ERC Case No. 2011-071 RC PDF

Republic of the Philippines
ENERGY REGULATORY COMMISSION

San Miguel Avenue, Pasig City
IN THE MATTER OF THE

APPLICATION FOR THE
APPROVAL OF CAPITAL
PROJECTS AND THE AUTHORITY
TO SECURE LOANS FROM THE
NATIONAL ELECTRIFICATION
ADMINISTRATION (NEA) AND
RURAL ELECTRICIATION
FINANCING CORPORATION
(REFC), IN ACCORDANCE WITH
THE PROVISIONS OF R.A. NO.
9136 AND THE RULES FOR THE
APPROVAL OF REGULATED
ENTITIES' CAPITAL
EXPENDITURE PROJECTS, WITH
PRAYER FOR THE ISSUANCE OF
PROVISIONAL AUTHORITY
ERC CASE NO. 2011-071 RC
ZAMBALES I ELECTRIC
COOPERATIVE, INC. (ZAMECO I),
Applicant.
)(- - - - - - - - - - - - ~ - - - - - - - - - - - - )(
DEC IS ION
Before this Commission for resolution is the application filed on

May 6, 2011 by the Zambales I Electric Cooperative, Inc. (ZAMECO
I) for the approval of its capital expenditure projects (CAPEX) for the
years 2011 to 2014 and authority to secure loans from the National
Electrification Administration (NEA) and Rural Electrification
Financing . Corporation (REFC), with prayer for the issuance of
provisional authority.
Having found said application sufficient in form and in

substance with the required fees having been paid, an Order and a
Notice of Public Hearing, both dated July 11, 2011,. were issued
setting the case for initial hearing on August 9, 2011.
, I, .' I
ERC Case No. 2011-071 RC

DECISION/December 15, 2014
Page 2 of 28
In the same Order, ZAMECO I was directed to cause the

publication of the Notice of Public Hearing, at its own expense, twice
(2x) for two (2) successive weeks in two (2) newspapers of general
circulation in the Philippines, with the date of the last publication to be
made not later than ten (10) days before the date of the scheduled
initial hearing. It was also directed to inform the consumers, by any
other means available and appropriate, of the filing of the instant
application, its reasons therefor and of the scheduled hearing
thereon.
The Office of the Solicitor General (OSG), the Commission on

Audit (COA) and the Committees on Energy of both Houses of
Congress were furnished with copies of the Order and Notice of
Public Hearing and were requested to have their respective duly
authorized representatives present at the initial hearing.
Likewise, the Offices of the Provincial Governor of Zambales

and the Mayors of the Municipalities within the franchise area of
ZAMECO I were furnished with copies of the Order and Notice of
Public Hearing for the appropriate posting thereof on their respective
bulletin boards.
During the August 9, 2011 initial hearing, only ZAMECO I

appeared. No intervenor/oppositor appeared nor was there any
intervention/opposition registered.
At the said hearing, ZAMECO I presented its proofs of

compliance with the Commission's posting and publication of notice
requirements which were duly marked as Exhibits "A" to "H-7",
inclusive. Thereafter, it conducted an expository presentation of its
application.
At the termination of the expository presentation, ZAMECO I

submitted its "Pre-Trial Brief' and the Commission conducted a pre-
trial conference. Thereafter, ZAMECO I presented the following
witnesses: 1) Engr. Robert S. Alaba, its Technical Services
Department (TSD) Manager who testified, among others, on the
following: a) his duties and functions as TSD Manager; b) his
familiarity with the technical descriptions of each projects; c) the
supporting documents he submitted in support of the application; and
d) the necessity of the proposed project in the operation and
maintenance of the distribution system; and 2) Ms. Sharon Q.
Domacena, its Finance Manager who testified, among others, on the
t .1 1.1

DECISION/December 15,2014
Page 3 of 28
following: a) her duties and functions as Finance Manager; b) her

participation in the preparation of supporting documents; c) her
familiarity with the technical descriptions of each proposed projects;
and d) the computations of the rate impact and of how these projects
are to be financed.
In the course of their direct examinations, additional documents

were presented and duly marked as exhibits. The direct
examinations having been terminated, the Commission propounded
c1arificatory questions on the said witnesses. ZAMECO I was, then,
directed to file its formal offer of evidence.
On August 18, 2011, ZAMECO I filed its "Formal Offer of

Evidence".
On March 26 to 28,2014, the Commission conducted an ocular

inspection on the assets of ZAMECO I subject matter of the instant
application.
On December 1, 2014, the Commission issued an Order

admitting ZAMECO I's "Formal Offer of Evidence" and declaring the
case submitted for resolution.
DISCUSSION
ZAMECO I sought the Commission's approval of the following

capital projects:
PARTICULARS PROPOSED COST

(PhP)
Installation of 10 MVA Substation at Sta. Cruz and
Construction of 69 kV Line 63,803,459.68
Relocation of Existing Capacitors and Additional Capacitor
Placement 1,195,021.64
Upgrading of Oil Circuit Breakers to Sulfur Hexaflouride
(SF6) 69 kV Power Circuit Breaker at Candelaria
Substation 2,600,000.00
Installation of Additional Fuse Cut-Out 284,700.00
Secondary Line Expansion at Sitio Level 636,316.04
Uprating of Distribution Transformers (DTs) 12,828,238.48
Procurement of Additional DTs 15,217,345.78
Additional Kilowatt-hour (kWh) Meters 6,351,062.32
Upgrading of Lines 5,755,491.15
•. '" 11

Page 4 of 28
1,783,793.30
25,101,619.09
8,185,700.00
76,000.00
892,000.00
5,100,000.00
2,592,124.00
7,200,000.00
Sta. Cruz
8,500,000.00
840,000.00
168,942,871.48
A. OVERVIEW OF ZAMECO I's DISTRIBUTION SYSTEM
ZAMECO I covers the Municipalities of Sta. Cruz, Candelaria,

Masinloc, Palauig, Iba, and 8otolan, all in the Province of Zambales.
It was classified by the NEA as a "Large" electric cooperative (EC) as
it serves one hundred eighteen (118) barangays with approximately
44,000 registered customers.
As of the year 2009, its distribution lines have reached far flung
areas providing electricity up to sitio levels. It had already
accumulated almost 500 km. of lines excluding service drops. It has
four (4) substations with a combined maximum capacity of 37.5 MVA
situated in four (4) different locations.
The LGUs and barangays have prioritized electrification

projects through the grant of subsidies.
The supply of power is presently being distributed through ten

(10) feeders in the entire franchise area of the cooperative. The
figure is an indication that the cooperative's distribution lines
comprise of sixty-seven percent (67%) secondary lines and the
remaining thirty-three percent (33%) are primary lines. The
secondary lines are composed of underbuilt and open secondary line
configurations while the primary lines are composed of single phase,
vee-phase, double circuit, and 3-phase line configurations. Shown
.below is its system line configuration:
• 't 1 J

Page 5 of28
2009
SYSTEM LINE CONFIGURATION (km)
Single Phase
16.010
3%
Three Phase
3.990
1%
SYSTEM LINE CONFIGURATION AS OF 2009
Approximately ninety-two percent (92%) of the connected

customers are composed of residential customers, seven percent
(7%) are commercial customers, while the remaining one percent
(1%) comprises of industrial customers, public buildings, street lights
and special lightings. Shown below is a diagrammatic representation
in the distribution of its customer classes:
2009
CUSTOMER CLASS
Commercial
3.006.00
Special Lighting
7%
21.00
0%
CUSTOMER CLASS
.,
Page 6 of 28
The chart below indicates that majority of its revenue comes

from the residential consumers which is equivalent to sixty-one
percent (61 %) for the year 2009 while, commercial type of customers,
which include small business establishments, resorts, sari-sari stores
and other similar businesses in the coverage area, and industrial
customers contributed sixteen percent (16%) and seventeen percent
(17%) of the entire energy sales, respectively.
Public buildings such as local government owned buildings and

complexes have begun to upgrade their facilities like putting up air-
conditioning units and more lighting fixtures have contributed to about
five percent (5%) of the entire energy sales. Street lights and other
special lighting also contributed to the remaining one percent (1%) of
the entire energy sales:
2009
ENERGY SALES
II Commercial
9.782.41
16%
II Public
II Special Lighting Building
115.38 2.875.83
0% 5%
ENERGY SALES AS OF 2009
The relationship of both the energy purchases and sales for the
past seven (7) years is directly proportional. As indicated in the
graph below, an abrupt increase on both energy purchases and sales
were significant from years 2004, 2007 to 2009 but a slim increase,
with an average growth of one percent (1%) for the energy sales and
three percent (3%) for energy purchased. These situations were
encountered for the years 2005, 2006 to 2008. Hotels, commercial
establishments, provincial and city development plans, tourism
industry are good indicators of additional demand for electrical
energy.
Page 7 of 28
I
80,000.00
Energy Profile (MW) I
I
70,000.00
i
I
00.000.00
-~~~~~s£i
(MVVh)' I
:2 I
50,000.00
~
>.
E!'
,
40,000.00
I
2:! ,
w ,
30,000.00 ~__ SNERGY
SALES
(M'I'ho)
1
20.00 .00
10,000.00
.1
j
~
S ,;
.......... _ _- _ - _._.- _-_ - _ - _ _ _ _--
ENERGY PROFILE
Melnwhile, . the cooperative sustained double digit . level

distributioh system loss for the last seven (7) years, It must also be
noted, however, that for the last four (4) years, it has been trying to
improve its efficiency by reducing its entire system loss at an average
of almost 'two percent (2%) annually. For the year 2009, it attained its
lowest annual system loss of 14.77%. This percentage, however,
does not meet the maximum allowable cap of thirteen (13%), set by
.the Commission. It should determine the major contributor of such
loss particularly through. technical simulations of the distribution
system dfita in order to prioritize the necessary projects that will
address this problem.
.. . J .
System Loss
..
---------------------
Ih
Ih
o
oJ 15:00% .. 1
E
.•..CDIh
?i
*
I
,I
...• ""-.
",1
Page 8 of 28
B. FORECASTING
In order to determine the optimal project for a particular

scenario, it is imperative to have a more accurate forecast of the
future energy, future demand and future customers of an electric
cooperative. This forecast will ensure that the prescribed solution will
redound to the benefit of the consumers.
There are two (2) methods of forecasting that a distribution

planner can utilize to predict or best capture the future requirement of
an electric utility. These are the Econometric Analysis which uses
economic and demographic information to forecast the load as an
input and, Trend Analysis which requires only historical data as an
input. Comparing the abovementioned methodologies, the
Econometric Analysis presents the more accurate for medium and
long-term forecasting. At present however, Trend Analysis is the
widely used method of forecasting among the electric cooperatives
which requires only historical data as an input. This method of
forecasting is best suited for short-term, like, for a three (3) to five (5)
years planning, which coherently meets the criteria for the planning
period under the Commission's Resolution No. 26, Series of 2009.
Under the Electric Cooperative Distribution Utility Planning

Manual (ECDUPM), all forecasting models formulated must be tested
for validity and accuracy. Valid models should meet the following
criteria for each statistical value:
1) adjusted R2 should be at least 80% for econometric

analysis or 99% for trend analysis;
I
2) 'p-value should be lower than 0.1; and
3) ,t-statistic should be greater than 2 or less than -2.
Accuracy of the model, likewise, should have a Mean Absolute

Percentage Error (MAPE) of less than five percent (5%).
,
ZAMECO I simulated several forecasting models using the
abovementioned methods in order to produce accurate forecast of
future energy, demand requirement and future customers of the
cooperative. The tabulation below shows the summary of the
forecast that passed all the criteria, mentioned above, and was used
by it in planning its Distribution Development Plan (DDP).
Page 9 of 28
Validity Tests Accuracy Test Annual Average Growth Rate

Forecasting Model
Adj. R' (>0.99/0.8) t-stat (It I > 2) p-value «0.1) MAPE «5%) Historical Forecast
a 4.7170 0.009191668
Energy Purchase 2 b 13.3604 0.000181479
a"lnt + bt + ct + d
(Distribution 0.9992 1.62% 4.52% 6.90%
System) (w/horizon) c -5.1666 0.006667418
d 38.9882 2.58532E-06
a 10.2470 0.000511316
Energy Sales 2 -1 b -2.7271 0.052597344
(Distribution at +bt+ct +d
0.9973 2.91% 6.12% 7.84%
System) (w/horizon) c -2.8888 0.044616732
d 9.3197 0.000737782
2 a 35.4848 3.34508E-07
Botolan at + b (w/horizon) 0.9953 3.47% 0.60% 6.06%
b 44.9906 1.02424E-07
c:
.2 3 a 41.5008 2.01487E-06
~ Iba
at + bl'+ C
0.9973 b -2.1964 0.093023181 4.26% 5.74% 6.96%
!II
.c (wlhorizo n) ,
::l C 20.9744 3.05377E-05
•..
VI
a -3.5770 0.070042896
'a" .
'tl
3 2
at + bt + ct + d b 4.0842 0.055045698
c: Palauig 0.9900 0.92% 0.69% 4.27%
III (w/double horizon) c -3.3736 0.077756427
E
d 25.5700 0.001525966
Q'"
2 . a 27.4991 1.04007E-05
Candelaria at + b (w/honzon) 0.9934 1.21% 1.13% 2.17%
b 116.8315 3.21884E-08
No. of Customers
a 4.9989 0.015402016
per Class 2 b -3.2103 0.04894597
a*lnl + b*lnl + Cl' + d 0.9963 0.26% 3.61% 3.51%
(Distribution c -2.9437 0.060328294
System)
d 8.0809 0.003959581
FORECASTING MODEL
It used trend methodology in determining the forecasted data of

its energy purchase, energy sales, demand and number of
customers. These forecasted parameters are crucial in determining
the future problem within the entire system which enables it to
provide careful technical planning in preventing such problem from
happening.
The predicted energy sales, energy purchase and number of

customers of the entire franchise were directly derived from the
polynomial trend model with horizon while the predicted peak
demand of the entire franchise was derived by forecasting the peak
demand of each substation.
The: forecasted number of each customer class, on the other

hand, was not directly forecasted by the ZAMECO I. It utilized
instead the percentage share of each customer class from the DUs
entire number of customer of the last historical year. The same
procedure was also adopted by the applicant in determining its
forecasted sales per customer class.
I
The Commission conducted its own forecast on both the energy
sales and the number of customers for each customer class by direct
forecasting or using the available historical data per customer class.
..
Page 10 of 28
It was then verified that the submitted forecast is valid considering

that the Commission initiated forecasts were just as close as the
submitted data.
C. PERFORMANCE ASSESSMENT
Evaluating the performance of a distrib.ution network will

provide a complete picture of the needs of an electric cooperative in
formulating project ideas. ZAMECO I identified and quantified these
problems and categorized these requirements to address safety,
capacity, customer requirements, reliability improvements, and
system loss reduction. Shown below is a summary of the
deficiencies within its distribution system:
Affected Network Problem Type

No. Problem
Feeder Substation
1 Under-voltage Feeder 1 Candelaria Power Quality
All existing
2 High system Loss All existing substations Efficiency
feeders
Overloaded distribution All existing
3 All existing substations Capacity
transformers feeders
Not standard substation's primary
4 Feeders 1 & 2 Candelaria Safety
line protection equipment
5 Un-enerQized sitios Feeders 1 & 2 Candelaria & Palauiq Rural Electrification
Materials for new consumer All existing Customer
6 All existing substations
connection feeders Requirements
All existing
7 Old and rotten wood poles All existing substations Safety
feeders
Old and dilapidated kilowatt-hour All existing
8 All existing substations Efficiency
meters feeders
Insufficient logistics and other
9 Non-network Non-network Customer Efficiency
support
The abovementioned problems were determined based on the

following performance assessment, to wit:
a. 'Safety
It determined that some portions within the distribution system

need serious action due to safety problem. Through short circuit
analysis, it identified that two (2) feeders from the Candelaria
Substation would basically require corrective measures in order to
ensure safety within the distribution system. The said analysis, as
shown by the graph below, has indicated that the existing protective
devices installed within these lines may not be able to sense the
minimum fault current in case a fault occurred within the system. It
should be considered that the computed minimum fault current is
oJ
1,1

Page 11 of 28
lower than the existing protection setting of these devices. In order to

correct this problem, the said lines need additional protective device
that will sense the minimum fault current even at the farthest end of
the line during fault.
Minimum Fault Safety Margin

0.25
= Min.
0.20 - LG
Faull
- ,.....
- •...
g 0.15
•'
•. 11 ••
•••
'E • ~
•'. ••
•••• LG
U
~
:J
'3 0.10 -
.'..
' '
••
• •.!
10
• -=-'~-
•
••
•
- ,.....
Selling
••
'"
u.
•• .- o• 0
• 0 •
o'
0
0.05
Note: Bar graphs below the broken lines are feeders with protection equipment that are
inadequate to sense the line's minimum fault current.
Meanwhile, the graph below only manifests that the existing

protection equipment installed within the EC's substations are still
safe and adequately compliant with the safety standards set by the
Philippine Grid Code (PGC) and Philippine Distribution Code (PDC).
Maximum Fault Safety Margin
12.00
10,00 ~-.-..•.. ' .=1.J....J.....-... ...L...... ....L....~.-.-'.~~ -

_MftilO.
___
FeuD
Curront
CB
•. 00 $otting
s:
."
~
•. 00 ---_. -_ ..._- ._.- _.__ .-_._-_.
. 0'_' 0'_'_'_" ._- ._- • •••• Fuso
Sotllng
~ - ._- - . . - - . - .
u nn
4.00 --- - -- .. "';'.: . --;... .-
2.00
- - r-
- -
. -- - ---- •.... . -- -- - _._~~._- - _.
Note: Bar graphs below the broken lines are feeders with adequate protection
equipment specifications.
','
Page 12 of 28
b. Capacity
Its existing maximum capacity is at 37.5 MVA representing the

merged capacities of its four (4) substations. Based on the
forecasted demand, the loading percentage of its entire distribution
system and all its existing substations are still within the seventy
percent (70%) criteria for capacity margin. This proves that the entire
distribution system is capable enough to provide the necessary
demand requirement of its entire customers. Shown below are the
respective rated capacities of its'substations:
Rated MVA Power Max. MVA Max. MW Historical Forecast .
Substation
Capacity Factor Capacity Capacity 2010 2011 2012 2013 2014 2015
Demand (MW) 2.60 2.74 2.91 3.10 3.31 3.54
8otolan 5.00 98.00% 6.25 6.13
% Loading 42.37% 44.80% 47.56% 50.64% 54.04% 57.76%
Demand (MW) 5.32 5.63 6.03 6.51 7.10 7.80
Iba 10.00 96.00% 12.50 12.00
% Loading 44.32% 46.93% 50.21% 54.25% 59.15% 64.99%
Demand (MW) 2.78 2.89 3.02 3.17 .3.33 3.50
Palauig 5.00 98.00% 6.25 6.13
% Loading 45.41% 47.18% 49.31% 51.73% 54.34% 57.07%
Demand (MW) 5.96 6.08 6.21 6.36 6.52 6.69
Candelaria 10.00 98.00% 12.50 12.25
% Loading 48.65% 49.63% 50.71% 51.90% 53.19% 54.58%
Entire Demand (MW) 16.65 17.35 18.17 19.14 20.25 21.52
30.00 97.00% 37.50 36.38
System % Loading 45.78% 47.68% 49.95% 52.61% 55.67% 59.16%
c. Power Quality
Based on its analysis, there are several customers in some

areas within its franchise will experience or is presently experiencing
under-voltages particularly during peak-load condition. Feeders 1
and 2 of the Candelaria Substation are basically the lines imminently
and presently experiencing under-voltage problems within the years
capital expenditures are sought to be implemented. Shown below is
a graphic illustration of this under-voltage problem:
Voltage Variation Profile

1.10
1.05
'.00
:j
0.95
.e
Q)
0)
0.90
~0
0.65
> 0.60
0.75
0.70
2010 20'1 2012 2013 2014
r:I:~::I
.•,Max. Limtl: 1.1 1.1 1.1 1.1 1.1
Min. Limit 0.9 0.9 0.9 0.9 0.9
-Bot.F1 0.9511 0.9474 0.9430 0.9380 0.9323
-Bot-F2 0.9545 0.9508 0.9463 0.9412 0.9354
-lbe-F1 0.9508 0.9481 0.9443 0.9392 0.9326
-lba-F2 0.9460 0.9421 0.9365 0..
9288 0.9188
-lba-F3 0.9658 0.9638 0.9608 0.9568 0.9517
=-=--lba:F4--'"'- .--O.9372-.----0 ..
9330----.---0~9270--.-.__
..0.9190- -- -~084' -_.
-Pal-F1 0.9486 0.9266 0.9194 0.9113 0.9030
-Pel-F2 0.9708 0,9671 0.9625 0.9572 0.9518
-Can-F1 0.7467 0.7394 0.'7309 0.7207 0.7091
-Can-F2 0.9035 0.9007 0.8974 0.8935 0.8891
Page 13 of 28
Note: Lines outside the colored box in the graph manifest feeders not complying with the
standard voltage measurement.
There are also several customers in some areas within its

franchise area that have experienced or is presently experiencing
problems of voltage unbalance. True to this observation are Feeder
1 of the Candelaria Substation and Feeder 2 of Botolan Substation
that basically the lines that experienced, or are presently affected by
such voltage unbalance problem.
The PDC provides that the voltage levels at the customer's

connection point must be within :t10% of the nominal voltage level of
230 volts. Furthermore, the maximum voltage unbalance at the
customer's connection point shall not exceed 2.5% during normal
operating conditions. Voltage unbalances are harmful to consumer
using 3-phase motors. Excessive heat caused by circulating currents
may be produced on these motors if voltage unbalances are high or
beyond the allowable limit discussed above. Shown below is its
voltage unbalance profile:
Voltage Unbalance Profile
Note: Lines outside the colored box in the graph manifest feeders not complying with
the standard voltage unbalance limit.
In compliance with the abovementioned standards, it proposed

in the instant application projects that are to address these power
quality issues of its distribution system.
Page 14 of 28
d. System Efficiency
Its system loss reached 14.55% at the end of year 2009, which
is beyond the existing thirteen percent (13%) system loss cap set by
the Commission. The said losses comprise of technical losses
equivalent to 5.66% and non-technical losses equivalent to 8.89%.
Shown below is a graph depicting that the non-technical losses has
contributed the biggest share among the segregated losses:
2009 System Loss Segregation
Based on the submitted data, most of the technical losses

came from the distribution lines with seventy-two percent (72%) of the
said losses. The remaining contributing factors of acquiring technical
losses are the transformers and other equipment with eighteen
percent (18%) and ten percent (10%), respectively.
It has predicted that its entire system's technical loss shall go

beyond the allowable system loss cap for the entire applied capital
expenditure period based on its simulation. Feeder 1 of Palauig
Substation and Feeder 1 of Candelaria Substation contributed the
highest technical losses in its distribution system as shown in the
graph below. The percentage of system loss registered by its feeders
should be addressed primarily if it intends to bring down its entire
system loss within the allowable cap.
Page 15 of 28
Technical System Loss

18.00%
~
16.00%
14.00%
12.00%
--'-- ----
en
en
0 10.00%
--'E 8.00%
'>."
iii 6.00%
(f)
4.00%
2.00%
'-:....lba.F4.- ~2.43%.1 ... ~2,52%~ .. ~.-2:69%.--L-2~96% 3.36%

11'-P;;H'1-"~ "15'29% ~I- 15.77% -'''~1649~..J 1726% 17.88% I
!==i>ai:F2- .._.. ... 822%-.r::.:..S44%... ......-s:7S% ..+---.9.i4%.... .. 9~42%-""----i
r-==9an-F~__~___. ~1_,~.,090/0 I. -10.90% --W]3o/~ ----L= 10.56%~--- __ ~~_,~j
L==~_~_~_~~_~_~,"._.
L Ent~~_~~_~:_~__~
~:Q~_~~_,.,
~~~_~
__J , .__
._,_,.,
__
~.:.g~~.,
._1__ 1_~.~,~
,.,_,
_,.,.,.,,.,.,~:,?_~~.,. ,.,.,_J
-.:!.3.350/0,._--l __ 14.01%
.,. .__--------..-,-~-=-~~~------J
,.__"_~,.,:,~3_~~
14.90% I
Note: Lines outside the colored box in the graph manifest feeders with technical system
loss beyond the allowable cap,
e. Reliability
Its reliability performance is being measured through the

System Average Interruption Frequency Index (SAIFI) and the
System Average Interruption Duration Index (SAlOl). These indices
are required as reliability indicators in the ECDUPM of which its value
shall not exceed the interim criteria for SAIFI at twenty (20) customer-
interruptions per customer-year and for SAlOl at forty-five (45) hours
per customer-year.
In 2009, its entire reliability performance index registers at

15.26 for SAIFI and 15.27 for SAlOl. These values are within the
abovementioned criteria.
f. Rural Electrification
In 2010, the entire barangays within its franchise area are all
energized. However, there are several customers, particularly on the
sitio level that are yet to be electrified. Thus, in view of its mandate to
provide rural electrification, it conscientiously prepared a detailed plan
energizing the remaining sitios. Shown below is a list of un-energized
sitios to be addressed by its proposed projects:
No. Sitio
1 Tinoran
2 Babulo
3 Tambak
Page 16 of 28
D. OVERVIEW OF THE PROPOSED PROJECTS
Resolution No. 26, Series of 2009 or the "Guidelines for the

Approval of Regulated Entities' Capital Expenditure Projects" defines
capital projects as those projects that are needed to serve forecasted
future loads in order to maintain good electric service to existing and
future customers satisfying the utility's technical criteria for capacity,
reliability, quality and safety. These capital projects will form part of
the Capital Assets of the EC.
Capital assets are divided into two (2) categories, namely: (1)
regulated distribution assets; and (2) distribution connection assets.
The regulated distribution assets are further divided into two (2) sub-
categories, namely: (a) distribution plant assets or network assets;
and (b) general plant assets or non-network assets.
E. PROJECT FORMULATION
Preparation of capital expenditure projects requires diligent

formulation of project ideas in coming up with a particular solution to
the assessed deficiencies/problems of a distribution network. Several
alternatives were considered by ZAMECO I in addressing the
deficiencies of its distribution system in order to provide a technically
feasible and economically viable project for the benefits of its member
consumers.
F. PROPOSED PROJECTS' OBJECTIVES
ZAMECO I identified and proposed nineteen (19) capital

projects intended to address the distribution system's technical
deficiencies and are essential to provide continuous supply, efficient,
reliable and best possible quality of service to its customers.
G. TECHNICAL EVALUATION AND ANALYSIS
As provided in the ECDUPM, the power system model or

electric circuits used to assess distribution system's performance
should be modified to reflect the proposed projects or solutions.
Likewise, the conduct of appropriate technical analysis is necessary
Page 17 of 28
in order to predict the performance of the distribution system.
ZAMECO I provided several alternative projects for each

quantified problems and ranked the technically feasible projects in
terms of technical effectiveness. Projects that were considered
technically feasible were subjected to economic evaluation, wherein,
the project that presented the least cost or manifests economic
viability was selected by the cooperative.
Upon evaluation of all the proposed projects, the Commission

finds merit in the approval of all nineteen (19) proposed capital
projects. The Commission has revised the costs corresponding to
each of eight (8) proposed projects. The remaining eleven (11) are
not subjected to any technical amendments or cost revision.
The cost of the project projects amounted to -One Hundred

Sixty-Eight Million Nine Hundred Forty-Two Thousand Eight Hundred
Seventy-One and 48/100 Pesos (PhP168,942,871.48). This amount
was reduced to One Hundred Fifty-Seven Million Nine Hundred
Seventy-Eight Thousand Six Hundred Forty-Seven and 19/100 Pesos
(PhP157,978,647.19). Annual allocation for each projects are shown
in Annex B appended in this Decision.
In connection with the foregoing, a summary of the projects with

modifications is shown in the following tabulation. The complete
evaluation of the Commission as to how the modifications are derived
at are discussed in Annex C appended in this Decision.
CAPEX Projects with Modification

Project Cost (PhP)
Project Name Approval Reason
Proposed Approved
Substation Projects
Installation of 10MVA Substation at Sta. Cruz and
63,803,459.68 59,372,634.75 Cost Revision Revised unit cost
construction of 69kV line
Secondary Distribution Projects

Up-rating of Distribution Transformers 12,828,238.48 11,112,502.17 Cost Revision Revised unit cost
Other Network Projects

7 Additional Distribution Transformers 15,217,345.78 12,306,211.75 Cost Revision Revised unit cost and qty.
8 Additional Kilowatt-hour Meters 6,351,062.32 6,350,370.52 Cost Revision Revised qty.
9 Upgrading of Lines 5,755,491.15 4,888,547.65 Cost Revision Revised unit cost
10 Revamp of Primary and Secondary Line 1,783,793.30 1,497,428.89 Cost Revision Revised unit cost
11 Replacement of Rotten Poles from Wood to Concrete Poles 25,101,619.09 24,614,089.78 Cost Revision Revised unit cost and qty.
Non-network Projects
19 Additional Desktop Computers and laptops 840,000.00 575,000.00 Cost Revision Revised unit cost
Page 18 of 28
H. .COST ANALYSIS
The cost estimates used by the EC on its capital expenditure

projects were based on the prevailing market price with the
assistance of its Professional Engineering Consultants (PECs)
subject to public, transparent and competitive biddings.
The Commission made a reassessment of cost estimates of

each proposed projects. The cost assessment was based primarily in
reference with the ERC Valuation Handbook provided in Resolution
No. 17, Series of 2010 entitled: itA Resolution Adopting the Valuation
Handbook for the Optimized Depreciated Replacement Cost
Valuation of System Fixed Assets of Privately Owned Distribution
Utilities Operating Under Performance-Based Regulation (PBR)" and
the latest NEA Price Index. The proposed cost estimates that
exceeded the benchmark provided in the said ERC Valuation
Handbook, or the NEA price index, were reduced while the estimated
costs that are close to the said benchmarks were retained.
Comparison of the proposed estimated cost, the ERC Price

Benchmark and the 2012 NEA Price Index are shown in the
tabulation below. The proposed costs and the NEA price benchmark
were based only on the material costs while the ERC valuation
already includes all the necessary cost in establishing and installing
such equipment or materials:
Unit Cost (PhP/unit)

Adopted
No. Equipment Specifications Unit Proposed' ERe" NEA"
Unit Cost
IPhPl IPhPl IPhPl
1 Power Transformer 10 MVA No. 11,892,516.40 -11,676,151.48 NEA
2 Conductor Bare, ACSR 336 MCM km 110,000.00 - 110,000.00 NEA
3 Poles Steel, 65 ft. No. 72,009.00 - 72,009.00 NEA
4 Capacitor 25 kVAR No. 33,177.55 35,400.00 37,396.38 Proposed
5 Capacitor 50 kVAR No. 33,219.55 35,400.00 37,396.38 Proposed
6 Power Circuit Breaker 69 kV No. 2,600,000.00 - 3,169,956.28 Proposed
7 Fuse Cut-out Load Break, 200 A No. 7,300.00 16,100.00 - Proposed
Distribution
8 15 kVA No. 72,535.73 75,000.00 59,638.33 NEA
Transformer
Distribution
9 25 kVA No. 91,164.48 95,000.00 77,380.00 NEA
Transformer
Distribution
10 37.5 kVA No. 109,105.83 107,000.00 94,467.00 NEA
Transformer
Distribution
11 50 kVA No. 125,872.23 124,000.00 110,435.00 NEA
Transformer
Distribution
12 75 kVA No. 156,627.98 159,000.00 139,726.19 NEA
Transformer
Distribution
13 100 kVA No. 173,963.64 177,000.00 156,236.34 NEA
Transformer
1-Phase, 240 V, 30 A, Bottom
14 KWh meter No. 818.57 1,200.00 818.57 Proposed
Connected
1 The proposed unit cost does not include contingency rate factors and VAT
2 The ERC and NEA price benchmarks already include contingency rate factors and VAT
Page 19 of 28
15 KWh meter 1-Phase, 100 A, 240 V, Socket Type No. 1,768.69 2,300.00 1,768.69 Proposed
3-phase electronic, 120-480V,
16 KWh meter
Socket Tvpe No. 18,000.00 35,500.00 28,000.00 Prooosed
17 Pole Concrete, 25 ft. No. 6,624.80 10,400.00 6,944.00 Proposed
22 Hot Stick Telescopic 30 ft. No. 25,000.00 - 21,504.00 Proposed
As shown by the foregoing, most of the proposed unit cost are

comparable if not lesser than the abovementioned price benchmarks.
The proposed unit cost of these materials did not include rate
factors, such as contingency and Value Added Tax (VAT), which
were then added by ZAMECO I in determining the total projects
costs. These factors are adopted in order to cushion the effect of
price differences in the different regions due to handling of such
materials or equipment and the required tax in acquiring such
materials. The Commission has deemed it appropriate to exclude
such rate factors if the proposed unit cost is greater than the ERC
and NEA price benchmarks. The said price benchmarks already
include said rate factors.
I. FINANCING SCHEME/AUTHORITY TO SECURE LOAN
ZAMECO I intends to avail loans from the NEA to finance most

of its capital expenditure projects. It also intends to avail loans from
Rural Electrification and Financing Corporation (REFC) to finance, in
particular, the proposed Management Information System (MIS)
project.
The proposed NEA and REFC loans shall be paid within ten
(10) years and five (5) years, respectively, and shall both have an
annual fixed interest rate of nine percent (9%). These loans are
subject to its corresponding present lending policies on loan approval
and releases. Furthermore, the mode of payment for both loans shall
be in quarterly basis.
It shall then use previous collection and projected revenues

from its Reinvestment Fund for Sustainable Capital Expenditures
(RFSC) to remit the annual amortizations gained from availing such
loans and to finance some of its capital expenditure projects.
Page 20 of 28
Funds for annual capital expenditures requirement should

already be available before the periodic implementation of the project.
It finds it conservative and prudent that releases of its loan be in a
staggered scheme. The release shall be on an annual basis as
projected in the annual implementation of the projects. Considering
the total cost modification of some projects, the financing scheme
should be as follows:
Financiers based on the Projected Amount (PhP)
Total (PhP)
Application 2011 2012 2013 2014
NEA 21,263,253.20 73,183.580.47 15,841,637,95 16.655,867.83 126,944,339.45
REFC 1.600.000.00 - - - 1,600,000.00
I Loan Amount I 22,863.253.20 I 73,183,580.47 I 15,841,637,95 I 16,655,867.83 I 128,544,339.45 I

I RFSC I 11,728,631.92 I 7,148,275,65 I 6,952,124,00 I 1,686,000.00 I 27,515,031.57 I
CAPEX Amount 34,591,885.12 80,331,856.12 22,793,761.95 18,341,867.83 156,059,371.02
The Commission simulated the probable effect on the ZAMECO

I's existing RFSC rate should it opt not to avail of any loan and will
just utilize its expected revenues from the RFSC. The simulation
considered using the recommended project costs and other financial
considerations, which are not present in the application, such as the
accumulated RFSC collection and half of the projected annual leased
income from its Regulatory Asset Base (RAB). Shown below is the
result of the Commission's initiated simulation:
Entire 4-years
Energy Sales Forecast, KWh 319,145,910
Approved RFSC Rate, PhP/KWh 0.2508
Cash balance beginning, PhP, excess/(shortfall) 41,529,015.27
CASH INFLOWS
Current year RFSC Collection, PhP 80,041,794.23
__ .50% income on lease~pr~pe~i~, PhP ___.. _____ ...
2,580,885.08
Total Cash Inflows, PhP 82,622,679.31
Available cash for disbursement, PhP 124,151,694.58
CASH OUTFLOWS
CAPEX Requirement, PhP 156,059,371.02
__ p'~~~u~ Lo~f'r:!1_orti~ation, Ph~ ___________ --_.-- _ .•. _ ..~.... ~
17,682,274.00
ERC Permit Fees, PhP 1,184,842.00
Total Cash Outflows, PhP 174,926,487.02
Cash balance ending, PhP, excess/(shortfall) (50,774,792.44)
I Rate Impact on RFSC, PhP/KWh, excess/(shortfall) (O.1591) I
As shown in the above simulation, the revenues derived from

its existing RFSC rate are not sufficient to finance the entire capital
expenditure projects. There is a need to increase its RFSC rate by
PhPO.1591/kWh should it pursue such a financing scheme. By
adopting the following financing scheme for capital expense, shown
below is the result of simulations conducted by the Commission of the
indicative effect on ZAMECO I's existing RFSC rate:
Page 21 of 28
1. By using the proposed financing scheme and the proposed

loan terms and conditions of NEA and REFC;
2. Similar to condition No. 1 but with the standard NEA loan

terms and conditions of eight percent (8%) annual interest
rate at fifteen (15) years repayment;
3. The entire CAPEX requirement shall be loaned from NEA

with eight percent (8% ) annual interest rate at fifteen (15)
years repayment; and
4. The RFSC utilization shall be maximized and the deficit to

fully implement the recommended projects shall be loaned
from NEA with eight percent (8%) annual interest rate at
fifteen (15) years repayment.
Scheme NO.1
Entire 4-years
CASH INFLOWS
50% income on leased properties, PhP 2,580,885.08
Loan proceeds from financial institutions, PhP 128,544,339A5
Available cash for disbursement. PhP 252,696,034.03
CASH OUTFLOWS
CAPEX Amortization, PhP 35,714,857.40
-
Previous Loan Amortization, PhP 17,682,274.00
Total Cash Outflows, PhP 210,641,344A2
Cash balance ending, PhP, excess/(shortfall) 42,054,689.61
I Rate Impact on RFSC, PhP/KWh, excess/(shortfall) I. 0.1318 I

Page 22 of 28
Scheme NO.2
Entire 4-years
CASH INFLOWS
._--- ---'-_._--- --
Loan proceeds from financial institutions, PhP 128,544,339.45
CASH OUTFLOWS
I Rate Impact on RFSC, PhPlKWh, excess/(shortfall) 0.1584 I
Scheme NO.3
Entire 4-years
Energy Sales Forecast, KWh 319,145.910
CASH INFLOWS
CASH OUTFLOWS
Previous Loan Amortization, PhP 17,682,274.00_
I Rate Impact on RFSC, PhP/KWh, excess/(shortfall) 0.2263 I

Page 23 of 28
Scheme NO.4
Entire 4-years
.
CASH INFLOWS
- 50% income on leased properties, PhP 2,580,885.08
CASH OUTFLOWS .

-
ERC Penmit Fees, PhP 1,184,842.00
Cash balance ending, PhP, excess/(shortfall) -
I Rate Impact on RFSC, PhP/KWh, excess/(shortfall) -I
As shown by the foregoing simulations, ZAMECO I's existing

RFSC rate will have an excess should financing scheme nos. 1, 2
and 3 are attained. However, financing scheme no. 4 requires a total
loan amount of PhP62,581,959.96. In this scheme, the existing
RFSC rate will just be sufficient to fund its entire capital expense.
Thus, it would be more beneficial to customers by following financing
scheme no. 4 and by exerting its best efforts in negotiating for longer
terms, lower interest rate and reasonable loan amount.
The above simulations do not reflect the fact that there will still
be a reduction in the overall rate, due to improved efficiency,
reliability (less ENS) and system loss reduction in the implementation
of the proposed projects. The presented simulations are just an
indicative effect as to the RFSC rate component, the Distribution,
Supply and Metering (DSM) components and the overall rate impact
will still be subjected to review in the rate adjustment application on
the regulatory reset period of the cooperative as indicated in the Tariff
Glide Path (TGP) Guidelines.
J. PROJECT DESIGN
The acquisition of major equipment such as the DTs are

required to address the forecasted load growth while, equipment such
as circuit breakers, reclosers, disconnect switches, fuse cut-outs and
surge arresters are mainly for the protection and safety of the entire
distribution system.
Page 24 of 28
The acquisition of equipment for the substation control rooms

and the acquisition of engineering hardware and software programs
are appropriate in order to monitor the quality and reliability of the
system, and other parameters needed to provide efficient and reliable
power service to the customers of ZAMECO I. These parameters are
also in compliance with the provisions of the PDC.
The design of the proposed electrical projects complies with the

standards of the NEA Engineering Bulletin and the Philippine
Electrical Code (PEC).
K. PROJECT STATUS
Most of its proposed capital expenditure projects, particularly

the major network projects, have yet to start implementation. This
was verified during an ocular inspection. Some projects that were
already implemented within the applied capital expenditure period are
detailed as follows:
Project Recommended Actual Cost

Project Title Project Type Remarks
No. Cost (PhP) (PhP)
5 Secondary Line Expansion at Sitio level Rural Electrification 636,316.04 636,316.04 Fully implemented
7 Additional Distribution Transformers Capacity 12,306,211.75 2,646,590.09 Partially implemented
8 Additional Kilowatt-hour Meters Capacity 6,350,370.52 1,580,432.98 Partially implemented
9 UP9rading of Lines Safety 4,888,547.65 974,065.41 Partially implemented
10 Revamp of Primary and Secondary Line Safety 1,497,428.89 538,235.32 Partially implemented
Grand Total 25,678,874.85 I 6,375,639.84 I
Some of its projects were immediately implemented in order to

maintain safety and security in the operation of its power system.
Any distribution utility can never be derelict in its duty to safeguard
the consuming public from the hazards intrinsic in the business of
distributing electricity. Also, some of the projects are necessary in
order to provide the necessary demand requirement of its customers.
Detailed discussion of the Commission's resolution of the

proposed capital expenditures is embodied in separate documents
hereto attached as Annex "A", "B" and "C", and made integral part of
this Decision.
A perusal of the evidence presented herein showed that the

application for the approval of its capital expenditure projects
(CAPEX) for the years 2011 to 2014 and authority to secure loans
from the National Electrification Administration (NEA) and Rural
Electrification Financing Corporation (REFC), with prayer for the
Page 25 of 28
issuance of provisional authority is in accordance with the provisions

of RA. 9136 and the Commission's "Resolution Amending the Rules
for Approval of Regulated Entities' Capital Expenditure Projects",
Section 20 (e)3 of Commonwealth Act No. 146 (C.A. 146), as
amended or the "Public Service Acf', and will redound to the benefit
of the electricity consumers in terms of continuous, reliable and
efficient power supply as mandated by RA. 9136, or the Electric
Power Industry Reform Act of 2001 (Section 2. Declaration of Policy
- (b) "to ensure the quality, reliability, security and affordability of the
supply of electric power'?
WHEREFORE, the foregoing premises considered, the

application filed by the Zambales I Electric Cooperative, Inc.
(ZAMECO I) for approval of its capital expenditure projects (CAPEX)
for the years 2011 to 2014 and authority to secure loans from the
National Electrification Administration (NEA) and Rural Electrification
Financing Corporation (REFC), in accordance with the provisions of
RA. No. 9136 and the Rules for Approval of Regulated Entities'
Capital Expenditure Projects, with prayer for the issuance of a
provisional authority, is hereby APPROVED with modification.
Accordingly, the following are the confirmed and approved

capital expenditure projects:
A. CONFIRMED PROJECTS:
PARTICULARS CONFIRMED COST

PhP
636,316.04
DTs) 2,646,590.09
1,580,432.98
974,065.41
Lines 538,235.32
6,375,639.84
3
"Sec. 20. Acts requiring the approval of the Commission. - Subject to established limitations and exceptions and
saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator
thereof, without the approval and authorization of the Commission previously had - Xxx
(el Hereafter to issue any stock or stock certificates representing an increase of capital; or issue any share of stock
without par value; or issue any bonds or other evidence of indebtedness payable in more than one year from the
issuance thereof, provided that it shall be the duty of the Commission, after hearing, to approve any such issue
maturing in more than one year from the date thereof, when satisfied that the same is to be made in accordance with
law, and the purpose of such issue be approved by the Commission."
Page 26 of 28
B. APPROVED PROJECTS:
PARTICULARS APPROVED COST

(PhP)
Construction of 69 kV Line 59,372,634.75
Placement 1,195,021.64
Upgrading of Oil Circuit Breakers to Sulfur Hexaflouride
(SF6) 69 kV Power Circuit Breaker at Candelaria
Installation of Additional Fuse Cut-Out 284,700.00
Uprating of DTs 11,112,502.17
Procurement of Additional DTs 9,659,621.66
Additional kWh Meters 4,769,937.54
Upgrading of Lines 3,914,482.24
Revamp of Primary and Secondary Lines 959,193.57
Replacement of Rotten Poles from Wood Pole to Concrete
Poles 24,614,089.78
Replacement of Old kWh Meters 8,185,700.00
Communication System 76,000.00
Meter Reading, Billing and Collection Projects 892,000.00
Management Information System (MIS) Projects 5,100,000.00
Engineering Tools and Equipment 2,592,124.00
Additional Utility Vehicles 7,200,000.00
Construction of New District Office Building at Botolan
Renovation of Technical Services Department Office and
Multipurpose Building and
Procurement of Lot for the proposed new Sta. Cruz
Additional Desktop Computers and Laptops 575,000.00
Grand Total 151,603,007.35
Further, ZAMECO I is hereby authorized to secure loan from

NEAlREFC to finance its capital expenditures projects amounting to
PhP62,581,959.96.
Relative thereto, ZAMECO I is hereby directed to remit to the

Commission, within fifteen (15) days from receipt hereof, a total
permit fee in the amount of One Million One Hundred Eighty-Four
Thousand Eight Hundred Forty Pesos (PhP1, 184,840.00),
computed as follows:
.•
Page 27 of 28
PhP157,978,647.00
----------------------------- x PhPO.75 = PhP1, 184,840.00
PhP100.00
Further, ZAMECO I is hereby directed to: 1) submit a progress

report with an indication of any variance in the implementation of the
project and time schedule; 2) conduct a competitive bidding for the
purchase of major materials in the implementation of the proposed
project; and 3) exert best effort in negotiating/refinancing its loan for a
reasonable term and lower interest rate.
50 ORDERED.
Pasig City, December 15,2014.
£11. (~
!QG. 'CRUZ-DUCUT
Ur;;.''IJo\,u~hairperson rv
ALFREDO
Commissioner
% G~!r~ ¥tAf.rARUC
Commissioner
A. MAGPALE-A5IRIT
missioner
r:::¥O'~ 'RC CAS' NO. 201~12. RC SIARELCO-DEe'SION

.
,

Page 28 of 28
Copy Furnished:
1. ATTY. ARNIDO O.INUMERABLE

Counsel for the Applicant
405 Elisa Street, U.E. Village, Cainta, Rizal
2. ZAMBALES I ELECTRIC COOPERATIVE, INC. (ZAMECO I)

Palauig, Zambales
3. The Office of the Solicitor General

134 Amorsolo Street, Legaspi Village
Makati City, Metro Manila
4. The Commission on Audit

Commonwealth Avenue
Quezon City, Metro Manila
5. The Senate Committee on Energy

GSIS Bldg., Roxas Blvd., Pasay City
Metro Manila
6. The House Committee on Energy

Batasan Hills, Quezon City, Metro Manila
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
8. Office of the Municipal Mayor

Santa Cruz, Zambales

Candelaria, Zambales

Masinloc, Zambales

Palauig, Zambales

Iba, Zambales

Botolan, Zambales
ANNEXA
Proposed ZAMECO I CAPEX Projects for the years 2011 to 2014

Proposed Project Cost (PhP)
No. Project Name Total (PhP)
2011 2012 2013 2014
Substation Projects
Installation of 10MVA Substation at Sta. Cruz and
63,803.459.68 63,803,459.68
construction of 69kV line
Primary Distribution Projects

2
Placement - 1,195,021.64 - - 1,195,021.64
Upgrading of Oil Circuit Breaker to SF6 69kV Power

3
Circuit Breaker at Candelaria Substation - 2,600,000.00 - - 2,600,000.00
4 Installation of Additional Fuse Cut-out 284,700.00 - - - 284,700.00

5 Secondary Line Expansion at Sitio level 636,316.04 636,316.04
6 Up-rating of Distribution Transfonners 8,017,011.99 1,197,814.23 1,585.468.27 2,027,943.99 12,828,238.48
Other Network Projects

7 Additional Distribution Transfonners 2,646,590.09 3,456,761.03 4,166,073.32 4,947,921.34 15,217,345.78
8 Additional Kilowatt-hour Meters 1,580,432.98 1,586,299.06 1,590,565.30 1,593,764.98 6,351,062.32
9 Upgrading of Lines 4,195,854.43 1,559,636.72 - - 5,755,491.15
10 Revamp of Primary and Secondary Line 598,107.36 1,185,685.94 - - 1,783,793.30
Replacement of Rotten Poles from Wood to Concrete
11 5,028,149.43 5,008,701.46 7,532,384.10 7,532,384.10 25,101,619.09
Poles
12 Replacement of Old Kilowatt-hour Meters 2,046,425.00 2,046.425.00 2,046.425.00 2,046,425.00 8,185,700.00
Non-network Projects
13 Communication System 15,000.00 61,000.00 - - 76,000.00
14 Meter Reading, Billing & Collection Projects 700,000.00 96,000.00 - 96,000.00 892,000.00
15 Management Infonnation System Projects 3,600,000.00 - 1,500,000.00 - 5,100,000.00
16 Engineering Tools and Equipment 350,000.00 400,000.00 1,252,124.00 590,000.00 2,592,124.00
17 Additional Utility Vehicles 1,000,000.00 1,000,000.00 4,200,000.00 1,000,000.00 7,200,000.00
Construction of New District Office Building at Botolan,
Renovation of Technical Services Department Office and
18
Multi-purpose Building and procurement of lot for the
6,500,000.00 2,000,000.00 - - 8,500,000.00
proposed new Sta. Cruz Substation
19 Additional Desktop Computers and laptops 420,000.00 420,000.00 - - 840,000.00
Grand Total (PhP) I 37,618,587.32 1 87,616,804.76 1 23,873,039.99 119,834,439.41 1168,942,871.48 1
1
ANNEX B
Approved ZAMECO I CAPEX Projects for the years 2011 to 2014
8 p_ro_l_ec_t_N_a_m_e T_O_ta_'
<_P_h_P_)
__
Substation Projects .
Installation of 10MVA Substation at Sta. Cruz and construction of 69kV line 59,372,634.75\
Primary Distribution Projects
2 Relocation of Existing Capacitors and Additional Capacitor Placement 1,195,021.64
Upgrading of Oil Circuit Breaker to SF6 69kV Power Circuit Breaker at Candelaria
3 2,600,000.00
Substation
4 Installation of Additional Fuse Cut-out 284,700.00

I 5 Secondary Line Expansion at Sitio level 636,316.04 I
I 6 Up-rating of Distribution TransfonTlers 11,112,502.17 I
other Network Projects
7 Additional Distribution TransfonTlers 12,306,211.75
8 Additional Kilowatt-hour Meters 6,350,370.52
9 Upgrading of Lines 4,888,547.65
. 10 Revamp of Primary and Secondary Line 1,497,428.89
11 Replacement of Rotten Poles from Wood to Concrete Poles 24,614,089.78
12 Replacement of Old Kilowatt-hour Meters 8,185,700.00
Non-Network Projects
13 Communication System 76,000.00
14 Meter Reading, Billing & Collection Projects 892,000.00
15 Management InfonTlation System Projects 5,100,000.00
16 Engineering Tools and Equipment 2,592,124.00
17 Additional Utility Vehicles 7,200,000.00
Construction of New District Office Building at Botolan, Renovation of Technical Services

18 Department Office and Multi-purpose Building and procurement of lot for the proposed new 8,500,000.00
Sta. Cruz Substation
19 Additional Desktop Computers and laptops 575,000.00
Grand Total (PhP) 157,978,647.191
2
ANNEX C
DETAILED PROJECT DISCUSSION
I. NETWORK PROJECTS
~ 1
Project Title
construction of 69 kV line
~ PQ-001
~ Power Qualit
~ 1
Project Category Substation Pro'ect
Project Description I Duration

• Construction of a new 69/13.2 kV, 10 MVA power
substation at Sta. Cruz, Zambales associated with a 2012
45.281 km 69 kV subtransmission line.
Proposed CAPEX Cost (PhP)

2011 2013 2014
Project Justification
• The project is intended to address the existing power quality problem
within areas presently being served by feeder 1 of Candelaria
Substation.
Technical Analysis
• The existing feeder 1 of Candelaria Substation is having power quality
problem wherein its voltage level is measured 0.75 per unit while the
voltage unbalance is measured almost seven percent (7%). These
data were verified by measuring the main feeder line at its farthest
point.
• The said measurements do not comply with the standards provided in

the Philippine Distribution Code (PDC). The voltage levels at the
customer's connection point must be within :t10% of the nominal
voltage level of 230 volts or per unit values ranging 0.9 to 1.1 while the
maximum voltage unbalance at the customer's connection point shall
not exceed 2.5% during normal operating conditions.
• There were (7) seven projects that were considered by the EC in

resolving the said problem. The following are the alternative projects
(options), to wit:
1. Installation of Automatic Voltage Regulator (AVR) at Candelaria
Substation Feeder 1;
2. Reconductoring of Candelaria Substation Feeder 1 from 3/0 to
336 Aluminum Conductor Steel Reinforced ACSR;
3
336 ACSR with AVR;
4/0 ACSR with AVR;
5. Relocation of Candelaria Substation to Bayto, Sta. Cruz;
6. Relocation of Candelaria Substation to Bayto, Sta. Cruz with 2
AVR; and
7. Installation of new substation at Bayto, Sta. Cruz and
construction of 69 KV subtransmission line from Candelaria
Substation to Bayto, Sta. Cruz
• Based on the submitted technical simulations, the proposed project

(option no. 7) presented the only feasible project to address the
abovementioned problem. The tabulations below are simulations of
result of implementation of the alternative projects in terms of the
voltage level and voltage unbalance of the feeders of the Candelaria
Substation:
Voltage Level (p.u.)
Option Substation Feeder Existing Condition With Project
2011 2012 2013 2014 2011 2012 2013 2014
Feeder 1 0.7394 0.7309 0.7207 0.7091 0.8171 0.8079 0.7969 0.7845
1 Candelaria
Feeder 2 0.9007 0.8974 0.8935 0.8891 0.8996 0.8962 0.8923 0.8878
Feeder 1 0.7394 0.7309 0.7207 0.7091 0.8354 0.8298 0.8232 0.8158
2 Candelaria
Feeder 2 0.9007 0.8974 0.8935 0.8891 0.9018 0.8986 0.8948 0.8904
Feeder 1 0.7394 0.7309 0.7207 0.7091 0.8978 0.8941 0.8897 0.8847
3 Candelaria
Feeder 2 0.9007 0.8974 0.8935 0.8891 0.9008 0.8975 0.8936 0.8892
Feeder 1 0.7394 0.7309 0.7207 0.7091 0.8492 0.8409 0.8312 0.8201
4 Candelaria
Feeder 2 0.9007 0.8974 0.8935 0.8891 0.8999 0.8965 0.8926 0.8881
Candelaria
Feeder 1 0.7394 0.7309 0.7207 0.7091 - - - -
5
Feeder 2 0.9007 0.8974 0.8935 0.8891 - - - -
Sta. Cruz
Feeder 1 - - - - 0.8936 0.8900 0.8857 0.8809
Feeder 2 - - - - 0.6922 0.6827 0.6716 0.6587
Candelaria
Feeder 1 0.7394 0.7309 0.7207 0.7091 - - - -
6
Feeder 2 0.9007 0.8974 0.8935 0.8891 - - - -
Sta. Cruz
Feeder 1 - - - - 0.8880 0.8842 0.8798 0.8747
Feeder 2 - - - - 0.8245 0.8161 0.8062 0.7950
Feeder 1 0.7394 0.7309 0.7207 0.7091 0.9441 0.9424 0.9401 0.9375
Candelaria
Feeder 2 0.9007 0.8974 0.8935 0.8891 0.9099 0.9072 0.9038 0.9000
7
Sta. Cruz
Feeder 1 - - - - 0.9284 0.9259 0.9229 0.9196
Feeder 2 - - - - 0.9514 0.9501 0.9480 0.9456
Maximum Unbalance Voltage (p.u.)

Option Substation Feeder Existing Condition With Project
2011 2012 2013 2014 2011 2012 2013 2014
Feeder 1 0.8416 0.9015 0.9693 1.0449 6.8846 7.1557 7.4922 6.9602
1 Candelaria
Feeder 2 2.3045 2.4759 2.6727 2.8952 0.6022 0.6151 0.6309 0.6458
Feeder 1 0.8416 0.9015 0.9693 1.0449 4.7344 4.8990 5.2273 5.3185
2 Candelaria
Feeder 2 2.3045 2.4759 2.6727 2.8952 0.6032 0.6167 0.6364 0.6486
Feeder 1 0.8416 0.9015 0.9693 1.0449 4.6143 4.7709 5.0836 5.1683
3 Candelaria
Feeder 2 2.3045 2.4759 2.6727 2.8952 0.5972 0.6104 0.6304 0.6414
Feeder 1 0.8416 0.9015 0.9693 1.0449 6.1249 6.3564 6.8510 6.9602
4 Candelaria
Feeder 2 2.3045 2.4759 2.6727 2.8952 0.6005 0.6138 0.6378 0.6458
Candelaria
Feeder 1 0.8416 0.9015 0.9693 1.0449 - - - -
5
Feeder 2 2.3045 2.4759 2.6727 2.8952 - - - -
Sta. Cruz
Feeder 1 - - - - 3.5952 3.6951 3.8135 3.9444
Feeder 2 - - - - 4.9338 5.1819 5.4720 5.8408
Candelaria
Feeder 1 0.8416 0.9015 0.9693 1.0449 - - - -
6 Feeder 2 2.3045 2.4759 2.6727 2.8952 - - - -
Sta. Cruz Feeder 1 - - - - 3.6209 3.7222 3.8398 3.9746
4
Feeder 2 - - - - 4.7704 4.9963 5.2724 5.5950
Feeder 1 0.8416 0.9015 0.9693 1.0449 1.1074 1.1176 1.1546 1.1971
Candelaria
Feeder 2 2.3045 2.4759 2.6727 2.8952 0.6534 0.6792 0.6994 0.7220
7
Sta. Cruz
Feeder 1 - - - - 1.2447 1.1980 1.2365 1.2802
Feeder 2 - - - - 0.7121 0.6712 0.6938 0.7200
Economic and Cost Analysis

• Considering that the proposed project appeared to be the only
technically feasible project amongst the alternative projects and that is
intended to resolve the problem that requires mandatory action, the
said project would no longer be subjected through least cost analysis.
• ZAMECO I simulated the effect on the technical system loss of the

area presently being served by the Candelaria Substation with the
project's implementation. Summary of the said analysis is shown in the
table below:
Technical System Loss (KWh)
2011 2012 2013 2014 Average
I Existing 2,100,504.12 2,210,423.34 2,337,941.88 2,488,595.82 2,284,366.29
I With Project 703,998.54 735,069.73 771,443.28 813,769.46 756,070.25
I Avoided Loss I 1,396,505.58 I 1,475,353.61 I 1,566,498.60 I 1,674,826.36 I 1,528,296.04 I

• Meanwhile, the Commission conducted its own analysis in terms of
economic advantage that the project will provide if in case it was
implemented. The analysis shows that the project is economically
viable since the computed benefit/cost (B/C) ratio is greater than 1.
The BIC ratio was determined based on the probable monetary
savings derived from the avoided technical system loss with the
project's implementation and uSing the EC's existing generation,
transmission and system loss charges. Summary of the analysis is
shown in the table below:
BIC 1.44
Interest Rate 8%
PV of Benefits PhP1 07,767,332.51
PVof Cost PhP74,618,598.80
Total Benefits (NPV) PhP33,148,733.71
• The proposed project cost includes labor cost and contingency factor
of thirty-five percent (35%) and five percent (5%) of the material cost
for the construction of subtransmission line, respectively. Shown in the
table below is the proposed project cost breakdown, to wit:
Length No. of Unit Cost Project Cost
No. Activity Materials Year
(km) Units (PhP/unitlkm) (PhP)
10 MVA Power Transformer - 1 set 11,892,516.40 11,892,516.40
69kV Structures - 1 set 607,291.66 607,291.66
69kV Protection & Metering
Equipment
- 1 set 4,238,432.89 4,238,432.89
15kV Protection Equipment - 1 set 1,426,101.91 1,426,101.91
Substation 69kV & 15kV Metering, 2012

1
Control & Protection Panel - 1 set 2,356,644.64 2,356,644.64
and Relay
Battery & Battery Charger - 1 set 668,989.57 668,989.57
15kV Power Cable &
Termination Kit
- 1 set 17,022.50 17,022.50
Civil Works - 1 pack 1,254,000.00 1,254,000.00
5
Other Electrical Works . 1 pack 1,897,500.00 1,897,500.00
Testing and Commissioning . 1 pack 110,000.00 110,000.00
Bare Conductor, ACSR 336 .
45.28 110,000.00 4,980,910.00
MCM
Steel Poles, 65 ft. . 241 72,009.00 17,354,169.00
Subtransmission .
2 Accessories 1 set 5,761,321.08 5,761,321.08
Line
Labor Cost (35% of Mat. Cost) . . 9,833,740.03 9,833,740.03
Contingency (5% of Mat. . . 1,404,820.00 1,404,820.00
Cost)
I Grand Total (PhP)

I 63,803,459.68 I
• The Commission reviewed the proposed project cost and approves
that such cost be reduced. The assessment involves adjustment of the
power transformer's unit cost in reference with the 2012 NEA price
index and reducing the labor cost to an acceptable amount of twenty-
five percent (25%) of the material cost for the construction of the
subtransmission line. The cost reduction was also due to the removal
of the contingency factor considering that the price benchmark of the
materials in the NEA price index already includes five percent (5%)
contingency factor. The said NEA price benchmark also includes
twelve percent (12%) Value Added Tax (VAT).
• The following is the approves project cost breakdown, to wit:

Length No. of Unit Cost Project Cost
No. Activity Materials Year
(km) Units (PhP/uniVkm) (PhP)
10 MVA Power Transformer . 1 set 11,676,151.48 11,676,151.48
69kV Structures . 1 set 607,291.66 607,291.66
69kV Protection & Metering . 1 set 4,238,432.89 4,238,432.89
Equipment
15kV Protection Equipment . 1 set 1,426,101.91 1,426,101.91
69kV & 15kV Metering,
1 Substation
Control & Protection Panel - 1 set 2,356,644.64 2,356,644.64
and Relay
Battery & Battery Charger . 1 set 668,989.57 668,989.57
15kV Power Cable & . 2012
1 set 17,022.50 17,022.50
Termination Kn
Civil Works . 1 pack 1,254,000.00 1,254,000.00
Other Electrical Works . 1 pack 1,897,500.00 1,897,500.00
Testing and Commissioning . 1 pack 110,000.00 110,000.00
Bare Conductor, ACSR 336 .
45.28 110,000.00 4,980,910.00
MCM
2
Subtransmission
Steel Poles, 65 ft. . 241 72,009.00 17,354,169.00
Line
Accessories . 1 set 5,761,321.08 5,761,321.08
Labor Cost (35% of Mat. Cost) . . 7,024,100.02 7,024,100.02
I Grand Total (PhP) 59,372,634.75
Resolution I Remarks
Pro'ect to continue as ro osed
Pro'ect to continue with REVISED Ca ital Ex enditure
Pro'ect to continue with Technical Amendments
Project to be deferred which may be included in its next
a lication with additional 'ustification
Approved CAPEX Cost
59,372,634.75 59,372,634.75
6
Distribution Line Pro.ect

• Relocation of the existing capacitors and installing
additional capacitors in strategic locations within the 2012
entire distribution network.
1,195,021.64
• The proposed project intends to improve the efficiency of the entire
distribution s stem.
Technical Analysis
• Based on the technical analysis conducted by the applicant, the
existing capacitors should be relocated and requires additional
capacitors within specified line locations in order to reduce the entire
systems power factor and accordingly, improve the distribution
network's technical system losses. The following tabulation shows the
summary of the said technical analysis:
Technical Loss (KW)
Substation Feeder Existing Condition With Project
2011 2012 2013 2014 2011 2012 2013 2014
Feeder 1 99.19 113.17 130.32 151.20 99.21 113.20 130.37 151.28
Botolan
Feeder 2 95.35 108.55 124.75 144.40 94.07 107.13 123.15 142.60
Feeder 1 39.45 45.45 54.32 67.07 38.83 44.78 53.57 66.23
Feeder 2 127.70 152.03 188.66 243.34 126.78 150.90 187.24 241.48
Iba
Feeder 3 46.80 54.85 66.94 84.79 47.00 55.05 67.14 84.98
Feeder 4 84.78 96.90 114.81 140.60 83.64 95.61 113.32 138.86
Feeder 1 161.55 180.76 203.36 227.41 151.94 170.26 191.89 214.94
Palauig
Feeder 2 86.47 96.26 107.73 119.86 85.75 95.45 106.85 118.89
Feeder 1 382.21 402.51 426.09 453.97 10.67 11.05 11.49 12.00
Candelaria
Feeder 2 70.21 73.59 77.47 82.04 67.08 70.24 74.00 78.37
Sta. Cruz
Feeder 1 - - - - 68.80 71.75 75.25 79.31
Feeder 2 - - - - 3.79 3.87 3.96 4.07
Power Factor (%)

Substation Feeder Existing Condition With Project
2011 2012 2013 2014 2011 2012 2013 2014
Feeder 1 95.00% 95.00% 95.00% 95.00% 95.29% 95.19% 95.07% 94.93%
Botolan
Feeder 2 97.00% 97.00% 96.00% 95.00% 95.79% 95.22% 94.62% 94.00%
Feeder 1 95.00% 94.00% 94.00% 94.00% 98.09% 97.87% 97.59% 97.23%
Feeder 2 94.00% 94.00% 93.00% 93.00% 96.38% 95.93% 95.38% 94.74%
Iba
Feeder 3 96.00% 96.00% 95.00% 95.00% 96.15% 95.78% 95.34% 94.84%
Feeder 4 95.00% 95.00% 95.00% 94.00% 97.25% 97.01% 96.70% 96.35%
7
Feeder 1 91.00% 91.00% 90.00% 90.00% 96.29% 95.77% 95.22% 94.70%
Palauig
Feeder 2 96.00% 96.00% 96.00% 96.00% 97.30% 97.15% 96.99% 96.83%
Feeder 1 96.00% 96.00% 96.00% 96.00% 96.15% 96.14% 96.13% 96.11%
Candelaria
Feeder 2 93.00% 93.00% 93.00% 93.00% 97.26% 97.13% 96.99% 96.83%
Feeder 1 - . . - 96.74% 96.71% 96.66% 96.62%
Sta. Cruz
Feeder 2 - - - . 96.76% 96.74% 96.72% 96.70%

• The Commission conducted its own analysis with regard to the
project's economic implication. It was determined that the proposed
project is economically viable considering that the project's Net
Present Value (NPV) is positive and the Benefit-Cost Ratio is greater
than one (1), as manifested in the tabulation below:
BIC 2.69
Interest Rate 0%
PV 01 Benefits PhP3,886,426.73
PV 01 Cost PhP1,445,976.18
Total Benefits (NPV) PhP2,440,450.55
• The said analysis was determined using the submitted technical

benefits and some significant financial information with the project's
implementation. Summary of the technical benefits is shown in the
tabulation below. The financial information includes the project's useful
life and the EC's existing generation, transmission and system loss
charges. The discount rate is insignificant considering that the project
shall be funded directly using the Reinvestment Fund for Sustainable
Capital Expenditures (RFSC) collection.
Technical System Loss (KWh)
2011 2012 2013 2014 Average
I Existing 4,656,647.00 5,139,702.00 5,769,436.00 6,579,166.00 5,536,237.75
I With Project 4,573,400.00 5,049,532.00 5,670,821.00 6,470,739.00 5,441,123.00
Avoided Loss 83,247.00 90,170.00 98,615.00 108,427.00 95,114.75
Approved CAPEX Cost

2014
1,195,021.64
8
Project No. 3
Upgrading of Oil Circuit Breaker to SF6 69kV Power
Project Title
Circuit Breaker at Candelaria Substation
Project Code RP-001
~ Safet
Priority Rank 1
Project Category Prima Distribution Line Pro'ect

• Upgrading of the existing Oil Circuit Breaker of the
Candelaria Substation to a new and more efficient 2012
SF6 69 KV circuit breaker.
2,600,000.00 2,600,000.00
• The Oil Circuit Breaker, which is the existing primary line protection
being used at the Candelaria Substation, has been in service for more
than twenty (20) years. The EC intends to replace such with a modern
type one in order to cope up with the present demand in terms of
maintainin a safe distribution of electricit .
Technical Analysis
• With the influx of modern type and more efficient circuit breakers in the
market, the disadvantages of the Oil Circuit Breaker which includes
being fire hazard, high probable cause of explosions, and high
maintenance cost due to periodic maintenance and replacement,
outweighs its advantages.
• Oil-filled equipment has largely been replaced by Sulfur Hexaflouride

(SF6) equipment, allowing large currents and power levels to be safely
controlled. The following are the advantages of having an SF6 circuit
breaker:
a) Very short arcing time due to superior arc quenching property;
b) Interrupt much larger currents considering that its dielectric
strength of SF6 gas is 2 to 3 times greater than air;
c) Provides noiseless operation due to its closed gas circuit;
d) Closed gas enclosure keeps the interior dry so that there is no
moisture problem;
e) It is non-combustible thus, there is no risk of fire;
f) There are no carbon deposits;
g) Low maintenance cost, light foundation requirements and
minimum auxiliary equipment; and
h) It is particularly suitable where explosion hazard exists
considering that it is totally enclosed and sealed from
atmos here.
9
• Shown in the table below is the proposed project cost breakdown:
No. of Unit Cost Project Cost
No. Materials Specifications Year
Units (PhP/unit) (PhP)
1 Power Circuit Breaker 69 kV 1 2,600,000.00 2012 2,600,000.00
• The Commission reviewed the proposed project cost and determined

that said cost is reasonable. The said cost of equipment is proximate
with the rice benchmark of 2012 NEA rice index.
2,600,000.00
10
~ 4
Project Title Installation of Additional Fuse Cut-out
Project Code RP-002
~ Reliabilit
~ 3
Project Category Prima Distribution Line Pro'ect

• Acquisition of thirty nine (39) units of 200A load break
fuse cut-out which will be installed within different
2011
parts of the distribution network's main backbone
lines.
• This project is deemed necessary to limit the power outages of the
entire distribution system thereby, improving the reliability performance
of the EC.
• It will also extend the asset life of the distribution system's facilities
considerin that the damage inflicted u on it shall be minimized.
Technical Analysis
• Based on the technical analysis conducted by the applicant, as
summarized in the table below, the Expected Energy Not Served
(EENS) would be reduced significantly upon implementation of the
project. The simulation presents significant benefit to both the EC and
its customers through improvement of the distribution system's
reliability performance.
Expected Energy Not Served (KWh) Energy Saved
Substation
Without the Project With the Project (KWh)
Botolan 7,854.51 828.13 7,026.37
Iba 849.31 265.79 583.52
Palauig 1,222.35 613.75 608.59
Candelaria 6,651.18 1,316.20 5,334.98
Total 16,577.34 3,023.88 13,553.46

• The Commission conducted the economic analysis of the project which
was determined to be viable considering that its Net Present Value
(NPV) is positive and its Benefit-Cost Ratio is greater than one (1), as
manifested in the succeeding tabulation. The said analysis involves
using the submitted technical benefits and some significant financial
information with the project's implementation. The financial information
includes the project's asset life and the EC's existing distribution,
su I and meterin DSM char es as well as the RFSC rate. The
11
, ;J
I
discount rate is insignificant considering that the project shall be

funded directly using the RFSC collection.
BIC 1.06
Interest Rate 0%
PV of Benefits PhP348,622.10
PVof Cost PhP327,405.00
Total Benefits (NPV) PhP21,217.10
• The proposed project cost is approved considering that the required

unit cost of the device is proximate with the NEA price benchmark,
• The following is the proposed project cost breakdown, to wit:

No. Substation Equipment Specifications Year
1 Botolan Fuse Cut-out Load Break, 200 A 18 7,300.00 131,400.00
2 Iba Fuse Cut-out Load Break, 200 A 4 7,300.00 29,200.00
2011
3 Palauig Fuse Cut-out Load Break, 200 A 5 7,300.00 36,500.00
4 Candelaria Fuse Cut-out Load Break, 200 A 12 7,300.00 87,600.00
Grand Total (PhP) 284,700.00
Pro"ect to continue with Technical Amendments
Approval CAPEX Cost
12
.J
~ 5
Project Title Seconda
~ RE-001
~ Rural Electrification
~ 2
Project Category Seconda Distribution Line Pro'ect

• Construction of secondary distribution line extension
in far-flung areas within the entire ZAMECO I
2011
franchise. Its scheduled plan is to energize 3 sitios
within the ear 2011.
Proposed CAPEX Cost
636,316.04
• The extension of distribution lines is necessary in order to energize
customers located at far-flung areas or sitios which is the mandate of
the coo erative.
Technical Analysis
• The project shall execute the said obligation through providing
missionary electrification within the remotest and the countryside areas
of the franchise.

• The project shall be subsidized by the Department of Energy (DOE),
Congressional funds, concerned Local Government Unit (LGU), and
NEA.
• The proposed project cost is approved considering that the required

material unit costs are proximate with the NEA price benchmark.

Length Unit Cost Project Cost
No. Location Year
(km) (PhPlkm) (PhP)
1 Sitio Babulo, Bulawen, Palauig 0.42 336,009.50 2011 141,123.99
2 Sitio Tambak, San Roque, Candelaria 1.08 327,358.43 2011 353,547.10
3 Sitio Tinoran, Lipay, Palauig 0.36 393,458.19 2011 141,644.95
Grand Total (PhP) 636,316,04
Resolution Remarks
Pro'ect to continue as ro osed ./
13
636,316.04
14
of Distribution Transformers
Distribution Line Pro'ect

• Replacement of several existing installed Distribution
Transformers that are predicted to be, if not already
overloaded.
• The following are the required specifications of the

proposed DTs to be acquired, to wit:
2011 to 2014
a) The transformer ratings are 15, 25, 37.5, 50, 75
and 100 kVA;
b) All transformers are of conventional type, oil
immersed and pole-mounted;
c) Primary voltage of 13.2/7.62 kV; and
d Seconda volta e of 120 / 240 or 240/480 V.
12,828,238.48
• The replacement of the existing overloaded distribution transformers
(DT) installed within the network is necessary to address the
impending capacity problem while maintaining a safe distribution
system.
• The project shall also provide system efficiency improvement

considering that aged distribution transformers largely contribute to the
technical system losses of the entire distribution system. It is also
intended to improve the EC's overall transformer management strategy
to ensure that transformer 0 erates at 0 timum load.
Technical Analysis
• The tabulation below shows the summary of the number of existing
distribution transformers that are predicted to be, if not already
overloaded and the proposed quantity of DT to be replaced. It can be
observed that the quantity of DT per rating to be acquired is not similar
with the quantity of overloaded DTs considering that the EC opted to
utilize the existing DT that can still be used while addressing the
capacity problem.
15
10 KVA 11 1 - 3 - - - -
15 KVA 21 2 3 2 6 - - 3
25 KVA 25 8 8 6 22 2 3 2
37.5 KVA 10 1 1 4 24 7 8 6
50 KVA 5 - 2 3 17 2 1 4
75 KVA 1 - - - 3 - 2 3
100 KVA - - - - 2 - - -
• Considering that the problem requires mandatory action and that there
is no other alternative solution to address the problem, the proposed
project is already deemed necessary without any further technical
justification. Nonetheless, the applicant submitted its simulation of the
additional technical benefits that the project would provide. Summary
of the said benefits, which is the system's efficiency improvement, are
shown in the table below.
Technical System Loss (kWh) Energy Saved
Year
Existing With Project (kWh)
2011 4,656,647.00 4.545,558.00 111,089.00
2012 5,139,702.00 5,000,872.00 138,830.00
2013 5,769,436.00 5,592,289.00 177,147.00
2014 6,579,166.00 6,346,058.00 233,108.00

• Based on the Commission's economic analysis, the proposed project
is financially viable considering that its Net Present Value (NPV) is
positive and its Benefit-Cost Ratio is greater than one (1), as reflected
in the table below. The analysis involves using the quantified technical
benefits and some significant financial information with the project's
implementation. The said financial information includes the project's
asset life, discount rate of eight percent (8%) and the EC's existing
generation, transmission and system loss charges. The discount rate
is based on the existing interest rate for NEA loans.
BIC 1.03
Interest Rate 8%
PV of Benefits PhP14,1 01,128.13
PV of Cost PhP13,694,762.09
Total Benefits (NPV) PhP406,366.04

15 kVA 6 72,535.73 435,214.38
25 kVA 22 91,164.48 2,005,618.56
37.5 kVA 24 109,105.83 2,618,539.92
1 Distribution Transformer 2011
50 kVA 17 125,872.23 2,139,827.91
75 kVA 3 156,627.98 469,883.94
100 kVA 2 173,963.64 347,927.28
25kVA 2 91,164.48 182,328.96
2 Distribution Transformer 37.5 kVA 7 109,105.83 2012 763,740.81
50 kVA 2 125,872.23 251,744.46
25 kVA 3 91,164.48 273,493.44
37.5 kVA 8 109,105.83 872,846.64
50 kVA 1 125,872.23 125,872.23
75 kVA 2 156,627.98 313,255.96
15 kVA 3 72,535.73 217,607.19
4 Distribution Transformer 25 kVA 2 91,164.48 2014 182,328.96
37.5 kVA 6 109,105.83 654,634.98
16
50 kVA 125,872.23 503,488.92
75 kVA 156,627.98 469,883.94
Grand Total (PhP) 12,828,238.48 I
• The Commission reviewed the proposed project cost and approves

that such cost be reduced. The assessment involves adjustment of the
DT's unit cost in reference with the 2012 NEA price index.
• The following is the approved project cost breakdown, to wit:

15 kVA 6 59,638.33 357,829.98
25 kVA 22 77,380.00 1,702,360.00
37.5 kVA 24 94,467.00 2,267,208.00
50 kVA 17 110,435.00 1,877,395.00
75 kVA 3 139,726.19 419,178.57
100 kVA 2 156,236.34 312,472.68
25 kVA 2 77,380.00 154,760.00
50 kVA 2 110,435.00 220,870.00
25 kVA 3 77,380.00 232,140.00
37.5 kVA 8 94,467.00 755,736.00
50 kVA 1 110,435.00 110,435.00
75 kVA 2 139,726.19 279,452.38
15 kVA 3 59,638.33 178,914.99
25 kVA 2 77,380.00 154,760.00
50kVA 4 110,435.00 441,740.00
75kVA 3 139,726.19 419,178.57
Grand Total (PhP) 11,112,502.17
Pro'ect to continue with REVISED Ca ital Ex enditure ./
Approved CAPEX Cost
6,936,444.23 1,377,763.38 1,761,395.56
17
II. OTHER NETWORK PROJECTS
Project No. 7
~ Additional Distribution Transformers
~ NP-001
~ Ca acit
~ 2

• Installation of additional distribution transformers (DT)
with various rating capacities in the distribution
network.

proposed DTs, to wit:
2011 to 2014
a) The transformer ratings are 15, 25, 37.5, 50 and
75 kVA;
b) All transformers are of conventional type, oil
immersed and pole-mounted;
c) Primary voltage of 13.2/7.62 kV; and
d Seconda volta e of 120 / 240 or 240/480 V.
4,166,073.32 4,947,921.34 15,217,345.78
• The installation of additional distribution transformers (DT) to the
network is a continuing process in the distribution utility to address the
increase of additional loads. Additional loads require additional
ca acit in the distribution network assets.
Technical Analysis
• The Commission conducted its own simulations to determine the most
acceptable quantity of DTs per rating capacity to be acquired by
ZAMECO I considering that the applicant was not able to present any
justification with regards to the quantification of the DTs. Based on the
said simulations, the proposed quantity of the DT's should be reduced.
• The following tabulation shows the summary of the said simulations, to

wit:
Load Growth Required Allocated Capacity of DT per rating (KVA)
Year ,
(kW) Demand (kVA) 15 kVA 25 kVA I 37.5 kVA 50 kVA I 75 kVA
2011 690.76 712.12 211.06 305.19 96.42 91.86 7.59
2012 825.36 850.89 252.18 364.67 115.21 109.76 9.07
2013 966.65 996.54 295.35 427.09 134.93 128.55 10.62
2014 1,114.18 1,148.64 340.43 492.27 155.52 148.17 12.25
• Based on the data above, the

capacity rating of 75 kVA is insignificant considering that it is very
minimal or only 1% of the DTs installed within the entire system.
Accordingly, the Commission disregarded the said capacity in the
determination of the forecasted quantity of DTs. Summary of the
simulations are shown in the following tables.
Load Growth Required Allocated Capacity of DT per rating (KVA)
Year
(kW) Demand (kVA) 15 kVA 25 kVA 137.5 kVA I 50 kVA ! 75 kVA
2011 690.76 712.12 213.33 308.48 97.46 92.85 -
2012 825.36 850.89 254.90 368.60 116.45 110.95 -
2013 966.65 996.54 298.53 431.69 136.38 129.94 -
2014 1,114.18 1,148.64 344.10 497.58 157.19 149.77 -
Load Growth Required Forecasted Quantity of DT per Rating Capacity

Year
(kW) Demand (kVA) 15 kVA 25 kVA 37.5 kVA 50kVA 75 kVA
2011 690.76 712.12 15 13 3 2 -
2012 825.36 850.89 17 15 4 3 -
2013 966.65 996.54 20 18 4 3 -
2014 1,114.18 1,148.64 23 20 5 3 -
• The simulation above involves the following procedure:

1. Determine the annual load growth of the entire DU through the
demand forecast;
2. Convert the annual demand forecast to apparent power (kVA);
3. Determine the required kVA demand per DT rating using the
annual forecasted kVA demand and the submitted percentage
load sharing of each DT ratings presently installed within the
distribution system; and
4. Determine the required units for each DT rating by dividing the
KVA demand per DT rating and the particular rating capacity of
the DT.
Cost Analysis
15 kVA 9 72,535.73 652,821.57
25kVA 8 91,164.48 729,315.84
Distribution
1 37.5 kVA 9 109,105.83 2011 981,952.47
Transformer
50kVA 1 125,872.23 125,872.23
75 kVA 1 156,627.98 156,627.98
15 kVA 11 72,535.73 797,893.03
25kVA 11 91,164.48 1,002,809.28
Distribution
2 37.5 kVA 10 109,105.83 2012 1,091,058.30
Transformer
50 kVA 2 125,872.23 251,744.46
75 kVA 2 156,627.98 313,255.96
15 kVA 14 72,535.73 1,015,500.22
25 kVA 14 91,164.48 1,276,302.72
Distribution
3 37.5 kVA 12 109,105.83 2013 1,309,269.96
Transformer
50 kVA 2 125,872.23 251,744.46
75 kVA 2 156,627.98 313,255.96
15 kVA 18 72,535.73 1,305,643.14
25 kVA 17 91,164.48 1,549,796.16
Distribution
4 37.5 kVA 14 109,105.83 2014 1,527,481.62
Transformer
50kVA 2 125,872.23 251,744.46
75 kVA 2 156,627.98 313,255.96
I Grand Total (PhP) I 15,217,345.78 I
19
"
• The Commission resolves the reduction of the proposed project cost

primarily due to the adjustment of the proposed quantities of DTs, as
discussed above. The cost reduction also involved adjusting the unit
costs of the DT per rating capacity in reference with the 2012 NEA
price index.

15 kVA 15 59,638.33 894,574.95
Distribution 25 kVA 13 77,380.00 1,005,940.00
1 2011
Transformer 37.5 kVA 3 94,467.00 283,401.00
50 kVA 2 110,435.00 220,870.00
15 kVA 17 59,638.33 1,013,851.61
2 2012
Transformer 37.5 kVA 4 94,467.00 377,868.00
50 kVA 3 110,435.00 331,305.00
15 kVA 20 59,638.33 1,192,766.60
3 2013
Transformer 37.5 kVA 4 94,467.00 377,868.00
50 kVA 3 110,435.00 331,305.00
15 kVA 23 59,638.33 1,371,681.59
4 2014
Transformer 37.5 kVA 5 94,467.00 472,335.00
50 kVA 3 110,435.00 331,305.00
Pro'ect to continue with Technical Amendments ./
Approved CAPEX Cost
3,722,921.59 12,306,211.75
20

project, to wit:
a) Single phase, 240V, 10(30)A, bottom-connected;
2011 to 2014
b) Single phase, 240V, 15A, class 100, socket type;
and
c 3- hase, electronic, 120-480V.
Proposed CAPEX Cost
• The cooperative is obliged to provide its customers the appropriate
services and connections consistent with the provision of the PDC. As
load growth dictates the addition of new equipments and assets, it is
therefore desirable to forecast the number of new connections to
determine the quantity of metering equipment the cooperative needs to
re are.
Technical Analysis
• The forecasting of new customers were based on the 7-year historical
customer data of ZAMECO I. The proposed project mainly focused on
determining the forecast of the number of customer per class. Details'
of the forecast are discussed in item 3.2 of this memorandum.
• The annual additional number of customers will then be identified by

subtracting the forecasted number of customer in a year from the total
number of customers of the previous year. Shown in the table below
are the forecasted additional customer requirements of the applicant.
Forecasted No. of Customers Load Growth I Requirement
Customer Class
2010 I 2011 I 2012 I 201~14 2011 2012 2013 2014
Residential 42.227 43.797 45.373 46.953 48.536 1,570 1.576 1,580 1.583
Commercial 3,127 3,244 3,360 3,477 3,595 117 116 117 118
Industrial 107 111 115 119 123 4 4 4 4
Public Building 479 496 514 532 550 17 18 18 18
Street Lights 93 96 99 103 106 3 3 4 3
Special Lighting 22 23 23 24 25 1 - 1 1
• The required additional metering equipment within the entire system

was based on the abovementioned forecasted load growth. The EC
segregated the types of meters to be used according to its customer
class. Industrial customers shall have 3- hase electronic kWh meters
21
while commercial customers shall have single phase kWh meters with
maximum current of 100 A. The remaining customer classes shall
have sin Ie hase kWh meters with maximum current of 30 A.
Cost Analysis
• There is minor discrepancy between the submitted total project cost
and the Commission cost review since it was found that the quantity of
meters in the applicant's cost breakdown is in fraction form. This is
unacceptable considering that any equipment or device can only be
acquired in a whole unit. Accordingly, the Commission rounded up the
said units into its next ones digit.

Customer No. of Unit Cost Project Cost
No. Device Specifications Year
Class Units (Ph P/u nit) (PhP)
Residential 1,570 818.57 1,285,154.90
Connected
Commercial 1-Phase, 100 A, 240 V, Socket Type 116 1,768.69 205,168.04
3-phase electronic, 120-480V, Socket
Industrial 4 18,000.00 72,000.00
Type
kWh
1 Public 1-Phase, 240 V, 30 A, Bottom 2011
meter 18 818.57 14,734.26
Building Connected
Street Lights 3 818.57 2,455.71
Connected
Special 1-Phase, 240 V, 30 A, Bottom
1 818.57 818.57
Lighting Connected
Residential 1,576 818.57 1,290,066.32
Connected
3-phase electronic, 120-480V, Socket
Industrial 4 18,000.00 72,000.00
Type
kWh
meter 18 818.57 14,734.26
Building Connected
Street Lights 3 818.57 2,455.71
Connected
1 818.57 818.57
Lighting Connected
Residential 1,580 818.57 1,293,340.60
Connected
3-phase electronic, 120-480 V, Socket
Industrial 4 18,000.00 72,000.00
Type
kWh
meter 18 818.57 14,734.26
Building Connected
Street Lig hts 3 818.57 2,455.71
Connected
1 818.57 818.57
Lighting Connected
Residential 1,583 818.57 1,295,796.31
Connected
3-phase electronic, 120-480 V, Socket
Industrial 4 18,000.00 72,000.00
Type
kWh
meter 18 818.57 14,734.26
Building Connected
Street Lig hts 3 818.57 2,455.71
Connected
1 818.57 818.57
Lighting Connected
6,350,370.52
22
Pro"ect to continue as roposed
Pro"ect to continue with REVISED Ca ital Ex enditure
Approved CAPEX Cost
1,580,331.48 6,350,370.52
23
of Lines

• Conversion of interconnected service drops of
multiple residential customers into underbuilt or open-
secondary distribution lines in strategic locations. It 2011 & 2012
includes upgrading line conductor size from #6 to #2
ACSR.
Proposed CAPEX Cost
4,195,854.43 1,559,636.72
• The proposed project is necessary in order to maintain a safe, efficient
and reliable distribution system. It shall basically comply with the safety
re uirements of the Phili ine Electrical Code PEC.
Technical Analysis
• Majority of the cooperative's service drops are presently
interconnected in order to serve multiple residential customers in a
particular area, as illustrated in the figure below. This type of
connection does not comply with the PEC standards for the service
entrance requirement, wherein service drops should serve individual
customers, with standard minimum height of installations and
clearances. Such connection is hazardous considering it has high
probability of overloading causing fire and electrocution.
• ZAMECO I proposed the reconfiguration of these lines in such a way

that each registered residential customers shall be provided by a
service drop. The said reconfiguration would require an extension of
lines or conversion of the existing line configuration into open-
secondary distribution lines using a conductor size of #2 ACSR, as
illustrated in the fi ure below. The said conductor size is 0 timal based
24
,...
on the applicant's line sizing economic analysis.
Cost Analysis
• The proposed project costs are based on the unit costs of several
materials intended for the line extension per area, which coincides with
the 2012 NEA Price Index, and its corresponding labor cost. It also
includes contingency factor and VAT allotting five percent (5%) and
twelve percent (12%) of the total material cost, respectively.

No. Location Year
(km) (PhPlkm) (PhP)
1 Parel. Botolan 0.30 277,605.43 83,281.63
2 Near PEO Palanginan, Iba 0.30 322,643.13 96,792.94
3 Tampo, Botolan 0.20 311,886.05 62,377.21
4 San Miguel, Botolan 0.30 311,812.03 93,543.61
5 Bunga, Paulien Subdivision, Iba 0.40 222,647.15 89,058.86
6 Decano Compound, Dulit, Palanginan. Iba 0.25 442,151.92 110,537.98
7 Riverside Bunga, Masinloc 0.08 470,371.60 35,277.87
8 Lucapon North (Meredor Compound), Sta. Cruz 0.24 398,412.46 95,618.99
9 Lucapon North (Near Adan), Sta. Cruz 0.36 385,067.25 138,624.21
10 Monterola St., Malabago, Sta. Cruz 0.30 375,060.17 112,518.05
11 Sitio Atob, Baloganon, Masinloc 0.09 566,581.76 48,159.45
12 Pagatpat (Liglig Ambay), Sta. Cruz 0.60 408,319.65 244,991.79
13 Pagatpat (Mandapat), Sta. Cruz 0.36 390,549.64 140,597.87
2011
14 Pagatpat (Maced a Old Big), Sta. Cruz 0.30 447,841.10 134,352.33
15 Balili, Palanginan, Iba 0.30 427,559.67 128,267.90
16 Baytan/Bulacan, Bolawon, Sta. Cruz 0.42 375,236.69 157,599.41
17 Pagatpat (Bernal Compund), Sta. Cruz 0.48 384,202.50 184,417.20
18 Sitio Malumbit, Tubo-tubo North, Sta. Cruz 0.42 392,364.52 164,793.10
19 Villa Roma, Baytan, Sta. Cruz 1.26 426,620.97 537,542.42
20 Sitio ASinan, Sto. Tomas, Palauig 0.25 533,916.00 133,479.00
21 Alwa Elementary School, Alwa, Palauig 0.18 500,254.06 90,045.73
22 Sitio Pasig, Tapuac, Masinloc 0.35 357,064.80 124,972.68
23 Longos (Near Bong Bernal), Sta. Cruz 0.48 329,049.21 157,943.62
24 Sitio Kalasag, Purok 7 Tubotubo North, Sta. Cruz 0.78 436,669.53 340,602.23
25 Sitio Ticong, Taltal, Masinloc 0.57 412,391.13 236,712.51
26 Sitio Pakal, Gama, Sta. Cruz 0.90 375,221.87 337,699.68
27 Salaza, Palauig 0.48 313,157.71 150,315.70
28 Lipay Dingin, Iba 3.68 206,138.80 758,590.77
29 Longos, Sta. Cruz 2.54 187,918.60 2012 477,313.25
30 Sea Shore Lucapon North, Sta. Cruz 0.33 357,065.11 116,046.16
31 Sitio Bayaba, Amungan, Iba 0.36 481,713.89 173,417.00
1 Grand Total (PhP) I 5,755,491.15 I
• The Commission approves the reduction of the proposed project cost

based on its review. The reduction was rimaril based on the
25
••
exclusion of contingency factor and VAT considering that the NEA

price benchmark already includes such financial factors.

No. Location Year
(km) (PhPlkm) (PhP)
1 Parel, Bololan 0.30 235,047.10 70,514.13
2 Near PEa Palanginan, Iba 0.30 273,446.97 82,034.09
3 Tampo, Bololan 0.20 265,169.50 53,033.90
4 San Miguel, Bololan 0.30 264,179.40 79,253.82
5 Bunga, Paulien Subdivision, Iba 0.40 188,547.35 75,418.94
6 Decano Compound. Dulil, Palanginan, Iba 0.25 375,032.00 93,758.00
7 Riverside Bunga, Masinloc 0.08 399,575.73 29,968.18
8 Lucapon North (Meredor Compound), Sla. Cruz 0.24 336,369.50 80,728.68
9 Lucapon North (Near Adan), Sta. Cruz 0.36 325,000.06 117,000.02
10 Monlerola St., Malabago, Sla. Cruz 0.30 317,019.03 95,105.71
11 Silio Alob, Baloganon, Masinloc 0.09 481,676.24 40,942.48
12 Pagatpat (Liglig Ambay), Sla. Cruz 0.60 345,021.25 207,012.75
13 Pagatpat (Mandapal), Sta. Cruz 0.36 329,571.25 118,645.65
2011
14 Pagatpal (Maced a Old Big), Sta. Cruz 0.30 378,081.27 113,424.38
15 Balili, Palanginan, Iba 0.30 358,796.50 107,638.95
16 Baytan/Bulacan, Bolawon, Sla. Cruz 0.42 317,126.86 133,193.28
17 Pagatpal (Bernal Compund), Sla. Cruz 0.48 324,246.06 155,638.11
18 Sitio Malumbit, Tubo-lubo North, Sla. Cruz 0.42 331,731.33 139,327.16
19 Villa Roma, Baytan, Sla. Cruz 1.26 358,046.57 451,138.68
20 Sitio Asinan, Sto. Tomas, Palauig 0.25 448,749.68 112,187.42
21 Alwa Elemenlary School, Alwa, Palauig 0.18 420,151.22 75,627.22
22 Silio Pasig, Tapuac, Masinloc 0.35 302,176.37 105,761.73
23 Longos (Near Bong Bernal), Sta. Cruz 0.48 277,651.65 133,272.79
24 Silio Kalasag, Purok 7 Tubolubo North, Sla. Cruz 0.78 364,877.83 284,604.71
25 Silio Ticong, Taltal, Masinloc 0.57 347,275.00 199,335.85
26 Silio Pakal, Gama, Sta. Cruz 0.90 316,847.61 285,162.85
27 Salaza, Palauig 0.48 265,975.27 127,668.13
28 Lipay Dingin, Iba 3.68 172,212.20 633,740.89
29 Longos, Sla. Cruz 2.54 156,671.65 2012 397,945.99
30 Sea Shore Lucapon North, Sla. Cruz 0.33 357,065.11 116,046.16
31 Silio Bayaba, Amungan, Iba 0.36 481,713.89 173,417.00
Approved CAPEX Cost
4,888,547.65
26
,••• •
,
of Primar and Seconda Line
and Seconda Distribution Line Pro'ect

• Rehabilitation of aged and damaged distribution
network assets throughout the coverage area. The
assets shall be replaced with new assets having the
same specifications.
2011 & 2012
• The assets involved are the conductors and its
corresponding accessories for both the primary and
secondary distribution lines and some existing poles
connected within these lines that are already
dila idated and rotten.
Proposed CAPEX Cost
• The proposed project is necessary in order to maintain a safe, efficient
and reliable distribution s stem.
Technical Analysis
• Based on ZAMECO I site survey, it was determined that some of the
existing distribution line assets are already aged and damaged. These
assets are threat to public safety and a contributing factor to the
inefficiency and unreliability of the distribution system.
• The proposed project shall provide an assurance of eliminating hazard

and reducing nuisance interruptions caused by these assets. It shall
also contribute in maintaining an efficient and reliable distribution
s stem.
Cost Analysis
• The proposed project costs are based on the unit costs of several
materials for replacement per area, which coincides with the 2012 NEA
Price Index, and its corresponding labor cost. It also includes
contingency factor and VAT allotting five percent (5%) and twelve
percent (12%) of the total material cost, respectively.

No. Location Distribution Line Year
(km) (PhP/km) (PhP)
1 Purok 10 Lawak Amungan, Iba Open Secondary 0.20 591,007.55 2011 118,201.51
27
2 Pamucuran Binabalian, Candelaria Open Secondary 0.49 340,800.82 166,992.40
3 Madreo Malabago, Sla. Cruz Open Secondary 0.12 498,933.67 59,872.04
4 Silio Babo, Sinabacan, Candelaria 1-phase/Open Secondary 0.65 389,294.48 253,041.41
5 Govic Highway Feeder 3, Iba 3-phase 1.61 738,745.13 2012 1,185,685.94
• The Commission approves the reduction of the proposed project cost

based on its review. The reduction was primarily based on the
exclusion of contingency factor and VAT considering that the NEA
price benchmark already includes such financial factors.

Length Unit Cost Project Cosl
No. Location Distribution Line Year
(km) (PhP/km) (PhP)
1 Purok 10 Lawak Amungan, Iba Open Secondary 0.20 496,234.30 99,246.86
2 Pamucuran Binabalian, Candelaria Open Secondary 0.49 288,736.96 141,481.11
2011
3 Madreo Malabago, Sla. Cruz Open Secondary 0.12 423,412.92 50,809.55
4 Silio Babo, Sinabacan, Candelaria 1.phase/Open Secondary 0.65 326,760.62 212,394.40
5 Govic Highway Feeder 3, Iba 3-phase 1.61 619,001.23 2012 993,496.97
Grand Total (PhP) I 1,497,428.89
Approved CAPEX Cost
503,931.92 993,496.97
28
and Seconda Distribution Line Pro'ect

• Aging wood poles shall be replaced with new concrete
2011 to 2014
oles havin len th var in from 25 u to 45 feet.
Proposed CAPEX Cost
• ZAMECO I intends to replace its existing old and damaged poles in
order to maintain a safe, efficient and reliable distribution s stem.
Technical Analysis
• Based on the applicant's site survey, it was determined that some of
the existing poles within the distribution system are already aged and
damaged. These distribution network assets are threat to public safety
and a contributing factor to the inefficiency and unreliability of the
distribution system. It also contributes to the distribution system's
continuous amplification of unaccounted losses or non-technical
losses.
• The proposed projects will provide an assurance of eliminating hazard

and reducing nuisance interruptions caused by these assets. It will
also provide efficiency and reliability improvement in the distribution
s stem.
Cost Analysis
• The applicant determined the quantity of poles which requires
replacement based on the actual inventory done by the cooperative.

Concrete, 25 ft. 57 6,624.80 377,613.60
Concrete, 30 ft. 200 8,955.59 1,791,118.00
1 Pole Concrete, 35 ft. 189 13,038.74 2011 2,464,321.86
Concrete, 40 ft. 25 15,025.92 375,648.00
Concrete, 45 ft. 1 19,447.97 19,447.97
Concrete, 25 ft. 57 6,624.80 377,613.60
Concrete, 30 ft. 200 8,955.59 1,791,118.00
2 Pole 2012
Concrete, 35 ft. 189 13,038.74 2,464,321.86
Concrete, 40 ft. 25 15,025.92 375,648.00
3 Pole Concrete, 25 ft. 86 6,624.80 2013 569,732.80
29
';" ,"
Concrete, 30 ft. 300 8,955.59 2,686,677.00

Concrete, 35 ft. 283 13,038.74 3,689,963.42
Concrete, 40 ft. 39 15,025.92 586,010.88
Concrete, 25 ft. 86 6,624.80 569,732.80
Concrete, 30 ft. 300 8,955.59 2,686,677.00
4 Pole 2014
Concrete, 35 ft. 283 13,038.74 3,689,963.42
Concrete, 40 ft. 39 15,025.92 586,010.88
• The Commission approves the reduction of the quantity of poles

considering that some of these assets were already included in the
revamp of primary and secondary line (project no. 10) project.

Concrete, 25 ft. 35 6,624.80 231,868.00
Concrete, 30 ft. 197 8,955.59 1,764,251.23
1 Pole Concrete, 35 ft. 189 13,038.74 2011 2,464,321.86
Concrete, 40 ft. 25 15,025.92 375,648.00
Concrete, 45 ft. 1 19,447.97 19,447.97
Concrete, 25 ft. 57 6,624.80 377,613.60
Concrete, 30 ft. 200 8,955.59 1,791,118.00
2 Pole 2012
Concrete, 35 ft. 166 13,038.74 2,164,430.84
Concrete, 40 ft. 24 15,025.92 360,622.08
Concrete, 25 ft. 86 6,624.80 569,732.80
Concrete, 30 ft. 300 8,955.59 2,686,677.00
3 Pole 2013
Concrete, 35 ft. 283 13,038.74 3,689,963.42
Concrete, 40 ft. 39 15,025.92 586,010.88
Concrete, 25 ft. 86 6,624.80 569,732.80
Concrete, 30 ft. 300 8,955.59 2,686,677.00
4 Pole 2014
Concrete, 35 ft. 283 13,038.74 3,689,963.42
Concrete, 40 ft. 39 15,025.92 586,010.88
.Pro'ect to continue with REVISED Ca ital Ex enditure
Approved CAPEX Cost
4,855,537.06 4,693,784.52 7,532,384.10 7,532,384.10 24,614,089.78
30
~ 12
Project Title Re lacement of Old Kilowatt-hour Meters
~ NP-006
~ Efficienc
~ 3

• Replacement of dilapidated and deteriorated kilowatt-
hour (kWh) meters particularly installed for the
residential consumers of the entire franchise.
2011 to 2014
• The kWh meters to be acquired shall have the
following specifications: single phase, bottom-
connected t e, 240 V and 10 30 A.
2,046,425.00 2,046,425.00 2,046,425.00
• ZAMECO I intends to replace the existing old and dilapidated kWh
meters in order to im rove the efficienc of the distribution s stem.
Technical Analysis
• Based on the ZAMECO I's site survey, some of its existing installed
kWh meters have exceeded their operational life which leads to the
ineffectiveness of the meters and can no longer operate reliably. The
presence of these meters contributes to the continuous amplification of
unaccounted losses or non-technical losses of the distribution utility.
• In order to reduce said losses, ZAMECO I proposed to replace these

assets with brand new ones. The probable result with the project's
implementation is manifested in the table below. The energy saved
was based on the probable accuracy improvement brought about by
replacing each defective/aged kWh meter which will then be multiplied
by the total number of proposed kWh meters.
Technical System Loss (kWh) No. of Energy Saved
Year
Existing With Project meters (kWh)
2011 5,295,491.83 5,246,405.89 2,500 49,085.94
2012 5,881,045.27 5,831,959.33 2,500 49,085.94
2013 6,658,754.57 6,609,668.63 2,500 49,085.94
2014 7,685,578.12 7,636,492.18 2,500 49,085.94
Cost Analysis
• The Commission has verified that the proposed project is viable
considering that the project's Net Present Value (NPV) is positive and
the Benefit-Cost Ratio is greater than one (1), as manifested in the
tabulation below. The assessment was determined usin the
31
abovementioned technical benefits while incorporating some
significant variables such as its asset life and discount rate of ten (10)
years and eight percent (8%), respectively. The discount rate shall be
the NEA interest rate considering that the projects will be funded
through NEA loan.
BIC 1.24
Interest Rate 8%
PV of Benefits PhP9,706,170.71
PV of Cost PhP7,859,060.18
Total Benefits (NPV) PhP1 ,847,110.53

1 2,500 818.57 2011 2,046,425.00
~ 1-Phase, 240 V, 30 A, 2,500 818.57 2012 2,046,425.00
KWh meter
~ Bottom Connected 2,500 818.57 2013 2,046,425.00
-
4 2.500 818.57 2014 2,046,425.00
Approved CAPEX Cost
2,046,425.00 2,046,425.00 2,046,425.00 2,046,425.00
32
III. NON-NETWORK PROJECTS
Project No. 13
~ Communication S stem
~ NNP-001
Project Type Customer Efficienc
~ 4
Project Category Non-Network Re uirements
Project Description Duration

• Acquisition of 12 units of cell phones and 1 unit of
2011 & 2012
office co iers.
Proposed CAPEX Cost
15,000.00 61,000.00
• ZAMECO I shall acquire 12 units of cell phone to be used by the
substation tenders and district office maintenance officer in order to
facilitate their communication with ease particularly during trouble or
problems.
• ZAMECO I shall also acquire 1 unit of copier considering that the

entire cooperative has only 1 existing copier. The said device is
necessary for reproduction of documents necessary in its daily
activities.
Cost Analysis
• The proposed cost is comparable with the existing market price and
available price reference found on the internet.
• The following is the recommended project cost breakdown, to wit:

No. Materials Year
1 Cellphone 6 2,500.00 2011 15,000.00
2 Cellphone 6 2,500.00 15,000.00
2012
3 Copier 1 46,000.00 46,000.00
33
Approved CAPEX Cost
2014
61,000.00
34
,,
~ 14
~ Meter Readin & Collection Pro'ects
Project Code NNP-002
~ Customer Efficienc
Priority Rank 4

• Acquisition of several new portable devices and
2011,2012&
software intended for the application of meter reading,
2014
billin and collection s stem.
Proposed CAPEX Cost
• ZAMECO I intends to acquire additional devices and upgrade its
existing meter reading, billing, collection and management information
system in order to meet the fast growing demand of consumers with
regard to its customer services. Considering the availability of modern
day technology, the cooperative would likewise take the opportunity to
utilize such in order to provide its customers adequate services it
rightfully deserves.
• The upgraded new system will significantly improve the performance of

the meter readers' capability. Posting and printing of materials for
billing will take less time thus, ensuring a timely billing of its
consumers. Moreover, the technology includes interfacing the entire
devices which eventually transforms into fast, reliable and efficient way
of collectin the a ment.
Cost Analysis

No. Materials Year
1 Industrial Printer 1 500,000.00 500,000.00
2011
2 Server 1 200,000.00 200,000.00
3 Portable Billing Gadgets 12 8,000.00 2012 96,000.00
4 Portable Billing Gadgets 12 8,000.00 2014 96,000.00
35
1"1
,
'I

• Acquisition of licensed SynerGee Engineering
Analysis Software, Internet Connection or Digital
2011 & 2013
Subscriber Line (DSL) and Accounting Software
acka e.
5,100,000.00
• The acquisition of the abovementioned hardware and software devices
shall further improve the capabilities of the EC's personnel in terms of
performing customer services.
• The following are the advantages provided by the devices to be

acquired:
a) SynerGee Engineering Analysis software is a vital tool in assisting
the EC's engineers to perform its duty to analyze the entire
distribution system in order to develop plans and procedures to
improve the same in a time efficient way;
b) Internet connection is essentially necessary these days considering
the increasing demand for customer service. The main office in San
Vicente, Palauig and the district office in Candelaria do not have
DSL access. Considering that internet is limited to a certain
perimeter, the project shall provide a fast and efficient transaction
between offices; and
c) Financial and accounting processes are among the most crucial
activities an organization conduct, serving as the backbone to core
business operations across the entire company. Therefore, the EC
intends to acquire software and hardware devices intended for
accounting purposes. The said devices shall enhance the EC's data
accurac and staff roductivit thereb rovidin hi her revenues.
I
Cost Analysis

No. Materials Year
1 SynerGee Software 1 set 1,600,000.00 2011 1,600,000.00
37
'...,. II
,

application with additional justification
Approved CAPEX Cost

2013
36
.,'., ,
2 Internet Connection 2,000,000.00 2,000,000.00

3 Accounting Software 1,500,000.00 1,500,000.00
5,100,000.00
.-. . Remarks
./
Project to continue as proposed
Project to continue with REVISED Capital Expenditure
Project to continue with Technical Amendments
application with additional justification
Approved CAPEX Cost
1,500,000.00
38
~ 17
~ Additional Utilit Vehicles
~ NNP-005
Priority Rank 4

• Acquisition of utility and service vehicles for operation
2011 to 2015
and maintenance.
• At present, the cooperative has only two (2) units of utility trucks, one
of which is a truck with basket and driller while the other one is a boom
truck. These vehicles are not adequate to cover the existing 6
municipalities of the franchise. It also cause these vehicles to
deteriorate rapidly considering that it is being used extensively daily in
attending to the needs of the entire franchise.
• The project also includes augmentation of the cooperative's existing

fleet of service vehicles in order to meet the growing demand of
consumers. The continuous increase in the number of customers
should definitely require an expansion of service vehicles in order to
attend the customer demands more efficiently.
• Procurement of additional utility trucks and service vehicles would

make it easier for the cooperative to provide fast and reliable service to
its member-consumers.
Cost Analysis
• The following is the recommended project cost breakdown, to wit:

No. Vehicle Year
1 Boom Truck 1 1,000,000.00 2011 1,000,000.00
2 Utility Truck with Basket 1 1,000,000.00 2012 1,000,000.00
3 Maintenance Utility Service 6 700,000.00 2013 4,200,000.00
4 Boom Truck 1 1,000,000.00 2014 1,000,000.00
Pro'ect to continue with REVISED Ca
40
..,
Tools and E ui ment

• Acquisition of several tools, engineering devices and
equipment to be used for the maintenance of the 2011 to 2015
entire network facilities.
Proposed CAPEX Cost
350,000.00 400,000.00 1,252,124.00 2,592,124.00
• The project is essential in order to maintain safe, efficient and reliable
distribution s stem.
Cost Analysis

No. of Unit Cost Project Cosl
No. Malerlals Year
Megger Tester 1 100,000.00 100,000.00
1 2011
Step Ladder 10 25,000.00 250,000.00
Online Accuracy Tester 1 100,000.00 100,000.00
2 30 ft., Hot Slick Telescopic 6 25,000.00 2012 150,000.00
Hoi Stick Shot Gun 6 25,000.00 150,000.00
Transformer Turns Ratio Tester 1 302,124.00 302,124.00
3 Infrared Scanner 1 700,000.00 2013 700,000.00
Step Ladder 10 25,000.00 250,000.00
30 ft., Hot Stick Telescopic 6 25,000.00 150,000.00
4 Load Logger 1 290,000.00 2014 290,000.00
Hot Slick Shot Gun 6 25,000.00 150,000.00
350,000.00 400,000.00 1,252,124.00 590,000.00
39
.'..
Pro"ect to continue with Technical Amendments

a lication with additional "ustification
1,000,000.00 4,200,000.00
41
18
Construction of New District Office Building at
Botolan, Renovation of Technical Services
Department Office and Multi-purpose Building and
procurement of lot for the proposed new Sta. Cruz
Substation
NNP-006
Customer Efficienc
4
Non-Network Re uirements

• The proposed project involves the following:
a) Construction of new Botolan sub-office building;
b) Renovation of Technical Services Department
(TSD) Office; 2011 & 2012
c) Construction of Multi-purpose building; and
d) Procurement of lot for the proposed Sta. Cruz
Substation.
Proposed CAPEX Cost

2013 2014
6,500,000.00
• The proposed project shall ensure the convenience of the member-
consumers as well as the office employees during the necessary
transactions.
• The following are the detailed discussion of each activity of the project:
a) The cooperative intends to have its own sub-office in the
municipality of Botolan considering that ZAMECO I is renting the
existing Botolan sub-office;
b) The proposed multi-purpose building shall be used as a place for
annual general membership meetings, anniversaries and other
programs of the cooperative;
c) The Technical Services Department is the least improved building
within the cooperative's Main Office area. Considering that it is
where most of the technical duties are being performed, it is
therefore necessary that this building be well-maintained and
comfortable enough for its staff to perform its duties; and
d) The acquisition of lot is certainly necessary in order for the
ro osed Sta. Cruz Substation ro'ect to be im lemented.
Cost Analysis
available price reference.
ro'ect cost breakdown, to wit:

42
Project Cost
No, Activity Lot Area Year
(PhP)
1 Construction of Botolan Sub-office 580 sq. m. 3,000,000.00
2 Multi-Purpose Building Renovation 430 sq. m. 2011 2,000,000.00
3 lot Purchase for Sta. Cruz Substation 500 sq. m. 1,500,000.00
4 TSD Office Renovation 425 sq. m, 2012 2,000,000.00
Grand Total (PhP) 8,500,000,00
a Iication with additional 'ustification
Approved CAPEX Cost (PhP)
6,500,000.00
43
., -.•
~ 19
Project Title Additional Deskto uters and la to s
~ NNP-007
Priority Rank 4

• Purchase of 15 units of desktop computers with
licensed software to augment the cooperative's 2011 & 2012
existin set of com uters.
Proposed CAPEX Cost
840,000.00
• ZAMECO I intends to offer the best possible services to its customers
through this project. The purchase of 15 additional units of desktop
computers with licensed software shall provide a much faster report
making. This would also further extend the capabilities of distribution
utility personnel in performing customer services.
• Obsolete units shall also be replaced with the latest unit in order for the
personnel to cope up with the modern technology by installing work-
related software that requires higher computer specifications.
• The project also includes acquisition of additional laptops. It is

intended to be used during seminars since nowadays workshops
require attendees to bring laptops with them as well as during field
works.
Cost Analysis
No. Malerials Year
1 Desktop 15 28,000.00 2011 420,000.00
2 Laptop 5 84,000.00 2012 420,000.00
I Grand Total (PhP) I 840,000.00 I

• The Commission reduced the proposed project cost considering that
the unit cost of both the computers and laptops with the submitted
specifications is beyond the existing market price and available price
reference found on the internet. These costs were then reduced in
reference with the said benchmarks.

Project Cost
No. Materials
(PhP)
44
1 Desktop 375,000.00
2 Laptop 200,000.00
575,000.00
Resolution Remarks
200,000.00
I:
''(,
dI
45

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Republic of the Philippines

ENERGY REGULATORY COMMISSION

IN THE MATTER OF THE

ERC CASE NO. 2011-071 RC

Before this Commission for resolution is the application filed on

Having found said application sufficient in form and in

ERC Case No. 2011-071 RC

In the same Order, ZAMECO I was directed to cause the

The Office of the Solicitor General (OSG), the Commission on

Likewise, the Offices of the Provincial Governor of Zambales

During the August 9, 2011 initial hearing, only ZAMECO I

At the said hearing, ZAMECO I presented its proofs of

At the termination of the expository presentation, ZAMECO I

ERC Case No. 2011-071 RC

following: a) her duties and functions as Finance Manager; b) her

In the course of their direct examinations, additional documents

On August 18, 2011, ZAMECO I filed its "Formal Offer of

On March 26 to 28,2014, the Commission conducted an ocular

On December 1, 2014, the Commission issued an Order

ZAMECO I sought the Commission's approval of the following

PARTICULARS PROPOSED COST

ERC Case No. 2011-071 RC

A. OVERVIEW OF ZAMECO I's DISTRIBUTION SYSTEM

ZAMECO I covers the Municipalities of Sta. Cruz, Candelaria,

The LGUs and barangays have prioritized electrification

The supply of power is presently being distributed through ten

ERC Case No. 2011-071 RC

SYSTEM LINE CONFIGURATION AS OF 2009

Approximately ninety-two percent (92%) of the connected

The chart below indicates that majority of its revenue comes

Public buildings such as local government owned buildings and

Melnwhile, . the cooperative sustained double digit . level

In order to determine the optimal project for a particular

There are two (2) methods of forecasting that a distribution

Under the Electric Cooperative Distribution Utility Planning

1) adjusted R2 should be at least 80% for econometric

2) 'p-value should be lower than 0.1; and

3) ,t-statistic should be greater than 2 or less than -2.

Accuracy of the model, likewise, should have a Mean Absolute

Validity Tests Accuracy Test Annual Average Growth Rate

It used trend methodology in determining the forecasted data of

The predicted energy sales, energy purchase and number of

The: forecasted number of each customer class, on the other

It was then verified that the submitted forecast is valid considering

Evaluating the performance of a distrib.ution network will

Affected Network Problem Type

The abovementioned problems were determined based on the

It determined that some portions within the distribution system

ERC Case No. 2011-071 RC

lower than the existing protection setting of these devices. In order to

Minimum Fault Safety Margin

Meanwhile, the graph below only manifests that the existing

10,00 ~-.-..•.. ' .=1.J....J.....-... ...L...... ....L....~.-.-'.~~ -

Its existing maximum capacity is at 37.5 MVA representing the

Rated MVA Power Max. MVA Max. MW Historical Forecast .

Based on its analysis, there are several customers in some

Voltage Variation Profile

There are also several customers in some areas within its

The PDC provides that the voltage levels at the customer's

Voltage Unbalance Profile

In compliance with the abovementioned standards, it proposed

2009 System Loss Segregation

Based on the submitted data, most of the technical losses