annexb network-loadgro~h

ANNEX"B"

PROPOSED RESIDUALCAPEXPROJECTS FOR RY2016

NETWORK-LOADGRO~H

Project Title

Project Code

Project TypeProject RankProject Category

Installation of Connection andFacilities to Serve NationalAuthori (NHA) Pro' ects

RES-8A.1/RES-9A.1/RES-12A.1/RES-26A RES-29ANetwork - Load Growth1Residual Ca ex Pro' ect

MeteringHousing

I

Project Description Duration

• Installations of Elevated Metering Center (EMC)accessories such as cable tie, metering frameand ICP modular with 5 kWh meter base forNHA projects.

• Installations of poles, towers, fixtures andprimary cable for EMG.NHA projects.

July 2015 to• Installation of pole mounted distribution December 2015transformers for EMC NHA projects.

• Installation of service drops for EMC NHAProjects.

• Purchase and installation of meters andconsumer instrument transformers for EMCNHA ro'ects.

Proposed CAPEX Cost (PhP) RES-8A.1Proposed CAPEX Cost (PhP) RES-9A.1--

Proposed CAPEX Cost (PhP) RES-12A.1Proposed CAPEX Cost (PhP) RES-26AProposed CAPEX Cost (PhP) RES-29A

Total Proposed CAPEXCost (PhP)

331,623,15711,557,242

188,795,631339,774,456457,854,998

1,329,605,484

1

I

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Pro' ect Justification

• To serve customers under the NHA projects, MERALCOneeds toinvest in new line extensions that would require the installation ofnew poles and distribution transformers.

• To install additional meters, instrument transformers and othermetering devices to address the 94,355 power connectionrequirements for government initiated housing projects underNHA. Thus, it is necessary to ensure having sufficient resourcestaking into consideration the maximum utilization of existingassets rior to addition of new facilities.

Technical Anal sis

a) Installation of Poles, Towers and Fixtures (EMC-NHA)

For EMC, customer growth was based on expected new serviceapplications lined up by the National Housing Authority (NHA) fortheir housing projects. Table below shows the number of beneficiariesfor RY2016.

The residual projects for EMC-NHA should be implemented for2016 since these are intended for the backlog NHA projects originallydue for RP3 but are currently pending for energization. Major reasonfor project delay is the pendency of the payment cash advance by thedeveloper or customer. These projects were created during theimplementation of DSOAR, Resolution No. 2 Series of 2010 whichstates in Section 2.6.1, Right to Extension of Lines and Facilities, that"in accordance with Magna Carta, a residential end-user user locatedwithin 30 meters from the distribution utilities existing secondaryvoltage lines has the right to an extension of lines or installation ofadditional facilities, other than a standard connection facilities, at theexpense of the utility. However, if a prospective customer is beyondthe said distance and the said project is not included in the forecastedCAPEX of the DU, the customer or developer may advance theamounts necessary to cover the expenditures on the connection assetbeyond the standard connection facilities." Affected customers underthe said resolution deferred the payment until the CY 2012implementation of the amended DSOARwhich states that "providedthat the project is viable, a residential end-user has a right to anextension of lines or installation of additional facilities at the expenseof the DU". This is to free the customer on the liability of project costpayment. The target for RY2016 was set by NHA as mandated by theNational Government. Execution of these projects shall be prioritizedin RY2016.

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Descri tionA liedNHABacklo NHAA lied + Backlo (Total)

RY20162

46,38394,355

The forecasted counts of primary and secondary poles were basedon the computed average number of poles per project using the list ofprevious NHA projects as reference.

Shown below is the methodology for the forecasted count ofprimary and secondary poles for RY2016.

Count ofPro"ects with BeneficiariesYear Project Count of Applicants/ Project/

Count A lieants Pro"eet A licantsCY2012 2 ,80 2CY201 26 ,620 0TOTAL 8 1 423 300 0.003329Note: Data was onlyused to obtain the # of applicants per project.

Average Average

Year Project Primary Secondary Primary SecondaryCount Poles Poles Pole/ Pole/

Proiect ProjectRY2010 30 007 467 10.13 K"ORY2011 26 95 92 3.65 ~.54RY2012 '" 463 5'0 10.20 12.22RY2013 20 364 7S0 18.20 37.95TOTAL 91 922 1,401 10.13 15."0

Table below shows the Primary and Secondary pole count.

Pole Count RY2016PrimarYPole 3,181SecondarYPole 4,834

b) Primary Cable Installations for EMC

Forecasted count of EMCprimary wire was based on the estimatedcount of poles for National Housing Authority (NHA) housingprojects. Whereas, the estimated count of poles was derived on thecount of beneficiariesj customers under the applied and backlog NHAprojects from MERALCO's Business Centers. Actual count of units'in-city (within Metro Manila) and off-city (Bulacan, Cavite, Rizal andLaguna) under the proposed resettlement program for Metro Manilaand Environs as identified by NHA was used as reference. The unitsconsist of Metro Manila danger areas, danger areas in Metro Manilaenvirons, families affected by calamities, infrastructure projects,condemned buildings, court-ordered eviction and AFPjPNP housingro'ects. These are overnment ro'ects that are tar eted to have

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permanent power connection through EMC for RY2016 as mandatedby the National Government.

The residual projects should be implemented in RY 2016 sincethese include backlog NHA projects originally due for RP3 but arecurrently pending for energization. The backlog was caused by thedelayed payment in form of cash advance by the developer orcustomer.

The forecasted count of EMC primary wires was based from thenumber of EMC primary poles (with estimated span of 40 meterlength per pole).

Descrintion RY2016NHA EMC Customer Count 94,355Primary Wire Len.th for EMC 127,24°

c) Installation of Distribution transformers (EMC-NHA)

For EMC, customer growth was based on expected new serviceapplications lined up by the National Housing Authority (NHA) fortheir housing projects. Table below shows the number of beneficiariesfor RY2016.

Descri lionA liedNHABacklo NHAA lied + BackIo (Total)

RY201647,9726 8

The residual projects for EMC-NHA should be implemented for2016 since these are intended for the backlog NHA projects originallydue for RP3 but are currently pending for energization. The backlogwas caused by the delayed payment in form of cash advance by thedeveloper or customer.

d) EMCService Drops

Forecasted costs for EMC service drops were based on the list ofNational Housing Authority (NHA) housing projects. These aregovernment projects that are targeted to have permanent powerconnection through EMC for RY2016. Actual count of units' in-city(within Metro Manila) and off-city (Bulacan, Cavite, Rizal andLaguna) under the proposed resettlement program for Metro Manilaand Environs as identified by NHAwas used as reference.

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The residual projects for EMC-NHAshould be implemented in RY2016 since these were intended for the backlog NHA projectsoriginally due for RP3 but are currently pending for energization. Thetarget was set by NHA as mandated by the National Government.The backlog was caused by the delayed payment in form of cashadvance by the developer or customer.

Descrintion RY2016

AppliedNHA Count of Units 47,972Service Droo Length 3,~'i8,040

BacklogNHA Count of Units 46,383Service Droo Length ~,246,81O

Applied + Total Count of Units 94,355Backlog Total EMC Service Drop Length 6,604,850

e) National Housing Authority Projects

The National Housing Authority (NHA) is the government agencymandated to provide housing and relocation projects. This programinvolves relocation and resettlement of families residing in or alongdanger areas in Metro Manila particularly those along waterwayssuch as creeks, rivers, and esteros. It is undertaken mainly throughin-city multi-storey housing development utilizing government-owned land.

This project is in support to the permanent power connectionrequirements for National Housing Authority and LGUMass HousingProjects.

Section 2.6.1 of ERC Resolution NO.2, Series of 2010, or tlIeDistribution Services Open Access Rules (DSOAR), previouslyprovided that if a prospective customer is beyond thirty (30) metersfrom the distribution utilities' existing secondary facilities and is notincluded in the forecast CAPEX of the Distribution Utility, thecustomer or developer may advance the amounts necessary to coverthe expenditures on the connection assets beyond the standardconnection facilities. Subsequently, the said provision was amendedunder ERC Resolution NO.3, Series of 2012. Under the amendedprovision (now Section 2.6.2), a prospective customer shall beentitled to non-standard connection at the expense of tlIeDistribution Utility in cases of socialized housing projects, i.e.,relocation/resettlement projects, of concerned agencies of thenational and local governments undertaken by the governmentagency itself or through the developer. The site of tlIe project musthave been identified and certified for socialized housing by theNational Housing AutlIority (NHA) or the Housing and Land UseRegulatory Board (HLURB) in accordance witlI Republic Act No.7279, as amended, otherwise known as the Urban Development andHousin Act of 1992.

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In the 3,d Regulatory Period (3RP), and prior to the passage of thisamendment to the DSOAR, the NHA scheduled the connection ofseveral housing projects which would require the connection of about137.495 housing units. Several NHA housing projects were originallyscheduled for energization were delayed because the developerdeferred payment of the cash advance to cover the extension of linesand facilities to their projects. Hence, it is anticipated that about92,767 of these housing units will only be completed after the end ofthe 3RP. With the amendment to the DSOAR, the NationalGovernment has mandated the NHA to prioritize the execution ofthese housing units. To accommodate these projects, the backlog shallbe spread over RY2016and RY2017.

In addition to this backlog from the 3RP, there are new NHAprojects that have applied for connection with MERALCO inRegulatory Year 2016 that would require connection for an additional47,972 housing units. Considering half of the projected backlog in the3rd Regulatory Period and the applied NHA projects for RY2016, thetotal NHA projects for RY2016 is equivalent to 94,355, assummarized in the table below.

Description CountHalf of Projected NHA Backlog in 3RP 46,383Applied RY2016 NHA Projects 47,972Total NHA Project for RY2016 94,355

Cost for National Housing Authority Projects

MERALCO relocates electric meters to elevated metering centers(EMCs) in order to ensure compliance with safety standards andadequate protection of the consumers' interests while reducingsystem losses in accordance with the guidelines set under ERCResolution No. 11Series of 2009 - "Rules to Govern the Installationand Relocation of Residential Electric Meters By Distribution Utilitiesto Elevated Metering Centers or Individual Residential Electric Meterto Other Elevated Service".

Taking into consideration the foregoing, the forecasted CAPEXforthe National Housing Projects will be based on the costs of theclustered box-type meter set-up through Elevated Metering Centers(EMC). This is similar to the metering setup provided in otherexisting NHA projects. This metering type was selected inconsideration of the safety requirements and difficulty in readingissues previously encountered. Also, the clustered box type set-upprovides an external display device accessible to the customers forreading. This includes the cost for meters, frames, modems, andinstallation cost.

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It is worthy to note that Section 2.2.2 of ERC Resolution No. 10,Series of 2010, which amended ERC Resolution No. 11,Series of 2009(Rules to Govern the Installation and Relocation of ResidentialElectric Meters by Distribution Utilities to Elevated Metering Centersor Individual Residential Electric Meter to Other Elevated Service),provides that the DU shall submit to the ERC a letter request from aconcerned Government Agency or Local Government Unit (LGU) forthe installation of electric meters to EMC or OES in certain areas, topromote public safety or for other meritorious reasons prior to theelevation ofthe meters to EMC or OES. MERALCO submitted a letterendorsement from the National Housing Authority (NHA) for theinstallation of facilities under the PRES and EMC scheme.

Pro' ect to continue as ro osed v'Pro' ect to continue with revised ca ital ex enditurePro'ect to continue with technical amendmentsProject to be deferred which may be included in its nexta lication with additional 'ustification

Approval

Approved CAPEX Cost (PhP) RES-8A.1Approved CAPEX Cost (PhP) RES-9A.1Approved CAPEX Cost (PhP) RES-12A.1

-- ----- - ---

Approved CAPEX Cost (PhP) RES-26AApproved CAPEX Cost (PhP) RES-29A- ~-- --~ ---

Total Approved CAPEXCost (PhP)

331,623,15711,557,242

188,795,631339,774.456457,854,998

1,329,605,484

2. Installation of Connection and MeteringFacilities to Serve New Customers

RES-8A.1/RES-9A.1/RES-11A.1/ RES-12A.1/RES-25A RES-26A RES-2 A RES-2 ANetwork - Load Growth1Residual Ca ex Pro' ect


Project Title

Project Code

Pro' ect Description Duration

• Installations of new distribution facilitiesincluding primary and secondary poles,insulators, cross arms, and guying.

July 2015 toJune 2016

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• Installations primary and secondary cables.

• Installation of underground conductors anddevices (underground primary and secondaryline extensions) for new service applications.

• Installation of standard connection facilities.This also includes installation of primaryconductors, protective devices, anddisconnecting facilities for construction of pole-mounted primary metering andsubtransmission primary metering services andsecondary metering service (service drops).

• Purchase and installation of meters andconsumer instrument transformers in order toserve the projected additional customers inRee:ulatorvYear 2016 due to customer e:rowth.

II

Proposed CAPEXCost (PhP) RES-8A.1Proposed CAPEXCost (PhP) RES-9A.1Proposed CAPEXCost (PhP) RES-11A.1Proposed CAPEXCost (PhP) RES-12A.1

- "-- ----------Proposed CAPEXCost (PhP) RES-25AProposed CAPEXCost (PhP) RES-26AProposed CAPEXCost (PhP) RES-27AProposed CAPEXCost (PhP) RES-29A

Total Proposed CAPEX Cost (PhP)

Project Justification

585,585,60893.446,99794,845,553

1,151,119,0897,218,742

208,892,78763,088,788

393,800,1432,597,997,707

• To serve new customers. This will address the forecasted increaseof 2.91% in count of residential, commercial and industrialcustomers for RY 2016. This is necessary to ensure that thedistribution system is responsive to the forecasted load growthand/or customer growth while all resources and assets are utilizedefficiently and economically.

• To address the demand for 145,649 customers based fromcustomer growth. Thus, it is necessary to ensure having sufficientresources taking into consideration the maximum utilization ofexistin assets rior to addition of new facilities.

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Technical Analysis .

a) Installation of Poles, Towers and Fixtures

HISTORICAL KVA CAPACITY FORECASTED KVAPOLE CAPACITYCOUNT RY RY RY RY RY RY RY

2010 2011 2012 2013 201 201 2016Primary 6,803 7,404 8,615 8,145 8,126 8,085 7,711PoleSeconda

4,789 6,426 5,148 5,766 5,736Pole 5,292 5,472

TOTAL 11 2 12,696 15,041 13,041 13,892 13,821 13,183

The types of customer considered for this type of asset and projectare residential, commercial and industrial customers.

The increase in quantities for RY 2014 - 2016 were derived usingIhe increase in customer count every Regulatory Year (RY) basedfrom MERALCO's Aggregate Market Forecast. The table below showsthe actual and forecasted increase in customer count.

Re alo Year *RCI Increase DecreaseRY2009 ,625,088RY2010 , 46 1 , 8RY2011 4,92 ,441 "52,8 5RY2012 5,108823 181 82RY2013 5 2 8,143 "3 , 20RY 201 , 0,6 3 1 2, aRY2015 5,622,367 1 1,674RY2016 ,786,115 163,748

Customer count: R := Residential,C = Commercial, I := Industrial

The number of primary and secondary poles for each historical RYwas derived from the data in the completed work order jobs listed inthe Work Order Management System.

A multiplier for each historical RY (# of poles/customer) wasestablished by the number of primary and secondary poles percustomer divided by the increase in customer count.

The average number of pole/customer was derived from themultiplier or # of poles/customer for Regulatory Years 2010-2013.

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ACTUALCOUNTDescription

RY2010 RY2011RY RY20132012

Increase/Decrease 149,458 152,895 181,382 169,320in Customer CountCount of Primary 11,592 12,696 15,04' '3,293and Sec. noles# of poles/customer 0.0776 0.0830 0.0829 0.0785Average No. of 0.0805Poles/customer

Description FORECASTEDCOUNTRY2014 RY2015 RY2016

Increase/Decrease 172,550 171,674 163,748in Customer Count

# of poles 13,891.61 13,821.04 13,182.94

b) Primary Cable Installations

The types of customer considered for this type of asset and projectare residential, commercial and industrial customers who are likelyto be provided with overhead primary line extension. This was thebasis for deriving customer growth rates which were then used indetermining forecasted quantities and costs.

The increase in driver (customer growth) for each RYwas derivedfrom the number of customers for the applicable regulatory year lessthe number of customers in the previous year. Whereas, the numberof customers was based on MERALCO'sAggregate Market Forecast,this presents actual customer count for historical RY 2010-2013 andforecasted RY2014-2016.

Below is the summary of the count of residential, commercial andindustrial customers used in determining the increase in thequantities of the forecasted assets.

Description ACTUALRY2010 RY2011 RY2012 RY2013

Driver (Count ofResidential, 4,774,546 4,927,44

'5,108,823 5,278,143Commercial &

Industrial Customers)Increase in Driver 149,458 152,895 181,382 169,320(Customer Growth)

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Description FORECASTRY2014 RY 201'" RY2016

Driver(CountofResidential,Commercial & Industrial 5,450,693 5,622,367 5,786,115Customers)Increase in Driver 171,674 163,748(CustomerGrowth) 172,550

The number of primary wire length for each historical RY wasderived from the count of primary wire length utilized in completedwork order jobs listed in the Work Order Management System.

A multiplier for each historical RY (# of pnmary WIrelength/customer) was established by the number of primary wirelength utilized for the historical RY divided by the increase incustomer count.

The average number of primary wire length per customer wasderived from the multiplier or primary wire length per customer forRegulatory Years 2010-2013.

Descrintion RY2010 RY2011 RY2012 RY2013Increase in Customer 149,458 152,895 181,382 169,320Count

Primary Wire Length 407,525.66 367,973.63 531,626.18 577,092.41PrimaryWireLength( 2.73 2,41 2.93 3.41CustomerAverage Primary Wire 2.87LenlrthlCustomer

The forecasted Primary Wire Length for RY 2014 - RY 2016 wascomputed by multiplying the increase in residential, commercialand industrial customer count to the established multiplier.

Descriution RY20ld RY2015 RY2016Increase in Customer Count 172,55° 171,674 163,748PrimaryWireLength 494,903,48 492,389.24 462,536.1

c) Secondary Cable Installations

The types of customer considered for this type of asset and projectare residential, commercial and industrial customers who are likelyto be provided with overhead secondary line extension. This was thebasis for deriving customer growth rates that were then used indetermining forecasted quantities and costs.

The customer growth rates used were based on the actual andforecasted count of customers from 2009 to 2016 using MERALCO'sAggregate Market Forecast.

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Ij

The tables below were computed and derived in the same manneras discussed above.

Descrintion RY2010 RY2011 RY2012 RY201<tDriver (Count ofResidential,Commercial & 4,774.546 4,927.441 5,108,823 5,278,143IudustrialCustomers)Increase in Driver 149.458 '52,895 181,382 169,320(Customer Growth)

Descrintion RY2010 RY2011 RY2012 RY201:'lIncrease/Decrease in 149.458 '52,895 181,382 169,320Customer CountSecondary Wire 267,774.83 253,046.97 33',657.05 321,953.78LemrthSecondary Wire 1.79 1.66 1.83 1.90Lencth/CustomerAverage SecondaryWire Length( 1.79Customer

Descrintion RY2014 RY201~ RY2016Increase/Decrease in 172,550 17',674 163,748Customer CountSecondary Wire Length 309,582.62 308,009.85 288,749.35

d) Installation of Distribution transformers

The increase in quantities and costs of the forecast wasdetermined using the forecasted customer growth increase onMERALCO's Aggregate Market Forecast. The resulting loadincrease will serve as the basis for putting up a new substation orexpandingjuprating existing substations with additional or largerpower transformer units. The types of customer considered forthis type of asset and project are residential, commercial andindustrial customers.

1 2,

Increase Decrease"RCI62 ,088, 4,546

Re lato YearRY200RY2010RY2011RY2012RY2013RY201RY201RY2016 86,115 16 , 48

Customer count: R = Residential, C = Commercial, I = Industrial

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Historical kVA Canacitv Forecasted kVA CapacityRegulatory RY RY RY RY RY RY RY2016Year 2010 2011 2012 2013 2014 2015kVA 558,125 601,436 594,208 600,520 597,469 569,885Canacitv 514,947

e) Primary Metering Service (Primary conductors,protective devices, and disconnecting facilities)

The types of customer considered for this type of asset and projectare commercial and industrial customers who are likely to heprovided with primary-metered service, This was the basis forderiving customer growth rates that were then used in determiningforecasted quantities and costs,

The number of customers was based on MERALCO's AggregateMarket Forecast which presents actual customer count for historicalRY2010-2013 and forecasted RY2014-2016.

Below is the summary of the count of commercial and industrialcustomers used in determining the increase in the quantities of theforecasted assets.

Descrintion RY2010 RY2011 RY2012 RY2013Driver (Count ofCommercial & 426,502 436,236 446,394 455,532Industrial Customers)Increase in Driver 9,868 10,158 9,138(Customer Growth) 9,734

Descrintion RY2014 RY2015 RY2016Driver (Couut ofCommercial & 467,294 478,427 488,367Industrial Customers)Increase in Driver 11,762(Customer Growth) 11,133 9,940

The number of primary metered customer for each historical RYwas derived from the data in the completed work order jobs listed inthe Work Order Management System.

A multiplier for each historical RY (number of primary meter percustomer) was established by the count of primary-meteredcustomers utilized for the historical RY divided by the increase incustomer count.

The average number of primary meter per customer was derivedfrom the multiplier or primary meter per customer for RegulatoryYears 2010-2013.

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Descrintion RY2010 RY2011 RY2012 RY2013Increase in 9,868 10,158 9,138Customer Count 9,734

Count of Primary- 28 61 80 73Metered CustomerCount of Primary-Metered Customerj 0.0028 0.0063 0.0079 0.0080Increase inCustomer CountAverage Count ofPrimary-Metered

0.0062Customer jIncreasein Customer Count

The forecasted number of Primary Metered Customer for RY2016was computed by multiplying the increase in commercial andindustrial customer count to the established multiplier.

Description RY2014 RY2015 RY2016Increase in Customer Count 11,762 11,133 9,940Count of PM customer 73-42 69-49 62.05

f) Secondary Metering Service (Service Drops)

The types of customer considered for this type of asset and projectare residential, commercial, and industrial customers. The types ofcustomer did not include customers of streetlight services sincestreetlight service drop is not a Distribution Connection asset.

The customer growth rates were used in determining forecastedquantities and costs.

The customer growth rates used were based on the actual andforecasted count of customers from 2009 to 2016 using theMERALCO'sAggregate Market Forecast.

The number of service wire length for each historical RY wasderived from the count of service wire length utilized in completedwork order jobs listed in the Work Order Management System.

Amultiplier for each historical RY(service wire length /customer)was established by the number of service wire length utilized for thehistorical RYdivided by the increase in customer count.

The average number of service wire length per customer wasderived from the multiplier or service wire length per customer forRe ulato Years 2010-2013.

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Descrintion RY2010 RY2011 RY2012 RY2013Increase in 149,458 '52,895 181,382 169,320Customer CountService Wire Length 117,860.30 120,1°3.23 120,1°9.94 113,9

'9in meters

Service WireLength/Increase in 0.79 0.79 0.66 0.67Customer CountAverage ServiceWire Length/ 0.73Increase inCustomer Count

The forecasted Service Wire Length for RY2016 was computed bymultiplying the increase in commercial and industrial customercount to the established multiplier.

Descrintion RY2014 RY201!i RY2016

Increase in Customer Count '72,550,44 171,673-84 163,747.83Service Drop Length 125,492.07 124,854.54 119,090.13in meters

g) Customer Growth

In order to provide adequate and reliable metering services,MERALCO's customer growth forecast was used to determine thenumber of new customers that needs provision of metering facilities.Each customer is equivalent to one new metering installation.

For Regulatory Year 2016, there is a forecasted 2.91% customergrowth equivalent to 163,800 customers, as shown in the table below:

Year Customer Customer GrowthCount Growth (%)

I

RY2012RY201RY2014RY2015RY2016

16 20172,6221 1,722163,800

. 1%

.2 %3.15%2. 1%

The customer growth forecast above includes installations forNational Housing Authority projects and Socialized HousingProjects. Thus, the resulting customer growth for Regulatory Year2016, which will become the basis of CAPEXforecast for "Meters andInstallation Cost for New Customers," excluding NHA projects andSHP roOects, is e uivalent to 145,649 new customer connections.

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A rovalPro"ect to continue as ro osed ./Pro"ect to continue with revised ca ital ex enditurePro"ect to continue with technical amendmentsProject to be deferred which may be included in its nexta lication with additional "ustification

Approved CAPEX Cost (PhP) RES-8A.1Approved CAPEX Cost (PhP) RES-9A.1Approved CAPEX Cost (PhP) RES-11A.1-_. _._--_.

Approved CAPEX Cost (PhP) RES-12A.1Approved CAPEX Cost (PhP) RES-25A

_. -_._-----

Approved CAPEX Cost (PhP) RES-26AApproved CAPEX Cost (PhP) RES-27AApproved CAPEX Cost (PhP) RES-29A

Total Approved CAPEXCost (PhP)

585,585,60893.446,99794,845,553

1,151,119,0897,218,742

208,892,78763,088,788393,800,143

2,597,997,707

Project TitleProject Code


3. Distribution Line Reinforcement Pro' ectsRES-8A. 2/RES-9A.2/RES-11A. 2/RES-12A.2/RES-15A.2Network - Load Growth1Residual Ca ex Pro' ect


• Acquisition of new poles and poles fixtures forthe construction, reconductoring andreinsulation of new lines, to address existingand foreseen network problems resulting fromgrowing consumer demand for electricity.

• Acquisition of overhead conductors and devicesfor the construction, reconductoring andreinsulation of new lines, to address existingand foreseen network problems resulting fromgrowing consumer demand for electricity.

• Acquisition of underground conductors, orpower cables, and related devices for theconstruction, reconductoring and reinsulation ofnew lines, to address existin and foreseen


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network problems resulting from growmgconsumer demand for electricity.

• Upgrading of distribution transformers inconversion projects intended to address existingand foreseen network problems resulting fromgrowing consumer demand for electricity.

• Acquisition of Information TechnologyEquipment to provide communication link forautomation of line switches, in order to addressexisting and foreseen network problemsresulting from growing consumer demand forelectricity.

Proposed CAPEXCost (PhP) RES-8A.2__ - - - - 0- ~ •••• _._. __

Proposed CAPEXCost (PhP) RES-9A.2Proposed CAPEXCost (PhP) RES-11A.2

- --- ---~- -"-- - - ...Proposed CAPEXCost (PhP) RES-12A.2Proposed CAPEXCost (PhP) RES-1sA.2


Project Justification

314,424,011252,176,24717,561,178

139,827,27123,738,715

747,727,423

To address MERALCO's distribution feeders that failed the loadingand switchin flexibili criteria.

Technical Anal sis

A distribution feeder is considered to be already critically-loadedwhen its demand reaches 70% of conductor capacity along its mainline. At this point, the ability of a circuit to accommodate additionallarge loads is limited. If the critical loading is not resolvedbeforehand, demand growth may be curtailed in the area beingserved by the affected feeder, potentially hampering economicgrowth. Thus, each distribution circuit is assessed for potentialcritical loading by RY2016based on forecasted load growth.

Load growth also affects the switching flexibility of distributionfeeders even before they reach critical loading. Circuits aresectionalized through line switches and protective equipment toallow isolation of troubled sections or segments. Tying facilities areconstructed between feeders to allow transferring of untroubledsections between feeders during line outages or contingencies. Withthe uneven and random distribution of loads across lines, demand insome line segments may grow faster than others. There comes a pointwhen a sectionalization or a tying facility is no longer adequate fortransferring a line segment to other feeders during contingencies. Insuch cases, the affected feeder is considered to be lackin in

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switching flexibility. It is therefore necessary to periodically reviewthe sectionalization and tying facilities of each feeder to ensure thatits line segments can still be transferred to other circuits through N-1line and N-1power transformer simulations using forecasted loads.

Seventy-nine (79) distribution circuits failed the assessment usingloading and switching flexibility as criteria. Fifty-five (55)distribution-line residual projects were lined up to correct theseissues. The scope ofthe project includes one or more ofthe following,as needed depending on individual configuration and requirements:

1. Addition of circuits or circuit-phases carried by poles;2. Upgrading of poles due to higher strength and clearance

requirements and/or additional circuits or circuit-phases;3. Construction of new lines;4. Reconductoring oflines; and5. Installation of additional line switches.

If the circuits that failed are odd-voltage or Special VoltageTransformer (SVT)lines, these circuits are lined-up for conversion orupgrading to higher operating voltage. Odd-voltage feeders are linesoperating at or less than 13.8 kV and fed by 34.5 kV feeders, insteadof high voltage sub-transmission lines. SVT circuits are feedersegments that are fed by SVT's, special type of distributiontransformers that step down to medium voltage, instead of servicevoltage. Conversion of odd-voltage feeders and SVT circuits tostandard voltage require the following line works in addition to oneor more of the works listed above for reconductoring and flexibilityprojects:

• Re-insulation of lines to accommodate higher voltage; and• Replacement of distribution transformers.

The Conversion of Odd-Voltage Distribution Circuits is a continuingprogram of MERALCOto gradually convert the odd-voltage 4.8 kV,6.24 kV, and 13.8 kV circuits to the higher standard voltage of 20kV/34.5 kV or 13.8 kV. Circuit conversions are prioritized based onthe loading and switching flexibility criteria described above.

Table below lists the findings on feeders that failed the assetassessment criteria and the proposed distribution-line residualprojects lined up to address the respective issues.

B k/C' 't As t ProposedDistribution-Linean Ireu] sessmen . Residual ProjectLacked

1. Bacoor 424WX switchingflexibili

Construction of Bacoor 424WX - Imus424WK Tie Line

18

Lacked Flexibility Improvement of Balibago2. Balibago 41XV s\vitching, flexib iIi";; 41XV

Lacked Flexibility Improvement of Balintawak3. Balintawak 47E switching

flexibili";; 47E,

4. Baliwag 323YW Critically- Flexibility Improvement of Baliwag'loaded 021YWLacked Flexibility Improvement of Manggahan

5. Cainta 423XG switchingflexibi Ii";; 45ZM

Lacked Flexibility Improvement of Cainta6. Cainta 42XG switching

flexibii;; 42XG and Pasig 41ZK

7. Calumpit Lacked Flexibility Improvement of Calumpit325YQ

switchingflexibili";; 13.8 kV Circuits

Lacked Flexibility Improvement of Calumpit8. Calumpit 32YQ switching

flexibilitY 13.8 kV Circuits

Lacked Flexibility Improvement of Camann9. Camarin 433TC switching

flexibilih: 34.5 kV Circuits

1:10.Camp-.., , ,

LackedRetirement of Camp Aguinaldo 34.5 kV

I Aguinaldo switching- 6.24 kV Substation and Complete

, 14VH flexibility ConversIOn of Camp Aguinaldo 14VHto 20 kV 114.' kV

, Lacked11.Cubao 42VQ switching

Construction of Marikina 54VG - Cubao

flexibil;; 42VQ 34.5 kV Tie-Line." ... _.-

12. Dasmarifias Lacked.... - ._ ..

41DAswitching Flexibility Improvement of Dasmarifias

flexibilih: 43DA and 41DA

13. Dasmariiias Lacked Flexibility Improvement of Dasmariiias43DA

switchingflexibili";; 43DA and 41DA

.__ .Lacked Installation of Pad mounted

,

'4. FBGC4 413RJ switching Switchgears at FBGC4 Feeders 413RJ,

flex;bilih: and 4l"RJLacked Installation of Padmounted

'5. FBGC4 415RJ switching Switchgears at FBGC4 Feeders 413RJflexibiii";; and 41SRJ

!,6. FPIP :'3WWLacked

----- -

switchingFlexibility Improvement of FPIP UG

! flexibili";; Circuits

Lacked,

'7. FPIP 425WW switchingFlexibility Improvement of FPIP UG

flexibilih: Circuits- ,-

Lacked,

18. FPIP 426WW switching Flexibility Improvement of FPIP UG

flexibilitv Circuits--

Lacked,

'9. Gardner 55GG switchingFlexibility Improvement of Sunvalley -

flexibili";; 34.5kV Circuits

Lacked Flexibility Improvement of GMA 43XF20.GMA43XF svvitchingI flexibilih: and 45XF

19

Lacked Flexibility Improvement of GMA 43XF21. GMA45XF switchingflexibilitv and 45XF

Lacked Partial Conversion of Imus 34WK to 2022. Imus 34WK switchingflexibiIiN kV/34.5 kV Pbases 2 & 3

- -Lacked Flexibilty Improvement of Imus

23. Imus 423WK switchingflexibilitV 423WK

_. _ ..Lacked

..- - -- .Flexibility Improvement of Irous

24. Imus 424WK switchingflexibilitY 424WK

25. Kamagong Lacked Construction of New Feeder fromswitching48VK fle,;bilitV Kamagong Substation

26: K3muning Critically- Flexibility Improvement of Kamilning426VP loaded d26VP

Lacked Flexibility Improvement of Las Pifias27. Las Pinas 43XA switchingflexihilitV and Pamplona Circuits

I Lacked Complete Conversion of Makati 12G to11:28.Makati 12G switching 20 kV/34.5 kVI flexibilitY- - ._,.

Lacked Retirement of Makati 34.5 kV - 6.24 kV29. Makati 13G switching Substation and Coml~lete Conversion of

flexibilitV Makati l>G to 20 kV' >".<;kVI Lacked Complete Conversion of Makati 17G to

11:30.Makati 17G switching 20 kV/34.5 kVI flexibilitv

Lacked Complete Conversion of Makati 19G to31. Makati 19G switching

fle,;bilitV 20 kV/ 34.5 kV

32. Malabon 412YD Loading Capacity Optimization of 34.5 kVFeeders

Lacked33. Malabon 45YD switching Reconductoring of Malinta 48YB

flexibilitVLacked

34. Malabon 53YD sVvitching Reconductoring of Malabon Feedersflexibilih'Lacked

35. Malabon 59YD switching Reconcluctoring of Malabon FeedersflexibilitYLacked

36. Malolos 33YV switching Reconductoring of Malolos 33YVflexibilitV ...--

37. Mandaluyong Critically- Flexibility Improvement of~WD loaded Mandaluvon; ,,>VD

- Lacked38. Manggahan Flexibility Improvement of Manggahanswitching45ZM flexibili!y 45ZM

Lacked Fle,;bility Improvement of Marikina39. Marikina 53VG switching 53VG Phase 3 ,

flexibilitV- - - - Lacked. . -

40. Marikina 54VG switching Construction of Marikina 54VG - Cubao

I flexibiliN 42VQ 34.5 kV Tie-Line

20

41, Marilao Lacked Construction of Marilao Circuitswitching

432MRL flexibilih: 435MRL - 432MRL 34.5 kV Tie-Line

Lacked -142. Marilao Construction of Marilao Circuitswitcbing

435MRL flexibility 435MRL - 432MRL 34-5 kV Tie-Line

Lacked Construction of Masinag 4oWN-43. Masinag 40WN switching

flexibilitY Parang 414YL 34.5 kVTie-Line

44. Meycauayan Lacked Flexibility Improvement ofswitching42YM flexibilitv Meycauayan 42YM

45. Meycauayan Lacked Flexibility Improvement ofswitching52YM flexibilitY Meycauayan 52YM

Lacked- - - -

46. NAlA413VX switching Flexibility Improvement of NAlAIii flexibilih: 413VX

47- New Mauban Lacked Flexibility Improvement of Newswitching41WY flexibilitY Mauban 41WY Phase 2

48. New Rockwell Critically- Flexibility Improvement of" ...-

I 412VV loaded Mandaluyoni "VD -

49. New Rockwell Lacked Flexibility Improvement of Newswitching

433VV flexibilitY Rockwell 433VV & 436VV

50'-New Rockwell Critically- Flexibility Improvement of New. 4~6VV loaded - Rockwell' 4~~Vv & Ao6VV ... -

51, Novaliches Lackedswitching Reconductoring of Novaliches 44YJ

44YJ flexibilitY52. Pagbilao 31WD Critically- Complete Conversion of Pagbilao 31WD

rSVT) loaded (SvT) to 20 kVI ~4.<;kVLacked Flexibility Improvement of Las Piiias

53. Pamplona 41XD switchingflexibilih: and Pamplona Circuits

54. Pamplona.Critically- Flexibility Improvement"of Las Piiias

<;~XD loaded and Pamnlona Circuits ,-...Lacked Partial Conversion of Pandacan 17M to

55. Pandacan 17M switchingflexibilitY 20 kV/ 34.5 kV

- - -- Lacked56. Paraiiaque 21ZJ switchingPartial Conversion of Paranaque 21ZJ

Iii (SVT) flexibilitY (SVT) to 20 kV/ 34.5 kV

Lacked Construction of Masinag 40WN -57. Parang 414YL switching

flexibilitY Parang 414YL 34.5 kV Tie-Line

I- Lacked

-- -Flexibility Improvement of Cainta

58. Pasig 41ZK switching 42XG and Pasig 41ZK! flexibilitY-- ,

Lacked Construction of Rosario 42RS - Bacoor59. Rosario 42RS switching

flexibilih: 424WX Tie Line, Lacked Partial Conversion of Sampaloc 12K to60. Sampaloc 12K switching

flexibilitY 20 kV/34.5 kV

21

Lacked Partial Conversion of Sampaloc 18K to61. Sampaloc 18K switchingf1exibilitv 20 kV/ 34.5 kV

Lacked -62. San Miguel i'lexibility Improvement of San Miguelswitching

34YN flexibilitY 34YN

63. San Pablo 12WJ Critically- Complete Conversion of San Pabloloaded 12WJ (svr) to 20 kV/ ~4.~ kV

64. San Pablo Loading Capacity Optimization of 34.5 kV46WJ Feeders ....._.

65. Sapang Palay Lacked Partial Conversion of Sapang Palayswitching33YO flexibilitY 33YO to 20 kV/34.5 kV Phase 1

66. Sta. Maria Critically- Construction of Marilao Circuit42YU loaded 4~~MRL - 4~2MRL ~".< kV Tie-Line

67. Sta. Maria Critically- Construction of New Feeder from4~YU loaded Marilao Substation- " .. .. .

Lacked Complete Conversion of Sta. Mesa 221'68. Sta. Mesa 22F switchingflexibilitY to 20 kV/ 34.5 kV

..- . - ... . ... -. -- ...69. Sunvalley Critically- Flexibility Improvement of Sunvalley

424WG loaded ,,,.<kV Circuits70. Sunvalley Critically- Fle,dbility Improvement of Sunvalley

42WG loaded ~4.~kV CircuitsLacked Construction of Malolos - Tabang 13.871. Tabang 32YH switchingflexibilitY kV Tie-Lines

Lacked_. - - ...

Construction of Malolos - Tabang 13.872. Tabang 33YH switchingf1exibilitv kV Tie-Lines

Lacked Construction of Malolos - Tabang 13.873. Tabang 34YH switchingflexibilitY kV Tie-Lines

Lacked Flexibility Improvement of Tabang74. Tabang 35YH switching

f1exibilitv 35YH

Lacked Flexibility Improvement of Cainta75. Taguig 51ZL switching

flexibility 42XG and Pasig 41ZK

76. Tayabas 512Y Loading Capacity Optimization of 34.5 kVFeeders

Lacked Complete Conversion of Tegen 12B to77. Tegen 12B switchingflexibilitY 20 kV - 34.5 kV

Lacked Complete Conversion ofTegen 14B to78. Tegen 14B switchingf1exibilitv 20 kV/34.5 kV

Lacked Complete Conversion ofTegen 17B to79. Tegen 17B switching

flexibilitY 20 kV/ 34.5 kV

Overview of Conversion Program•

The Conversion of Odd-Voltage Distribution Circuits is a continuingprogram of MERALCO to gradually convert the odd-voltage 4.8 kV,6.24 kV, and 1~.8 kV circuits to the hi"her standard volta"e of

22

20kV/34.5 kV or 13.8 kV. The conversion program will implementthe 20 kV/34.5 kV and 13.8 kV as the ultimate primary line voltage ofMERALCO since these voltages are the most economical to use in theMERALCO franchise area. Specific areas were already identified as20/34.5 kV voltage zones and 13.8 kV voltage zones respectively.

Circuit conversions are prioritized based on loading and switchingflexibility criteria. Circuit conversions solve the problems inherent inodd-voltage circuits such as: a) critical loading; b) inadequate or notying facility (isolated circuit); and c) unreliability of equipment dueto aging or obsolescence. The conversion program would increase thecapacity, efficiency, reliability and flexibility of circuits.

The odd-voltage facilities are very old. By RY 2016, Camp AguinaldoBank NO.1 will be 52 years old; Sampaloc Bank Nos. 1 and 2 will bothbe 44 years old; Tanay Bank NO.1 will be 27 years old; and PandacanBank Nos. 1 and 2 will both be 26 years old.

Efficiency will be improved with the reduction of technical losses dueto lower currents and the removal of redundant voltagetransformations. Furthermore, the converted feeders will be operatedat the same voltage as the majority of other circuits, hence, wouldtend to have more alternate feeders for transferring loads duringcontingencies. In similar manner, the problem of isolation amongseveral odd-voltage feeders will be solved.

Using the asset assessment criteria, 9 odd-voltage circuits forconversion were identified by MERALCO for RY2016. At the end ofRY2016, the 103 odd-voltage circuits would be reduced to 94including those projected for completion in RY2015. Likewise, the 26odd-voltage substations would be reduced to 24 due to the retirementof two (2) odd-voltage substations. These remaining odd-voltagefacilities would be converted in the succeeding regulatory periods.

Cost of conversion, flexibility-improvement and unloading projectsare unique for each type of project and dependent on the followingdistribution line parameters: voltage level, length of the line, wiresize, underground or overhead, etc. Historically, the total distributionline residual project cost varies each regulatory year depending onthe said parameters and number of projects proposed.

In project cost estimating, MERALCO use different standard projectsthat serve as standard labor and material costs for each type ofdistribution line residual project. MERALCO compute for the overallproject cost by multiplying the cost of each standard project by theline parameter and input (Le. length of the line, wire size, number ofdistribution transformers and line switches, etc.) specific for eachdistribution line residual project proposal.

23

I

For the Underground Conductors and Devices asset category, thetotal cost is PhP17.56 Million in five (5) distribution-line residualprojects, PhP16.67 Million of which is allocated for flexibilityimprovement and unloading projects while the remaining PhPo.89Million is allocated for the conversion projects.

For the Distribution Transformers asset category, the total cost isPhP139.83 Million in 17conversion projects.

For the Information Technology Equipment asset category, the totalcost is PhP23.74 Million in 36 distribution-line residual projects,PhP22.74 Million of which is allocated for flexibility improvementand unloading projects while the remaining PhP1.00 Million isallocated for the conversion projects.

For the Poles, Towers, and Fixtures asset category, the total cost isPhP314-42 Million, PhP222.o6 Million of which is allocated forflexibility improvement and unloading projects while the remainingPhP92.36 Million is allocated for the conversion projects.

For the Overhead Conductors and Devices asset category, the totalcost is PhP252.18 Million, PhP218.25 Million of which is allocated forflexibility improvement and unloading projects while the remainingPhP33.93 Million is allocated for the conversion projects.

A rovalPro' ect to continue as ro osed ./Pro' ect to continue with revised ca ital ex enditurePro' ect to continue with technical amendmentsProject to be deferred which may be included in its nexta lication with additional' ustification

-

Approved CAPEXCost (PhP) RES-8A.2Approved CAPEXCost (PhP) RES-9A.2Approved CAPEXCost (PhP) RES-11A.2Approved CAPEXCost (PhP) RES-12A.2Approved CAPEXCost (PhP) RES-15A.2

-~-- -- --- -_.~-Total Approved CAPEXCost (PhP)

314,424,011252,176,24717,561,178

139,827,27123,738,715

747,727,423

24

Pro'ect Descri tion Duration

Replacement of old distribution transformers.

Proposed CAPEXCost (PhP)

Pro'ect Justification


The installation ofthese projects to serve new customers will addressthe forecasted increase of 2.91% in customer count for RY2016. Thisload growth would require the installation of new transformers orreplacement of existing transformers with higher ratingscommensurate to the requirements of the customers and that wouldcomply with voltage regulation requirement of the Energy RegulatoryCommission (ERe).

Technical AnalysisMERALCO has already more than 162,000 DistributionTransformers within its franchise. However, the transformers in theurban and other highly populated areas are generally loaded to itsmaximum capacity. More properties outside the urban areas andpopulated centers are being developed. These developmentsultimately would need electric service from MERALCO.To be able toserve these customers, MERALCO needs to invest in new lineextensions that would require the installation of new poles anddistribution transformers.

The residual projects will be implemented by ten Sectors and thesewill address the forecasted increase of 2.91% in customer count forRY2016. The forecast includes the proposal to replace the overloadeddistribution transformers over RY2016 for asset renewal. This shallallow transformer performance reliable within the limits prescribedby the regulator enabling distribution assets not posing any safetyhazards to the community.

The implementation of the residual projects is also a measure tocorrect the Overloaded Distribution transformers (OLDT) due toincrease in demand of connected customers. Corrections ofloading ofdistribution transformer assets in optimum load limits will not onlyprevent early transformer failures but will also make transformerassets operate efficiently. Thus, transformer failures caused byloading of transformers beyond its allowable overload capacity andduration should be immediately replaced with transformers withhi her ca aci ratin s. This maintenance rocedure aims to address

25

I,

load growth and to ensure continuity of electric service, optimizeasset utilization, contribute to system loss reduction, promote safetyof the customers and public, in general, and comply with the requiredperformance level standards.

Overloading of distribution transformers is a condition whereindistribution transformers are operated in excess of its full load rating.It results to overheating of the transformer unit due to increase oftransformer oil temperature that, in sustained and high extent, leadsto much rapid deterioration of the insulation and premature failureof the transformer coils. In addition, excessive overloading ofdistribution transformers significantly increases transformer windinglosses that would add up to electric system losses.

Installation of Overloaded Distribution transformers

Replacement of overloaded distribution transformers is driven by thenumber of inappropriately loaded distribution transformersidentified by the ten Sectors through field inspection or through theinformation system.

Table below shows the breakdown of the number of distributiontransformers that were replaced in 2009 and 2012 as well as theprojected count of transformers that are forecasted to be replaced in2013 to 2016. The forecasted quantity is determined by projection ofhistorical quantity using linear regression, which gives a linear orstraight line that best fits the given data using the "least squares"method of number of DTs being corrected over time due tooverloading condition.

kVA Actual Count ForecastRatiDl: 2009 2010 2011 2012 201<:l 2014 2015 2016

10 0 0 1 0 1 1 1 1

15 0 1 1 1 2 • • "2' 3 20 .6 '2 61 76 Ql 107.,.. • 2 18 • 17 22 26 "'0 4 '4 145 220 28. "4 425 A0675 " 28 128 ,6. 216 271 325 070100 2 2 Q '4 ,8 2' 27 02167 0 0 0 0 6 8 Q n333 0 0 2 6 • 7 8 Q

Total 16 107 340 448 610 763 016 1060

Table below shows the transformers to be used to determine the unitcost for the correction of overloaded distribution transformers. Thereplacement cost of different rating of DTs is determined andmultiplied to the historical usage of such rating. The total aggregatedcost is then divided to the number of distribution transformers todetermine the unit cost.

26

I-- -" .- -. -

DESCRIPTIONREPL\CEMENT QUANl11Y AGGREGATE

COST COST-- - --". - -

TRANSFORMER UNIT AND ACCESSORlES2SKVA TRANSFORMER, 34.Sj20KV- 88,688.6 18,713,2902~~~i~20VI-PHASE SECONDARY

.,.37~~ATRANSFORMER, 34.S/20KV. 99.316.4 494 49,062,271;:'0 120V, I-PHASE SECONDARY50~A TRANSFORMER, 34.S/2OKV- 124.700.8 565 7°,455,941;;"0 120V i-PHASE SECONDARY75~ATRANSFORMER, 34.sf20KV- '169,573.2 566 95,978,4092~O120V I-PHASE SECONDARYlOoKVA TRANSFORMER, 34.S/20KV- 180,227.3 6'7 111,200,2322A~-/~20V I-PHASE SECONDARY16~~ATRANSFORMER, 34.S/20KV- 264,317.3 347 91,718,0882"0 120V I-PHASE SECONDARY25~~ATRANSFORMER, 34.S/2oKY- 359,236.8 58 20.835.7372..10 120V I-PHASE SECONDARY1-333KVA.20KY-4.8KV, INSTALLATION,IP 507,510.5 87 44,153,414

SUB.TOTAL • n" 021;17.'-188

OTHERACCESSORlES20KV CURRRENT LIMITING FUSE 2,008 2,453 4,926,532INSTALLATION FOR 2"-100KVA20KV CURRRENT LIMITING FUSE 1,181,843INSTALlATION FOR 16:;:':I;':IKvA 2,402 49'

SUB.TOTAI. 2.945 6,108,375Notes: Surge Arresters and FCO are included TOTAL 2,945 508,225.762in the Constructive Units

UNIT eO51'S 172,572.42

The forecasted cost of distribution transformers were derived byusing the projected count of distribution transformers to be replacedas shown in the table below:

Descriution RY2016Count 1,069Unit Cost '72,572-42Total Costs 184-479,912.00

Ai> royal

27

MeteringHousing

Pro' ect Descri tion Duration

• Installations of Elevated Metering Center (EMC)accessories such as cable tie, metering frameand ICP modular with 5 kWh meter base forSocialized Housing Projects.

• Installations of poles, towers, fixtures andprimary cable for Socialized Housing Projects.

• Installation of pole mounted distributiontransformers for Socialized Housing Projects.

• Installation of service drops for SocializedHousing Projects.

• Purchase and installation of meters andconsumer instrument transformers forSocialized Housin Pro'ects.

Proposed CAPEXCost (PhP) RES-8A1-----

Proposed CAPEXCost (PhP) RES-9A1Proposed CAPEXCost (PhP) RES-12A1- -----~---~-- --Proposed CAPEXCost (PhP) RES-26AProposed CAPEXCost (PhP) RES-29A


Pro' ect Justification


23,146,9321,540,44512,269,97119,496,36530,407,58486,861,297

• To serve customers under the Socialized Housing Projects,MERALCO needs to invest in new line extensions that wouldrequire the installation of new poles and distributiontransformers.

• To address the 9,581 power connection requirements forSocialized Housing Projects. Thus, it is necessary to ensure havingsufficient resources taking into consideration the maximumutilization of existin assets rior to addition of new facilities.

28

Technical Analysis

a) Installation Poles, Towers and Fixtures (SocializedHousing Projects)

As mandated through the provisions of Republic Act No. 9136(Electric Power Industry Reform Act) under the DistributionServices and Open Access Rules (DSOAR), cost to install line andfacilities for Socialized Housing Projects as identified by theNational Housing Authority (NHA) shall be shouldered by the DU,which includes primary and secondary poles. Primary andsecondary pole installation was categorized into ordinaryapplication and EMCapplication.

The forecasted count of projects was based on the historical datacovering Socialized Housing Projects applied from 2012 to 2013.These projects were from the applications filed by the HLURBcertified developers. The forecasted project and customer count forRY2016 was derived from the pending projects or projects not yetenergized from the list of applications in 2012 and 2013. Shownbelow is the pending/forecasted count of projects and customercount for RY2016.

Table below shows the Project and Customer count.

RY2016OrdinaEMC

Pro. cct Count2120

Customer Count4.90,64

Table below shows the Primary and Secondary pole count.

RY2016 Primarv Pole Secondarv PoleOrdinary 91 144EMC 87 156

b) Primary & Secondary Cable Installations for SocializedHousing

Primary cable installation includes ordinary application and EMC.On the other hand, secondary cable installation pertains toordinary application only. There is no secondary wire installationfor EMC since the load side wire is directly connected from thekilowatt-hour meter to the customer's house.

The forecasted count of residual projects and customer count forRY2016 were derived from the pending housing projects whichwere not yet energized from the list of applications in 2012 and2013. Installation of the facilities for these housing projects wouldbe im lemented b the ten Sectors. Shown below is the

29

pending/forecasted count of residual projects and customer countfor RY2016.

RY2016 Project Count Customer CountOrdinary 21 4,907EMC 20 4,674

RY2016 Primary Wire Secondary Wire(meters) (meters)

Ordinary ~,640 3,480EMC 5,040 .

c) Installation of distribution transformers (SocializedHousing Projects)

..As mandated through the prOVlSlOnsof Republic Act No. 9136(Electric Power Industry Reform Act) under the DSOAR, cost toinstall line and facilities for Socialized Housing Projects asidentified by the National Housing Authority (NHA) shall beshouldered by the DU, which includes Distribution Transformer.2Distribution transformer installation were categorized intoordinary application and EMC application.

The forecasted count of projects was based on the historical datacovering Socialized Housing Projects applied from 2012 to 2013.These projects were from the applications filed by the HLURBcertified developers. The forecasted project and customer count forRY 2016 was derived from the pending projects or projects not yetenergized from the list of applications m 2012 and 2013.Installation of the facilities for these projects would beimplemented by the ten Sectors. Shown below IS thepending/forecasted count of projects and customer count for RY2016.

RY2016 Project Count Customer CountOrdinary 21 4,907EMC 20 4,674

The forecasted kVA count for ordinary application were based onthe computed kVA count per project using the list of pendingprojects applied in 2012 and 2013 and for EMC application, usingthe assumed values of 1-50KVA is to 60 customers. Shown below isthe kVA count for ordinary application and EMC application forRY2016.

RY2016 KVACountOrdinary 2,100EMC 3,9°0

30

d) Socialized Housing Projects

"Socialized Housing Project" refers to residential subdivisionprojects, and multi-level and medium rise housing projects andcondominium projects, sold at or below the prevailing price ceilingfor socialized housing and which comply with the standards underBatas Pambansa Bilang 220, undertaken by the government or theprivate sector for underprivileged and homeless citizens.

Under the Amended DSOARSection 2.6.2,

"...If the cost of the extension lines or installation of additionalfacilities was funded by the developer for any project other thansocialized housing, the said cost shall be subject to refund inaccordance with the first paragraph, provided that saiddeveloper shall submit to the DU thefollowing:"

"...For socialized housing projects, the developers must submit tothe DU a certification issued by the Housing and Land UseRegulatory Board that the site of said project has been identifiedfor socialized housing in accordance with Republic Act 7279,otherwise known as Urban Development and Housing Act of

"1992...

Based on the foregoing, the list of pending Socialized HousingProjects submitted the Housing and Land Use Regulatory Board(HLURB) office from the years 2012 - 2013 and recommended toMERALCO for energization in RY 2016 must consider theadditional meters and metering accessories necessary for powerconnection. The summary of pending projects and the count ofcustomers involved is shown in the table below. This is equivalentto 9,581 SHP customers for power connection.

RY2016 Proiect Count Customer CountOrdinary 21 4,907

EMC 20 4.674

ApprovalPro. ect to continue as ro osed v'"

Pro.ect to continue with revised ca ital ex enditurePro.ect to continue with technical amendmentsProject to be deferred which may be included in its nexta lication with additional' ustification

31

Approved CAPEX Cost (PhP) RES-8ibApproved CAPEX Cost (PhP) RES-9Ah ,Approved CAPEX Cost'CPhP)RES:i2A,i--- _.--Approved CAPEX Cost (PhP) RES-26A

- ------ "--._----~. -

Approved CAPEX Cost (PhP) RES-29A"Total Approved CAPEXCost (PhP)

lication

23,146,9321,540,44512,269,97119,496,36530,407,58486,861,297

Pro. ect Descri tion '., DurationThis project is intended to cater customer initiatedflat rate streetlight applications from LocalGovernment Units (LGUs) and Horne Owners'Associations (HOAs). New streetlight installationswere deemed necessary for customers since theseensure road safety and security. Also, a well-lightedsurrounding encourages extension of economicactivities within the res ective areas.


To procure the required number of streetlights and accessories and torespond to customer initiated applications for streetlights.

To comply with mandated customer service performance level andvoltage regulation system requirement. Failure to provide such to theprospective customers shall result in unrealized sales and negativecustomer satisfaction.Technical Analysis . ; .~. .,'Adaption of light emitting diode (LED) technology for streetlightapplication has revealed the following benefits over the existing streetlighting standard, High Pressure Sodium (HPS):

• LEDs can provide significant energy savings; more than 50% ofexisting streetlight standard

• Offers reliable performance• Longer service life• High efficiency• Increasin customer reference

32

With these, MERALCOhad been receiving rapidly increasing numberof clamors of LGUs and HOAs regarding demands on using LEDstreetlights as specific replacement on their existing High PressureSodium (HPS) streetlights.

This trend and rapidly growing customer preference plays a big factorfor customer initiated applications for such new streetlight servicewhich tends to lean on LED technology. To accommodate these louddemands, provide lesser energy consumptions for the customers andaesthetically complement LED streetlight projects on majorthoroughfares by different LGUs, MERALCOprepares to adopt LEDstreet lighting technology in a gradual manner wherein details will beprovided in the following discussions.

Customer Growth Forecast

The current standard of streetlight type for MERALCO is the HighPressure Sodium (HPS). It comprises majority, 83.17% of theinstalled 212,854 streetlights in the whole franchise.

To properly forecast the asset count of the customer initiatedstreetlight load growth, four year moving average method was used toaccount for the fluctuating annual count of customer initiated newstreetlight application.

Then, a driver was added per regulatory year based on percentincrease of the forecasted Total Streetlight Energy Sales. Taking intoconsideration iliat different streetlight accounts have variablestreetlight counts in it based on customer's capability and preference,which would likely to variably increase and decrease, it is moreappropriate to use customers' growth in terms of Total StreetlightEnergy Sales than on streetlight count to capture the growfu behaviorof whole streetlight asset. Please refer to ilie table below.

The allocation will be used to meet the forecasted increase III

streetlight application. This is to ensure that the company isresponsive to the anticipated volume of streetlight applications toensure this service, public safety as well as to comply wiili theexisting customer service performance level standards reauired.

Streetlight % Increase in New InstallationRegulatory of Streetlights

Year Energy Sales Streetlight per RegulatoryinGWh Energy Sales YearRY2011 '43.'2 1.14% 7,9'2RY2012 '33.07 -7.02% 7,2Q8RY2013 129.99 -2.31% 5,620RY2014 128.99 -0.77% ",934RY2015 '30.92 1.50% 6,763RY2016 133-40 1.89% 6,419

33

Note:• All values from RY2011 to RY2013 are all actual values .• Drop on Streetlight Energy Sales/rom RY2012 to RY2014 resulted from theprorating of kWh energy consumption of 125W Mercury Vapor and 70WHPS flat rate streetlight. The 12SW Mercury Vapor streetlight and 70WHigh Pressure Sodium (HPS) streetlight are prorated since the output theygive-off in terms of photometric performance are almost the same. ERChad approved the prorating of these fiat' rate streetlight bill based on thecurrent count of available 125 Mercury and 70W HPS streetlights.

• This results to decrease of the above-ment.ioned total streetlights energysales from 2012-2014, but the actual/physical count of streetlights servedas flat rate was independent and remained unaffected since this count ofnew installation is initiated by customer application.

Asset Assessment

The following information is provided to justify the proposed newstreetlight technology for RY2016 for Streetlight - Load Growthcapital expenditure.

a) Light Emitting Diode (LED) Street Lighting Technology

MERALCO as an electric distribution utility is mandated to supplyelectricity to its customers in a least-cost and effective manner.

With the use of LED street lighting technology, savings on streetlightenergy consumption, lower streetlight bills for customers, increasingcustomer requests, minimized outages due to long expected servicelife and continuity of LED installations on major thoroughfares fromend points of government LEDprojects can be addressed. This is alsoin addition to MERALCO's drive for technology development and toprovide an inviting atmosphere of business opportunities in a smartgrid powered environment.

To rationalize the gradual adoption of LED street lighting, count ofLED streetlights for installation and cost per wattage wasbenchmarked based on the report of Navigant for the Solid-StateLighting Program of the Office of Energy Efficiency and RenewableEnergy of the U.S. Department of Energy. However, the projectedcounts and costs for RY2017 to 2019 were only provided to show saidgradual adoption and to justify the application of residual projects forRY2016.The percent increase in count (see table below) and thepercent decrease in cost (see table below) were used as factors toforecast LED streetlight installation roll-out. The average unit costsof LED streetlights per wattage from suppliers were projected for2016.

34

.__ ... MERALCOProjected.US LED Streetlight Adoption" LED Streetlight

AdontionYear Count, in Percent ]ncrease Year Count, eaMillions in Count2010 0.2 - 2016 10002011 0.6 qoo% 2017 q.OOO2012 1 167% 2018 S.ooo201~ l.A IAO% 2010 7.000

I-

US LED Streetlight Cosl" MERALCOProjectedLED Sireetlight Cosl

Percent 70WHPS 150W 250WYear

US LED Decrease Year equivalen HPS HPSCosI,$ equivalen equivale

in Cost I I nl2000 4~2 - 2016 1<;000 22 000 260002010 q60 17% 2017 12.S00 18.QQq 216672011 '00 17% 2018 10.417 IS.278 180<;62012 24<; 18% 20'" 8.<;07 12.477 14.74<;

Benchmarking on US LED Streetlight Adoption was done to come upon a more realistic (actual world scenario) approach since initialcosts for new technologies like LED streetlights are high at thestarting years and erodes as competition on market with othermanufacturers and other factors arises. As a new technology, it is bestto apply gradual installation of LED streetlight while takingadvantage of the expected price erosion and harvesting the benefitsas early as RY2016 in terms of kWh energy savings which will bedirectly felt by the paying customers.

b) LED Streetlight Installation Plan

The gradual LED streetlight installation will follow the projectedcounts per regulatory year based on the US LED Streetlight adoption.Such gradual adoption is to take advantage of the unit price erosionof the LED streetlights similar to the price observed by US Utilities.

Majority of the LED installations In the first regulatory year(RY2016) will focus complimenting the LED installations on majorthoroughfares by government agencies and local government units(such as LED streetlight installations at Roxas boulevard and DOELED Retrofitting Project implemented by Road Board and MMDAalong different major thoroughfares; EDSA-Quezon avenue tunnel,Ortigas flyover and portions of EDSA to name a few) which are LEDequivalent of 250W HPS streetlights. This program is intended toinstall a common type of streetlight illumination along the wholestretch the critical maior thoroughfares provide constant visual

35

j

streetlight output color for a better driving experience and cater aninviting business opportunity atmosphere within the area.

The value for unit cost of new streetlight installation of High PressureSodium (HPS) decreased to PhP3,6oS from the last regulatoryperiod. The value of depreciated material costs outweighs theincreased salary adjustments for contracted services, hence, leavingthe unit cost in a reduced value.

The value for installation of LED streetlights tends to decrease peryear as an effect on new technologies.

The asset count for HPS was forecasted based on a four year movingaverage of customer initiated new streetlight application and a driverwas added per regulatory year bascd on percent increase of theforecasted total streetlight energy sales per annum. This factor wasincorporated per half as a factor to capture the overall movement ofcustomer initiated streetlight applications.

The acceptable asset count for LED installation was identifiedthrough complimenting specific LED installations of governmentagencies in critical major thoroughfares; the driver applied wasbenchmarked based on the percent increase in count of USStreetlight LED adoption. The unit cost of LED streetlights wascomputed as the summation of all thc allocated streetlight materialsper wattae:ewith labor cost divided bv the forecast count.

A rovalPro' ect to continue as ro osed .{Pro' ect to continue with revised ca ital ex enditurePro' ect to continue with technical amendmentsProject to be deferred which may be included in its nexta lication with additional justification

Project Title

Project Code

Project TypeProject Rank ..Project Category

7. Installation of Connection Facilities to ServeE-Vehicle Char in Stations

RES-SA.l/RES-gA.l/RES-12A.l/RES-26A RES-2gANetwork - Load Growth1Residual Ca ex Pro' ect

36

Pro' ect Descri tion : DurationThe project involves the construction of primarypoles and attachments for charging stations (PowerStations).

July 2015 toDecember 2015

Proposed CAPEK Cost (PhP) RES-8A.1Proposed CAPEK Cost (PhPfRES~9A.i-----Proposed CAPEK Cost (PhP) RES-1~A.1Proposed CAPEK Cost (PhP) RES-26A

- -- --,--,. , ~~------Total Proposed CAPEXCo!!t(PhP)

Pro' ect Justification .

4,853,3151,647,899

22,275,2951,764,483

3°,54°,992

To usher in the entry of private charging stations and electricvehicles. This project will promote a cleaner and healthierenvironment.

Technical Analysis :.../. ,

There are six (6) proponents for the forecast of charging stationsthat shall be commissioned for regulatory year 2016 namely: a.) ADB-DOE, b.) 1UTAK, c.) KEA MOTORS, d.) GUEVENTjEV Wealth, e.)GMSjPhil ETRO, f.) Global Electric Transport (GET). The mentionedproponents provided MERALCO with their projected deployment oftheir charging stations for RY2016.

• For ADB-DOE, the deployment of their E-Trike Project shallbegin within MERALCO's Business Centers (Marikina, Angono,Espana, Malate, Tutuban, Cainta, Commonwealth, QCRoosevelt, Novaliches, Valenzuela and Malabon) and Sectors(Pasig and Manila) and LGU-defined locations.

• As part of their Jeepney Upgrade and Modernization program,for 2016, 1UTAKshall deploy their charging stations in jeepneyassociation terminals (Eastern Survivor Coop;Padilla Cubao.,FAJODA;Antipolo-Cubao, JAODA; Antipolo JRU, LACODA;Lagro-Cubao, TPpJODA;Taguig-Pasig, PAFCDAI;Parang-Stop&Shop and BASICANO;BagongSilang - Philcoa)

• For Global Electric Transport (GET), their charging stationsshall be deployed in SM locations (SM North, SM Megamall,SM San Lazaro and SM Manila) that shall cater the rollout ofCOMET.

• For small E-Trike suppliers (GueventjEV Wealth, GMSjPhilETRO and KEA Motors), their charging stations shall bedeployed within their business area.

37

Table below shows the Forecasted Count of Charging Stations perProponent.

Proponent RY2016ADB-DOE 25lUTAK 13KEAMOTORS 1GUEVALENT lEV WEALTH 1GMSjPHIL ETRO 1GET 44GRAND TOTAL 85

a) Poles, Towers and Fixtures (Charging Station)

For the installation of Poles, the size of the primary pole shall be13.5 meter, concrete-type. The installation of primary pole includesvarious attachments such as asset identification tags (Pole Tag Nos.,Phase Tag Markers and Transformer Location Number), Insulatorsand Protective Device (Current Limiting Fuse).

The calculated estimated unit cost for charging station Poles,Towers and Fixtures were used to determine the forecastedinstallation of primary pole for new loads for RY2016. The unit costsare determined by the kW demand or type of distribution transformerto be used per charging station.

b) Overhead Conductors (Charging Station)

The forecasted costs for SCF for Overhead Secondary Meteringwere based from estimated installation cost of the SCF for OverheadSecondary Metering acquired.

Historical figures were not derived for Charging Station servicedrops since actual count of charging bays per charging station andcharging bay's power requirement as provided by the six (6)proponents for regulatory year 2016 was used as reference todetermine the forecasted quantities and unit costs.

Installation cost was determined by identifying the conductor sizeand length of service conductor. Conductor size was based on thesecondary lead conductor of the transformer that will be utilized. Onthe other hand, the service drop length used was ten (10) meters.Table below shows the transformer and secondary conductor usedgiven the kW demand per charging station.

The forecasted count and costs for the installation of service dropto serve new applications of charging stations was derived from theforecasted wire length and size per charging station (terminal)multi lied b the estimated installation cost determines.

38

c) Installation of Distribution Transformers (ChargingStation)

The unit costs for each transformer were derived by determiningthe kW demand and size of the distribution transformer to be usedfor a charging station, the total kW demand of the charging station isshown below. In order to provide fast charging characteristic, allDistribution Transformer used were Three-Phase (For a ChargingStation that shall be supplied with two distribution transformers,the secondary connection is Open-Delta, while others with threedistribution transformers, the secondary connection is Wye.)

Historical figures were not derived for charging station, since it is anew technology to be comprised in the 4RP.

d) Primary Cable Installations for Charging Stations

The quantities and costs for primary cable installations forcharging stations were based from the actual count of chargingstations that are scheduled to be commissioned for RY 2016 as listedby the proponents.

The list below shows the projected deployment of the chargingstations of the six (6) proponents for RY2016 namely: a) ADB-DOE,b) 1UTAK,c) KEA, d) GUEVENT I EVWealth, e) GMS I Phil ETRO,f) Global Electric Transport (GET).

A roval , t, .~, ~~!;Ii )Pro. ect to continue as ro osed ./Pro. ect to continue with revised ca ital ex enditurePro.ect to continue with technical amendmentsProject to be deferred which may be included in its nexta lication with additional. ustification

Approved CAPEXCost (PhP) RES-8A,.1Approved CAPEXCost (php) RES-9A.lApproved CAPEXCost (PhP)'RESil~hi, '". -. ;',",,' ,

Approved CAPEXCost(i'hpYlllis::26A ------, .:.",,<::, .';;'.,'

Total Approved CAPEX'(;o~t(PhP)

4,853,3151,647,89922,27 ,2 51,764,483

30,540,992

39

Project Title

Project Code


8. Installation of connection and meteringfacilities to interconnect embeddedenerators

RES-lA/RES-4A/RES-5A/RES-6A.2/RES-8A.1 RES-26A RES-29ANetwork - Load Growth1Residual Ca ex Pro' ect


The residual project involves the installation ofnecessary facilities to integrate renewable energy(RE) generating facilities into the MERALCOsystem. Pursuant to Republic Act No. 9513(Renewable Energy Act of 2008) and itsImplementing Rules and Regulations (IRR), "allstakeholders in the electric power industry shallcontribute to the growth of the renewable energyindustry ofthe country."

The integration of SOLAR RE generatingfacilities to MERALCO's distribution system shallinclude substation works such as Installation ofelectro-mechanical physical and controls,telecommunication system, SCADA equipment,distribution facilities and connection facilities forprimary metering facilities.

The Primary Metering Service specificallyincludes the following constructive units:

1) OHSW - Downlead wire and hardwares;2) 115KV or 69 kV size no. 795 MCM ACSR

(drake) phase conduct;3) 115KV or 69 kV suspension insulators,

hardwares and accessories;4) 115KVor 69 kV post insulators, hardwares

and accessories;5) OHSW - 3 #5 CDClad Steel wire;6) 115kV 3 #5 copper clad overhead shield wire;7) 3 - Surge arresters (60 kV or 96 kV);8) 3 - Surge arresters structures; and9) Disconnectin facilities (115kVor 69 kV).

January toJune 2016

40

883,9881.492,991777.431

3,693,116124,681

1,°39,0121,015,7°7

9,026,927

Project Justification;'1 \"1 ;

Necessary to meet the growing energy demand of customers orhigher service level requirements. The implementation of loadgrowth projects contributes to compliance to the mandated customerservice performance level and voltage regulation system requirement.Failure to provide such to the prospective customers shall result inunrealized sales and ne ative customer satisfaction.

Technical Analysis

The MERALCO standards for the interconnection of Generatingfacilities to the MERALCO system was developed in compliance withEnergy Regulatory Commission's (ERC) Distribution Services andOpen Access Rules (DSOAR). However, with the emerging influx ofSOLAR RE installations within the MERALCO franchise, the need todevelop standards become necessary for the integration of such REsystems to MERALCO's distribution system.

The forecasted customer count was based on the potentialcustomers that most likely will install RE generation facilities. For RY2016, it is anticipated that at least two (2) customers will be installingmore than 100kW RE SOLAR facilities that would require substationworks. The RE SOLAR generating plant is anticipated to tap to thenearest 34.5 kV distribution lines.

Historical figures are not available for SOLAR RE since it is a newtechnology for RY2016 Capital Expenditures (CAPEX). Unit costswere derived based on the average installation costs of Structures andImprovements under substation works on the previous customer withembedded generator. The resulting unit costs is PhP441,993.89

41

ApprovalPro' ect to continue as ro osed .(Pro' ect to continue with revised ca ital ex enditurePro' ect to continue with technical amendmentsProject to be deferred which may be included in its nexta lication with additional 'ustification

Approved CAPEX Cost (PhP) RES-8A.1Approved CAPEX Cost (PhP) RES-4AApproved CAPEX C!!st(Ph~P)~R_E_S_-sA _Approved CAPEX Cost (PhP) RES-6A.2Approved CAPEX Cost (PhP) RES-8A.1

- -------- - --- ----" ._------Approved CAPEX Cost (PhP) RES-26AApproved CAPEX Cost (PhP) RES-29A

Total Approved CAPEX Cost (PhP)

883,9881,492,991777,431

3,693,116124,681

1,°39,0121,015,7°7

9,026,927

42

annexb network-loadgro~h

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