dedicated point-to-point limited transmission facility which shall be used solely by the generating facility.

As alleged in the Application, aside from the subject facility to be constructed, SSAI shall likewise install the necessary assets at Hermosa Substation. The two (2) major facilities to be constructed by SSAI are as follows:


1) The 34.5/69 kV Substation and the corresponding 69 kV line interconnecting 69 kV Bay 56 of Hermosa Substation and SSAI’s 69 kV bus located at SSAI’s Substation (First Facility); and

2) The assets to be installed by SSAI in the Hermosa

Substation such as a circuit breaker, a disconnect switch, and its associate accessories (Second Facility).

As earlier illustrated in Figure 1, the facilities covered by the instant Application are composed of both a dedicated point-to-point limited facility or a Connection Asset, and a Transmission Asset.

Energy Regulatory Commission (ERC) Resolution No. 23, Series of 201621 defines a connection asset, to wit:

Connection Assets are those assets that are put in place primarily to connect a Customer/s to the Grid and used for purposes of Transmission Connection Services for the conveyance of electricity which if taken out of the System, will only affect the Customer connected to it and will have minimal effect on the Grid, or other connected Customers.

Based on the foregoing definition, a dedicated point-to-point limited facility functions similarly with connection assets.

Considering the foregoing definitions, the Commission concludes that only the First Facility can be considered as a dedicated point-to-point limited transmission facility (Connection Assets) because if these assets were to be removed or cut from the system, only the HSPP of SSAI will be affected. These facilities are to be used solely by SSAI’s HSPP.

On the other hand, the assets to be installed by SSAI for the Second Facility are not considered dedicated point-to-point limited transmission facilities or a connection asset but, rather, these are considered as transmission assets. As shown in Figure 1, these assets are already inside the NGCP HV Switchyard (Hermosa Substation), which is a Transmission Asset in accordance with ERC Resolution No. 23, Series of 2016.

21 Resolution Adopting the Amended Rules on the Definition and Boundaries of Connection Assets for Customers of Transmission Provider.


The foregoing findings of the Commission are consistent

with the Standard Grid Interconnection Variant 3 of ERC Resolution No. 23, Series of 2016, as shown in Figure 2.

Figure 2: Standard Grid Interconnection Variant 3

As shown in Figure 2, the Commission observed that the

proposed connection of SSAI is similar to the Standard Grid Interconnection Variant 3.

In the same manner, several generating facilities such as SSAI’s HSPP, YH Green Solar, and Orani Biomass are all connected to the 69 kV switchyard of the Hermosa Substation. PENELCO, a distribution utility, is also connected to the said 69 kV switchyard.

To reiterate, the assets that connect the HSPP to the Hermosa Substation will be used solely by SSAI’s HSPP. Thus, SSAI shall be authorized to develop and own the said assets.


On the other hand, the assets to be installed by SSAI at the 69 kV Switchyard of the Hermosa Substation are Transmission Assets. Hence, SSAI shall not be authorized to develop and own the said facilities, considering that the said assets are not functioning as dedicated point-to-point transmission facilities. NGCP should construct the said facilities in accordance with the Facility Study it approved. NGCP shall coordinate with SSAI immediately upon receipt of this Decision as to the installation and construction of the same, so as not to delay the project.

2.3 Project Status

As alleged in the Application, the construction of the subject facilities will commence on 01 October 2021, which was verified by the Commission during the hearings held on 16 and 23 April 2021.

Section 9 of the EPIRA provides that:

xxx A generation company may develop and own or operate dedicated point-to-point limited transmission facilities that are consistent with the TDP: Provided, that such facilities are required only for the purpose of connecting to the transmission system, and are used solely by the generating facility, subject to prior authorization by the ERC: xxx”

In view of the foregoing, insofar as the requisite of prior authorization from the Commission is concerned, SSAI is compliant with the Section 9 of the EPIRA.

3. Technical capability of SSAI to develop the subject facilities

3.1 System Impact Study and Facility Study

NGCP conducted a System Impact Study (SIS) in 2017, which was subsequently updated in 2019,22 to determine the technical feasibility of the connection of SSAI’s HSPP to the Luzon Grid.

22 Copies of the NGCP letter on the SIS Final Review Report dated 20 February 2017 and the SIS dated 20 February 2017, as well as the NGCP letter dated 23 December 2019 on the SIS Final Review Report and the updated SIS dated November 2019 are part of the submissions of the Applicant.


Based on the results of the SIS, the entry of the HSPP of

SSAI to the Luzon Grid is technically feasible. The excerpts from the submitted SIS are quoted, as follows:

x x x

The simulation results show that the Hermosa 300 MVA 230/69 kV Transformer is adequate to transmit the full capacity of the proposed project. It is observed that the entry of the project will slightly unload the Hermosa 300 MVA 230/69 kV Transformer. Also, upon connection of the proposed solar project no overloading issues were observed in the 230 kV and 69 kV transmission line during normal (intact network) and N-1 contingency condition for years 2020 and 2025.

As regards, the voltage analysis, no voltage problems were identified as a result of connecting the proposed Solar Project. The SIS confirms that the voltage levels of the monitored substations are within the 0.95 and 1.05 p.u. during normal and N-1 contingency condition.

The increase in fault level in the 230 kV and 69 kV substations associated to the entry of the proposed Solar Project are within the acceptable limits and will not breach the installed PCBs in year 2020 and 2025. With the connection of the Solar Project, transient stability studies conducted showed that there will be no stability problem from three-phase faults during normal and delayed fault clearance time for years 2020 and 2025 peak load condition.

The results of frequency assessment show that the loss of the Solar Project while supplying full capacity to the grid will not cause the frequency of the system to drop below 59.2 Hz and will not trigger Automatic Load Dropping (ALD).

Based on NGCP’s report dated 23 December 2019, upon review of the SIS, it is technically feasible to connect SSAI’s HSPP to the Luzon Grid.

Thereafter, a Facility Study (FS) was conducted for the connection of the HSPP to determine which facilities and equipment should be installed by SSAI based on the requirements of the SIS and the PGC.


NGCP approved the said FS on 28 October 2020. The approval was based on the provisions of Rule B15 of the Open Access Transmission Service (OATS) Rules,23 PGC, and the requirements of the NGCP. The SIS and FS shall be the bases of the technical design and specifications of the facilities subject of the instant Application.

For the construction of the proposed project, SSAI intends to engage the services of MN Electro Industrial Supply and Services, Inc. (MN-Electro) for the supply, construction, and installation of the subject facilities.

As to the technical capability of MN-Electro, it has been involved in several electrical projects in the Philippines and rendered services to its various generation, transmission, distribution, industrial, and commercial clients. Some of its projects in the Philippines are the 69 kV Transmission Line of Bulacan Solar Energy Corporation, 69 kV Transmission Line and the substation of YH Green Energy, Inc., and the 25 MVA San Fermin Substation, including the 69 kV line of Isabela I Electric Cooperative, Inc.

It is also worth noting that MN Electro is an accredited contractor of NGCP, specifically for substation and transmission line construction projects. Thus, the foregoing contractor to be engaged by SSAI is deemed to possess the technical capability and competence to construct and develop the subject facilities.

3.2 Compliance with the Technical Requirements

As a generator seeking connection to the Luzon Grid, SSAI must comply with the following standards, among others, as provided in the PGC, to wit:

x x x

GCR 4.2.9.2 At the nominal voltages below 115 kV, the

Transmission Network Provider shall specify the Grounding requirements and the applicable Earth Fault Factor at the Connection Point.

23 Annex “A” of the Decision dated 13 December 2006 in ERC Case No. 2006-015 RC, entitled “In the Matter of the Approval of the Amendments/Revisions on the Rules, Terms and Conditions for Open Access Transmission Service (OATS Rules)”.


GCR 4.2.10.2 All Equipment at the Connection point shall be designed, manufactured, and tested in accordance with the quality assurance requirements of the ISO 9000 series.

x x x

GCR 4.4.1.1.3 The Connection Point shall be controlled

by a Circuit Breaker that is capable of interrupting the maximum short circuit current at the point of connection.

GCR 4.4.1.1.4 Disconnect switches shall also be

provided and arranged to isolate the Circuit Breaker for maintenance purposes.

GCR 4.6.1.4 If the line between the Connection Point

and the substation of the Distribution Utility (or other Grid User) is greater than 500 meters (m), a Circuit Breaker of appropriate rating shall be provided at the Connection Point. However, a line equal to or less than 500 m between Connection Point and substation of the Distribution Utility (or other Grid User) shall at least be provided with Disconnect Switch.

x x x

GCR 4.7.1.1 A communication system shall be

established so that the Transmission Network Provider, the System Operator, and the Users can communicate with one another, as well as exchange data signals for monitoring and controlling the Grid during normal and emergency conditions.

x x x

GRM 9.2.1.1 The metering point between the Grid and

User System shall be at the Connection Point.

GRM 9.2.1.2 The metering facility shall be located

between the disconnect switch and Circuit Breaker.

x x x


The SLD in Figure 1 shows that SSAI is compliant with the foregoing provisions of the PGC and the requirements of NGCP.

Based on the Application, the length of the transmission line that will be constructed by SSAI is 500 meters. Thus, a disconnect switch shall at least be provided at the connection point pursuant to GCR 4.6.1.4 of the PGC.

The Commission notes that NGCP requires SSAI to install

additional power circuit breakers, disconnect switches, and other accessories at the connection point which will be located at the Hermosa Substation. However, considering that these are Transmission assets per Resolution No. 23, Series of 2016, these assets shall be installed, developed, and owned by NGCP.

Thus, in compliance with GCR 4.4.1.1.3 of the PGC and the requirements of NGCP, the Point of Interconnection, which will be located at the Hermosa Substation of NGCP, will be controlled by a circuit breaker which will be installed inside the 69 kV Bay 56 of Hermosa Substation. In addition, the connection point will be equipped with disconnect switches, surge arresters, instrument transformers, protective relays, and its accessories, which should be in accordance with the standards of PGC. To reiterate, these assets shall be installed, developed, and owned by NGCP.

Likewise, SSAI will construct a substation inside its power plant compound which will be equipped with a 25 MVA power transformer. The said transformer will be used to step up the voltage from 34.5 kV to 69 kV. The other facilities that will be installed by SSAI will include surge arresters, instrument transformers, protective relays, and its accessories at the said substation, which should be in accordance with the standards of PGC.

Further, SSAI will comply with the standards on equipment grounding. SSAI will provide Remote Terminal Unit (RTU) for the communication and control between the switchyard and the substations. Aside from the RTU, SSAI will provide other related equipment (e.g., network switches, firewall, patch panels, racks). This system is also compliant with the requirements in communication system and control as provided in the PGC.


Based on Annex “K”,24 which is attached to the Application, the metering facility of SSAI’s 20 MW HSPP will be installed at the connection point. The said location of the meter is compliant with the above-mentioned standard under GRM 9.2.1.1 of the PGC.

4. Operation of the dedicated point-to-point limited transmission facilities

The Commission notes that SSAI, in its Application, alleged that it intends to engage the services of NGCP for the operation and maintenance of the subject facilities. Nonetheless, the same application also included a prayer that it be allowed to directly operate the connection facilities subject of the instant case.

Section 9 (c) of the EPIRA mandates the NGCP to:

c) Ensure and maintain the reliability, adequacy, security, stability and integrity of the nationwide electrical grid xxx

NGCP was likewise granted by the Congress of the Philippines the exclusive franchise to operate and maintain the transmission system pursuant to Republic Act No. 9511.25

As a general rule, the dedicated point-to-point limited transmission facilities should be operated by NGCP because there should be an assurance that the subject facility will be operated without adverse effect to the reliability of the Grid.

The only exception provided in the EPIRA is when a

generation company is able to acquire prior approval from the Commission to operate such dedicated point-to-point limited facility. This exception, however, is bound by numerous strict conditions. One of which is that the generation company, applying for such authority, should be able to prove that it is capable of operating a point-to-point facility, and that its operation of the said facility is in the best interest of the consumers.

24 Detailed Single Line Diagram. 25 An Act Granting the National Grid Corporation of the Philippines a Franchise to Engage in the Business of Conveying or Transmitting Electricity through High Voltage Back-Bone System of Interconnected Transmission Lines, Substations and Related Facilities, and for Other Purposes.


As stated above, SSAI, in its Application, alleged that it

intends to engage the services of NGCP for the operation and maintenance of the subject facilities, albeit, it also prayed that it be allowed to directly operate the connection facilities subject of the instant case.

The subject prayer is denied. The Commission rules that

in order to ensure and maintain the reliability, adequacy, security, stability and integrity of the power system, the operation and maintenance of the subject facilities shall be through NGCP.

In view of the foregoing, NGCP is directed to undertake the

operation, service, and maintenance of the dedicated facility involving, among others, periodic inspection of the dedicated point-to-point limited facilities and regular assessment of poles and wire conditions, subject to applicable charges to SSAI.

5. Recovery of cost for facilities required for competitive purposes and where ownership of the same is transferred to TRANSCO/NGCP

As previously discussed, the assets connecting SSAI’s HSPP to the Hermosa Substation are considered dedicated point-to-point limited transmission facilities. However, if such assets shall be required for competitive purposes, or if the same were to be used to connect any other user, the ownership of the same shall be immediately transferred to TRANSCO or NGCP. In such case, TRANSCO or NGCP shall pay SSAI the fair market price of the subject facilities, subject to optimization.

On the other hand, the assets that will be installed in the Hermosa Substation are not considered dedicated point-to-point limited transmission facilities, as these assets perform a Transmission Asset function.

The Commission notes that SSAI agreed to develop and advance the costs for such development effort to enable the connection of its connection assets to the transmission system, and to allow the plant to start operating upon completion of the facilities and all the licensing and regulatory requirements. This


will help augment the thin reserves in the Luzon Grid.

However, since it is not a dedicated point to point facility, SSAI shall not be authorized to develop and own the said facilities. NGCP should construct the said facilities in accordance with the FS it approved. NGCP shall coordinate with SSAI immediately upon receipt of this Decision as to the installation and construction of the same, so as not to delay the project.

6. Payment of Permit Fee

Section 40 (g) of Commonwealth Act No. 14626 provides the legal basis for the collection of permit fee, to wit:

The Commission is authorized and ordered to charge and collect from any public service or applicant, as the case may be, the following fees as reimbursement of its expenses in the authorization, supervision, and/or regulation of the public services:

xxx

g) For each permit authorizing the increase of equipment, the

installation of new units or authorizing the increase of capacity, or the extension of means or general extensions in the service, xxx”

Based on the estimated project cost, the total amount of permit fee is Eight Hundred Fifty-Six Thousand Five Hundred Thirty-Eight Pesos and Ninety-Nine Centavos (PhP856,538.99), computed as follows:

PhP114,205,198.50 x PhP0.75 = PhP856,538.99

PhP100.00

The permit fee shall be considered in the coordination between SSAI and NGCP as to the construction and installation of the assets that are not dedicated point-to-point facilities. The permit fee shall likewise be considered in the determination of the fair market price of the dedicated point-to-point limited transmission facilities in the event that such facilities are required for competitive purposes or the same were to be used to connect any other user to the grid, and ownership of the same is

26 The Public Service Law.


transferred to TRANSCO or NGCP, at a fair market price.

A perusal of the evidence presented herein shows that the resolution of SSAI’s Application for authority to develop, own, and/or operate dedicated point-to-point limited transmission facilities to connect the 20 MW HSPP to the Luzon Grid through the Hermosa Substation of NGCP will redound to the benefit of the electricity consumers in terms of continuous, quality, reliable, and efficient power supply as mandated by Section 2 of the EPIRA.

WHEREFORE, the foregoing premises considered, the Application of Solana Solar Alpha Inc. (SSAI) to develop, own, and/or operate the dedicated point-to-point limited transmission facilities to connect its 20 MW Hermosa Solar Power Plant (HSPP) Project to the Luzon Grid through the Hermosa Substation of the National Grid Corporation of the Philippines (NGCP), is hereby RESOLVED, as follows:

1. SSAI is hereby AUTHORIZED to develop and own the dedicated point-to-point limited transmission facilities to connect its 20 MW HSPP to the Hermosa Substation of NGCP, subject to the following conditions: 1.1. The Prayer for authority to operate and

maintain the subject facilities is DENIED. NGCP shall operate and maintain the subject dedicated point-to-point limited transmission facilities to ensure and maintain the reliability, adequacy, security, stability, and integrity of the nationwide electrical grid, subject to applicable charges to SSAI;

1.2. The subject facilities shall be developed and constructed in accordance with the System Impact Study and Facility Study requirements so as not to result in the degradation of the transmission system;

1.3. The metering point shall be at the connection point in accordance with the Philippine Grid Code (PGC);


1.4. The dedicated point-to-point limited transmission facilities shall be used solely by the generating facility;

1.5. Should any portion of the dedicated point-to-point limited transmission facilities be required for competitive purposes or to connect any other user, the ownership of the same shall be transferred immediately to National Transmission Corporation (TRANSCO) or NGCP. SSAI, in turn, shall be paid by TRANSCO or NGCP the fair market price, subject to optimization.

2. SSAI is NOT AUTHORIZED to develop and own the assets that will be installed at the Hermosa Substation which are not dedicated point-to-point limited transmission facilities. NGCP shall construct the said facilities in accordance with the Facility Study it approved. NGCP shall immediately coordinate with SSAI, upon receipt of this Decision, for the installation and construction of the same, so as not to delay the project.

RELATIVE THERETO, SSAI is hereby DIRECTED to pay within fifteen (15) days from receipt of this Decision, the full amount of Eight Hundred Fifty-Six Thousand Five Hundred Thirty-Eight Pesos and Ninety-Nine Centavos (PhP856,538.99), as payment for the permit fee, pursuant to Section 40 (g) of Commonwealth Act No. 146, and the Commission’s Revised Schedule of Fees and Charges. The permit fee computed herein shall be considered in the determination of the fair market price in the event that the dedicated point-to-point limited facilities are transferred to TRANSCO or NGCP, including the portion of the permit fee corresponding to the transmission assets that are included in this project.

SSAI is hereby DIRECTED to submit a Compliance Report showing that it has complied with all the directives of the Commission within thirty (30) days from receipt hereof.



FINALLY, the resolution of the instant case shall be without prejudice to SSAI’s compliance with other government agencies’ requirements, rules, and regulations.

SO ORDERED.

Pasig City, 21 July 2021.

AGNES VST DEVANADERA Chairperson and CEO

ALEXIS M. LUMBATAN Commissioner

CATHERINE P. MACEDA Commissioner

FLORESINDA G. BALDO-DIGAL Commissioner

MARKO ROMEO L. FUENTES Commissioner

LS:KMS/ARG/MCCG ROS: AFC/REGR/REM/LLG

Copy Furnished:

ERC CASE NO. 2021-005 MC DECISION / 21 July 2021 PAGE 44 of 44 1. Solana Solar Alpha Inc. (SSAI)

Applicant Solanaland Building, Jose Abad Santos Avenue Barangay Magliman, City of San Fernando Pampanga

2. Puyat Jacinto & Santos Attn: Attys. Roy Enrico C. Santos, Jewelyn Gay B. Zareno and Mary Gladys Stephanie G. Consunji Counsel for Applicant 10/F 8 Rockwell, Hidalgo cor. Plaza Drive, Rockwell Center, Makati

Email Address: [email protected] 3. Office of the Solicitor General

134 Amorsolo Street, Legaspi Village, Makati City [email protected]

4. Commission on Audit

Commonwealth Avenue, Quezon City [email protected]

5. Senate Committee on Energy

GSIS Bldg., Roxas Boulevard, Pasay City [email protected]

6. House Committee on Energy

Batasan Hills, Quezon City [email protected]

7. Office of the President of PCCI

Philippine Chamber of Commerce and Industry (PCCI) 3rd Floor, Chamber and Industry Plaza (CIP) 1030 Campus Avenue corner Park Avenue McKinley Town Center, Fort Bonifacio, Taguig City [email protected]

8. Office of the Provincial Governor Province of Bataan

9. Office of the Sangguniang Panlalawigan Province of Bataan

10. Office of the Municipal Mayor Hermosa, Bataan

11. Office of the Sangguniang Bayan Hermosa, Bataan

12. Office of the Provincial Governor Province of Pampanga

13. Office of the Sangguniang Panlalawigan Province of Pampanga

14. Office of the Municipal Mayor Lubao, Pampanga

15. Office of the Sangguniang Bayan Lubao, Pampanga

ENERGY REGULATORY COMMISSION Pasig City

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