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ERC Case No. 2010-O97RC

PANAY ELECTRIC COMPANY, INC. Expository Presentation Application for Approval of PECO – PEDC 2010 EPPA. ERC Case No. 2010-O97RC. 9:00 AM, September 09, 2010, Iloilo Business Hotel, Small Ville Complex, North Diversion Road, Iloilo City. PECO –Franchise Holder - ILOILO CITY.

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ERC Case No. 2010-O97RC

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  1. PANAY ELECTRIC COMPANY, INC. Expository Presentation Application for Approval of PECO – PEDC 2010 EPPA ERC Case No. 2010-O97RC 9:00 AM, September 09, 2010, Iloilo Business Hotel, Small Ville Complex, North Diversion Road, Iloilo City

  2. PECO –Franchise Holder - ILOILO CITY Panay Electric Company is the Franchise Holder for the distribution of electricity in the City of Iloilo by virtue of NEC License Number 158 issued on January 19, 1994 by the National Electrification Commission.

  3. PECO’s Franchise – City of Iloilo

  4. PECO Serves Its Franchise Through 4 Main Substations

  5. PECO is connected to its power suppliers through its 69 kV Sub-Transmission (Loop) system

  6. PECO’s Forecasted Supply Requirement * 2010 Load Adjusted to remove Impact of El Nino

  7. Existing PECO Supply Contracts • PECO – PPC 1997 PPA - 72 MW (Diesel Contract) This contract is for 25 Years and will end on 2023 • PECO – GCGI 2010 (Non-Firm) – 10 MW (Geothermal) July to December 2010 Supply Available During Off Peak Period Only (Cheap power but mostly not available when needed)

  8. Problems Encountered by PECO with Existing PECO Supply Contracts Considering the volatility of Diesel Prices as influenced by world crude prices, PECO’s Generation Charge Rate is restrictive (If this is pure diesel without low cost NPC Supply, this is higher than P9 / kWh). The total Diesel Plant Capacity of 72 MW is now lacking when compared to the total load of PECO (The 78.3 MW is the load recorded at PECO’s sub-stations but in terms of total required plant output, this is already beyond 82 MW) This results to load shedding during PECO’s Peak Hours (10 AM to v4 PM)

  9. PECO’s Typical Daily Load Curve

  10. Problems Encountered by PECO with Existing PECO Supply Contracts Due to lack of Power Supply, PECO consumers are now experiencing 2 hours of rotational outages in around 6 to 8 of its 19 feeders during the 10 AM to 5 PM time slot. During emergency shutdowns of one of the 6 units of PPC plant number 1, these outages extend up to 9:30 PM (Interruption report from May to August of 2010 attached to my judicial affidavit would provide specifics of these rotational outages).

  11. What benefits will signing a contract with PEDC have for PECO consumers? Signing a contract with the PEDC Coal Fired Power Plant and getting ERC approval for the same would bring the following advantages to Iloilo City: 1) Lower Electricity Prices – Coal pricing is lower than the cost for diesel generation. The impact of Diesel price fluctuations will be greatly reduced considering that the sister company of PEDC, PPC, has agreed to reduce our diesel contract from 72 MW to 15 MW. The amended and restated PPC-PECO diesel contract is now being finalized.

  12. What benefits will signing a contract with PEDC have for PECO consumers? Furthermore, having an embedded generator will provide savings in terms of Transmission Charges and this will give Iloilo City customers an edge over other consumers relying 100% from NGCP to connect to their suppliers.

  13. What benefits will signing a contract with PEDC have for PECO consumers? 2) Enhanced Reliability – Power interruptions can come from various sources. Mostly, they are attributable to Supply / Generation Problems, Transmission Problems or Distribution Problems. By introducing a new power plant with a higher capacity and bigger generators, we will eliminate generation tripping significantly. Also, since this huge generator is embedded within our franchise, we eliminate the effects of transmission faults to our system. This is a very solid power plant only 2.5 kilometers away from PECO’s 69 kV Loop system.

  14. What benefits will signing a contract with PEDC have for PECO consumers? Furthermore, PEDC is installing two units of 82 MW each at the PEDC power plant. This reduces the risk of loosing all of the 65 MW that we have contracted considering that there is a pro-rata reduction provision in the PEDC contact to all its customers during maintenance.

  15. Procurement Process Other options for PECO’s Power Supply Requirements: • Green Core Geothermal Corporation • ASEA One Power Corporation • SNRE Corporation • Salcon Power Corporation

  16. Procurement Process Green Core Geothermal – Rates are acceptable but the issues are a) Reliability because of distance, b) Timeliness of available supply since what they can offer now is just non-firm supply c) They cannot displace the PPC Diesel contract and contracting with them and maintaining the PPC Diesel Contract would drive PECO’s prices higher.

  17. Procurement Process ASEA ONE Power – Renewable source but no real indication as to when they will start the power plant. Also, rates are subject to increments in transportation costs still driven by diesel prices to a huge extent. A major concern as well would be the sourcing of the fuel supply, at the rate of consumption projected during their presentation, we have questions on the sustainability of fuel supply. Also they could not displace PPC Diesel. Can only provide minimal capacity

  18. Procurement Process SNRE Corporation – Also a renewable source of supply that provided an offer to PECO and actually signed an agreement to construct a Biomass power plant in Ingore but failed to deliver. This agreement was signed in 2008 but never prospered. This has limited capacity (only for 5 MW) and apparently lacks financing to push the project through.

  19. Procurement Process Salcon Power Corporation – Rates are diesel rates even more expensive than PPC (Sells at P 9.50 / kWh). This will not solve Iloilo City’s dependence on high cost diesel. Also, considering the plant location, we will have to add P 1.00 / kWh more or less for the NGCP charges to bring their supply to PECO. Reliability also suffers due to NGCP transmission limitations.

  20. Procurement Process After considering all offers given to PECO, It is very clear that only PEDC can provide higher reliability considering its location and lower costs considering its offer to amend and restate the existing PPC Diesel contract from an existing obligation of 72 MW to a revised value of only 15 MW in consideration of the coal contract that we signed.

  21. URGENCY of GIVING PECO and PEDC a PROVITIONAL APPROVAL of this APPLICATION The PECO – PEDC contract provides for the supply of power on a non-firm basis from the commissioning phase of the Power Plant which is expected to commence on the first week of October 2010. Providing a PA on this application would afford PECO the chance to cover its daily peaking requirement from the output of the Coal Plant starting next month. This will minimize the recurring rotational outages in the city and will also bring down prices of electricity.

  22. End of Presentation

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