Republic of the Philippines

ENERGY REGULATORY COMMISSI

San Miguel Avenue, PasigCity

IN THE MATTER OF THE

PETITION FOR APPROVAL OF
THE RECLASSIFICATION. OF
THE NEW. SALONG 230 KV
SUBSTATION AND THE
SALONG-CALACA 230 KV LINE
INTO TRANSMISSION ASSETS

ERC CASE NO. 2014-111 Me

NATIONAL GRID
CORPORATION OF THE
PHILIPPINES (NGCP), LlocumT'~
<"tl'O 8 0
Petitioner. ""t~..u•.•../
,",,,. "._.;.: _-
)(- ----------------- ------ )( '"1v: ._.. __..(i'K .•... _-_.. _----

DECISION

Before the Commission for resolution is the petition filed on 9

September 2014 by the National Grid Corporation of the Philippines
(NGCP) for the approval of the reclassification of the New Salong 230
kV Substation and the Salong-Calaca 230 kV Line into transmission
assets

In the said application, NGCP alleged, muong others, that:

1. It is a corporation created and existing under the laws of the

Philippines, with principal office address at NGCP Building,
Quezon Avenue corner BIR Road, Diliman; Quezon City
where it may be served with notices, orders, resolutions and
other issuances of the Commission through its Office of the
General Counsel. It is the concessionaire which assumed the
power transmission functions of the National Transmission
Corporation (TRANSCO) pursuant to Republic Act.No. 9136,
otherwise known as the Electric Power Industry Reform Act
of 2001 (EPIRA);l

1 Republic Act No. 9136 entitled, "An Act Ordaining Reforms in the Electric Power
Industry, Amending for the Purpose Certain Laws and for Other Purposes."
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 2 Of18

2. Under Republic Act No. 9511,2it was granted a franchise to

construct, install, finance, manage, improve, expand,
operate, maintain, rehabilitate, repair and refurbish the
present nationwide transmission system of the Republic of
the Philippines;

3. Pursuant to the EPIRA, NGCP is authorized and responsible

for the planning, construction and centralized operation and
maintenance of its high-voltage transmission facilities,
including grid interconnections and ancillary services, as
well as the operation and maintenance of the
subtransmission assets until their disposal to qualified
distribution utilities which are in a position to take over the
responsibilities of operating, maintaining, upgrading, and
expanding said assets;

4. Steel Asia Manufacturing Corporation (SAMC), a

corporation existing under and by virtue of the laws of the
Republic of the Philippines, with address at Unit 2607 BS
Bonifacio High Street, Fort Bonifacio, Global City, Taguig, is
a directly-connected customer of NGCP. It owns the six (6)-
km Salong - Calaca 230kV Line, which is connected to
NGCP's Calaca Substation;

5. On the other hand, South Luzon Thermal Energy

Corporation (SLTEC), a generation company, is a
corporation existing under and by virtue of the laws of the
Republic of the Philippines, with address at KIn. 117National
Road, Phoenix Industrial Park - Phase II, Brgy. Puting Bato
West, Calaca, Batangas;

6. SLTEC is presently constructing a 2X135 MW Coal Fired

Power Plant in Phoenix Industrial Park in Calaca, Batangas
to be connected to the Luzon Grid through the Salong -
Calaca 230 kV Line owned by SAMC. This connection will
require construction of a switching station which will
become a common substation for SAMC's manufacturing
plants and SLTEC's Coal Fired Power Plant. Thus, SLTEC
constructed the new Salong 230 kV Substation. Illustrated
below is the single line diagram of the connection of the
SAMCand SLTEC:

2 Republic Act No. 9511 entitled "An Act Granting the National Grid Corporation of the
Philippines a Franchise to Engage in the Business of Conveying or Transmitting Electricity
Through High Voitage Back-bone System or Interconnected Transmission Lines. Substations d
Related Facilities, and for Other Purposes."
 ERC Case No. 2014-111 MC
DECISION/19 January 2016
Page 3 Of1S

TO 23Ok" Steel TO 230h e~jstingCaleca

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UNIT AUXILIARYTRANS,(UAT} '",~'; ,.1., Z"12.5% _
SLTEC, Sr. EE SLTEC, Sr, EE

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135MW I Noted By'

Silvana C. Zenona
SLTEC, SVP

SINGLE LINE DIAGRAM

A copy of the Single Line Diagram showing the whole Calaca

area is attached to the application as Annex "A", and the
diagram showing the power flow at Calaca is attached to the
application as Annex "B";

7. Upon the connection of SLTEC's Coal-Fired Power Plant, the

Salong - Calaca 230 kV Line and the new Salong 230 kV
Substation will be utilized by both generator and load
customer;

8. As such, both the Salong - Calaca 230 kV Line and the new
Salong 230 kV Substation will perform transmission
functions pursuant to the following resolutions issued by the
Commission:

A. In the "Guidelines to the Sale and Transfer of

TRANSCO's Sub transmission Assets and the
Franchising of Qualified Consortium" promulgated
on October 17, 2003, ticularly Article 2 Section III, it
is provided that:
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 4 Ofl8

"Section 2. Technical and Functional

Criteria - The assets shall be classified based
on the technical and functional criteria
enumerated in Sections 4 and 6, Rule 6, Part
II of the IRR of the Act, including but not
necessarily limited to, thefollowing:

"a) Directly Connected Generators

"Lines, power transformers and other

assets held by TRANSCO or NGCP, which
allow the transmission of electricity to a grid
from one or more directly connected
generators shall be classified as transmission
assets.

"b)Directly Connected End-Users

"Radial lines, power transformers,

related protection equipment, control system
and other assets held by TRANSCO or NGCP
which directly connect an end-user or group
of end-users to a grid and are exclusively
dedicated to the service of that end-user or
group of end-users shall be classified as
subtransmission assets.

"c) Directly Connected Load-End

Substation

"Radial lines, power transformers,

related protection equipment at the
secondary of the power transformers and
other assets held by TRANSCO or NGCP
which directly connect an end-user
substation of one or more distribution
utilities to a grid but no directly connected
generators shall be classified as
sub transmission assets.

"Dedicated point-to-point limited

facilities of a generation company of
connection assets for generators are not
classifieda.s sub,"""sm;s,,;O"
asse,s;y
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 5 Of18

B. Section 2.0 of Resolution No. 16 Series of 20113 defined

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

C. Section 4.2 of the aforementioned Resolution provides

that "a generation company may develop and own or
operate a dedicated point-to-point limited facilities
provided, that such facilities are required only for the
purpose of connecting to the transmission system, and
are used solely by the generating facility subject to prior
authorization by the ERC."

9. Corollary, any asset which is not solely used by either a load

customer or generator should be classified as transmission
asset;

10. The proposed reclassification of the subject assets to

transmission are in consonance with the following decisions
issued by the Commission:

A. In ERC Case No. 2010-032 MC entitled "In the Matter

of the Petitionfor Approval of the Reclassification of the
National Transmission Corporation Subtransmission
Asset to Full Transmission Asset Serving the Dingle-
Passi Lines in Iloilo,"4 the ERC ruled as follows:

"Section 2, Article III of the

Guidelines to the Sale and Transfer of the
TRANSCO's Subtransmission Assets and
the Franchising of Qualified Consortium
reads:

"Technical and Functional Criteria

- the assets shall be classified based on
the technical and functional criteria
enumerated in Sections 4 and 6, Rule 6,

3 Entitled "Resolution Adopting the Amended Rules on the Definition and Bounda:Yies of
Connection Asset for Customers of Transmission Provider."
4 Decision dated 01 December 2010.
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 6 Of18

Part II of the IRR of the Act, including, but

not necessarily limited to the following:

"a) Directly Connected Generators

"Lines, power transformers and

other assets held by TRANS CO or
its Buyer or Concessionaire, which
allow the transmission of electricity
to a Grid from one or more Directly
Connected Generators, shall be
classified as Transmission Assets.

xxx

"Based on the foregoing prOVISIOn,

the Commission may only reclassify
TRANSCO's subtransmission asset to a
transmission asset when the generator,
which intends to transmit electricity to the
Grid, is connected to said subtransmission
asset.

xxx

"WHEREFORE, the foregoing

premises considered, the petition filed by
Central Azucarera De San Antonio, Inc.
(CASA) for approval of the reclassification
of the National Transmission
Corporation's (TRANSCO)
Subtransmission Asset to full transmission
asset serving Dingle-Passi Lines in Iloilo is
hereby APPROVED subject to the
condition that CASA's bagasse power plant
should connect to the Dingle-Passi 69 kV
Line and only the portion of the said line
where CASA's plant is connected shall be
reclassified as transmission asset."

B. In ERC Case No. 2010-156 RC entitled "In the Matter of

the Approval of the Electric Power Purchase Agreement
between Cebu 1 Electric Cooperative, Inc. and 71cebU
Energy Development Corporation,"s Case No. 2010-10

---------
5 ERe Decision dated 01 August 2011
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 70f18

RC entitled "In the Matter of the Approval of the

Electric Power Purchase Agreement between Mactan
Electric Company, Inc. and Cebu Energy Development
Corporation;"6 and Case No. 2010-095 entitled "In the
Matter of the Approval of the Electric Power Purchase
Agreement between Bohol 1 Electric Cooperative, Inc.
and Cebu Energy Development Corporation,"7 the ERC
ruled as follows:

"However, the Sangi to Talavera 138 kV,

5.1-kilometer Double Circuit Transmission
Line does not qualify as a dedicated point-to-
point limited facility considering that the
same line is not solely used to connect CEDC's
plant to the grid (NGCP Talavera Substation)
but also used to transmit power to VECa
through the 138 kV CEDC-Colon Line and
another line to CEBECa III and Balamban
Enerzone Corporation. x x x

"The Commission believes that the 5.1

kilometer Sangi to Talavera Double Circuit
138 kV Transmission Line should be owned,
operated and maintained by the NGCP. Thus,
the cost of the said line should be reimbursed
by NGCP to CEDC and should not be
recovered through the generation rate for the
following reasons:

"a. there was no approval from the

Commission for the implementation or
construction of the said line;

"b. The EPIRA provides that a

generation company is only allowed to
own or operate dedicated point-to-point
limited transmission facilities required
only for the purpose of connecting to the
transmission system and are used solely
by the generating facility, subject to

an~1
pr~r ~/ation by the Commission;

6 ERC Decision dated 03 October 2011

7 ERC Decision dated 26 September 2011
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 8 Of18

"c. On the basis of the definitions

provided under the Commission's
Resolution No. 41, Series of 2006, the
S.l-kilometer Sangi to Talavera Double
Circuit 138 kV Transmission Line is
considered as a transmission asset that
should be owned byTRANSCOjNGCP."

C. In ERC Case No. 2009-l80RC entitled "In the Matter of

the Application for Approval of the Maximum
Allowable Revenue for the Third Regulatory Period
(2011-2015) of the National Grid Corporation of the
Philippines During the Regulatory Reset Process for
the Third Regulatory Period in Accordance with the
Alternative Form of Rate Setting Methodology under
the Rules in Setting Transmission Wheeling Rates,"S
the ERC ruled:

"The La- Trinidad-Calot 69 kV line

is classified as Transmission asset since
during off-peak hours, a generator
connected to that line delivers power to
the grid."

11. Considering that the Salong-Calaca 230 kV Line and the new
Salong 230 kV Substation, including all of the associated
equipment, will be used by SLTEC to deliver power to the
grid and by SAMC to draw power from the grid, it is
imperative that the subject assets be reclassified to full
transmission assets;

12. The list of associated equipment of Salong-Calaca 230 kV

Line and new Salong 230 kV Substation is attached to the
application as Annex "C"; and

13. It prays that the instant petition be granted and the Salong -
Calaca 230 kV Line, the new Salong 230 kV Substation, and
all associated equipment of both assets, be reclassified as
Transmission Assets, and its ownership and operation be
turned over to NGC~

8 ERG Order dated 06 July 2011

ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 9 Of18

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 30 March 2015, were issued
setting the case for initial hearing on 12 May 2015.

In the same Order, NGCP was directed to cause the publication

of the Notice of Public Hearing, at its own expense, once (IX) in a
newspaper of general circulation in the Philippines, with the date of
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 within its franchise area, 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 the Notice of
Public Hearing and were requested to have their respective duly
authorized representatives present at the initial hearing.

Likewise, the Office of the Mayor of Quezon City was furnished

with copies of the Order and Notice of Public Hearing for the
appropriate posting thereof on its bulletin board.

On 13 February 2015, South Luzon Thermal Energy

Corporation (SLTEC) filed its "Petition for Intervention (With Entry
of Appearance".

On 17 March 2015, SLTEC filed its "Motion for Leave to File

Supplemental Petition for Intervention" and "Supplemental Petition
for Intervention".

On 10 April 2015, NGCP filed its "Comment (On South Luzon

Thermal Energy Corporation's Supplemental Petition for
Intervention" .

On 4 May 2015, SLTEC filed its "Motion to Admit Reply" and

"Reply (to the Petitioner's Comment dated 10 April 2015)".

On 6 May 2015, the Manila Electric Company (MERALCO) filed

its "Petition for Intervention (With Entry of Appearance)" and "Pre~
Trial Brief'. ~
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 10 of 18

On 7 May 2015, SLTECfiled its "Pre-Trial Brief'.

On even date, NGCP filed its "Pre-Trial Brief'.

During the 12 May 2015 initial hearing, NGCP, SLTEC and

MERALCOappeared.

At the said hearing, NGCP presented proofs of its compliance

with the Commission's posting and publication of notice
requirements which were duly marked as Exhibits "A" to "1",
inclusive. Then, it conducted an expository presentation of its
application.

At the termination of the expository presentation, the

Commission propounded clarificatory questions.

SLTEC manifested that it intervened to get reimbursement for

the cost it incurred in developing and constructing the asset as well as
its cost in acquiring the line from Steel Asia Manufacturing
Corporation.

Subsequently, MERALCO also propounded clarificatory

questions based on the presentation earlier made.

SLTEC was directed to submit the Judicial Affidavit of its

witness within ten (10) days from the next scheduled hearing.

The ruling on NGCP's motion for an order of general default

was suspended until the pre-trial conference. Thus, the Commission
ruled to schedule the pre-trial conference and evidentiary hearing at
the next scheduled hearing.

On 8 June 2015, SLTEC filed its "Compliance" attaching

therewith the Judicial Affidavit of its witness, Mr. Wilfredo M. Costo.

At the continuation of the hearing on 16 June 2015, NGCP,

SLTEC and MERALCOentered their appearances.

In the said hearing, MERALCOmanifested that it will submit a

general comment on the instant petition and will no longer conduct
cross-examination questions on NGCP's witnesses. MERALCO
further manifested that it will .n~ comment on the pre-trial
brief, of both NGCP and SLTEC/ if
ERC Case No. 2014-111 MC
DECISION/19 January 2016
Page 11Of18

Thereafter, NGCP moved for an order of general default against

other interested persons who might be interested to participate in this
case but failed to timely intervene. The Commission granted said
motion.

Subsequently, the Commission conducted a pre-trial conference

where the parties presented their proposed stipulations or admissions
of facts and the issues to be tried or resolved.

Thereafter, NGCP presented Engr. Gerard F. Manuel, Officer-

in-Charge (OIC) of its Key Accounts Portfolio Division of the Revenue
and Regulatory Affairs Department who testified to show the factual
and legal bases for the reclassification of the New Salong 230 kV
Switching Station and the Salong-Calaca 230 kV Line. In the course
thereof, additional documents were presented and duly marked as
exhibits. The direct examination having been terminated, the
Commission propounded clarificatory questions on the said witness.

SLTEC manifested that it was not prepared to conduct its cross-

examination on the said witness and moved that it be allowed to do
the same on a later date.

Consequently, SLTEC presented Mr. Wilfredo M. Costo, its

Chief Finance Officer who testified to prove the costs in developing
and constructing the Salong Switching Station as well as the costs in
acquiring and performing the reinforcement works on the Salong-
Calaca 230 kV Line.

On 22 June 2015, SLTEC filed its "Motion for Leave to File

Amended Judicial Affidavit" and "Amended Judicial Affidavit of Mr.
Wilfredo M. Costo".

The continuation of the hearing for the identification of

SLTEC's witness of the documents attached to his judicial affidavit
and for the cross-examination of both NGCP and SLTEC's witnesses
was set on 1 July 2015.

At the continuation of the hearing on 1 July 2015, NGCP,

SLTEC and MERALCO entered their appearances.

SLTEC presented Mr. Wilfredo M. Costo, who testified under

lhesameoa~
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 12 Of18

SLTEC manifested that its previously marked exhibits be

withdrawn from the records of this case since it already filed an
Amended Judicial Affidavit with attached documents. Said motion
was granted by the Commission.

In the course thereof, additional documents were presented and

duly marked as exhibits. The direct examination having been
terminated, the Commission propounded c1arificatory questions on
the said witness. NGCP manifested that it would not cross-examine
SLTEC's witness.

Thereafter, NGCP recalled its witness, Engr. Gerard F. Manuel,

for the cross-examination by SLTEC.

Upon termination of the SLTEC's cross-examination, NGCP

conducted its re-direct examination.

The Commission directed the parties to submit their respective

formal offers of evidence within ten (10) days from today's hearing
and comments to the FOE of the other party within ten (10) days
from receipt thereof, and they were given thirty (30) days from
today's hearing to submit their respective memoranda.

On 13 July 2015, NGCP filed its "Formal Offer of Documentary

Evidence".

On even date, SLTEC filed its "Formal Offer of Evidence" and

"Compliance with Motion to Admit and Mark Evidence".

On 30 July 2015, NGCP filed its "Memorandum".

On 31 July 2015, MERALCO filed its "Comment (To NGCP's

Petition)".

Likewise, on the same date, SLTEC filed its "Motion for

Extension of Time to File Memorandum".

On 10 August 2015, SLTEC filed its "Memorandum".

On 25 August 2015, S~TEC~ its" Reply (To MERALCO's

Comment dated 31 July 2015)/" J
ERC Case No. 2014-111 MC
DECISION/19 January 2016
Page 13 of IS

On 14 January 2016, the Commission issued an Order

admitting the exhibits contained in NGCP's "Formal Offer of
Documentary Evidence" and SLTEC's "Formal Offer of Evidence" and
declaring the case submitted for resolution.

DISCUSSION

NGCP sought the reclassification of the following:

• Steel Asia Manufacturing Corporation's (SAMC) Salong-

Calaca 230 kV Line; and

• South Luzon Thermal Energy Corporation's (SLTEC) New

Salong 230 kV Switching Station.

Section 9 (f) paragraph 3 of Republic Act NO.g136, otherwise

known as the Electric Power Industry Reform Act of 2001 (EPIRA)
provides that:

':4 generation company may develop and own or

operate dedicated point-to-point limited
transmission facilities that are consistent with the
TDP: Provided, That such facilities are required
only for the purpose of connecting to the
transmission system, and are used solely by the
generating facility, subject to prior authorization by
the ERC; Provided, further, That in the event that
such assets are required for competitive purposes,
ownership of the same shall be transferred to the
TransCo at afair market price." xxx

Likewise, Rule 5, Section 5 of the Implementing Rules and

Regulations of the EPIRA provides that:

"Section 5. Dedicated Point-to-Point Limited

Transmission Facility of a Generation Company.-

"(a) Subject to prior authorization from ERC,

TRANSCO or its Buyer or Concessionaire
may allow a Generation Company to devel;;;/
ERC Case No. 2014-111 MC
DECISION/19 January 2016
Page 14 of18

own and/or operate dedicated point-to-point

limited transmission facilities: Provided,
That:

(i) Such dedicated point-to-point limited

transmission facilities are required only
for the purpose of connecting to the Grid
which will be used solely by the
Generation Facility, and are not used to
serve End-users or Suppliers directly;

xxx

(b) In the event that such assets are required for

competitive purposes, ownership of the same
shall be transferred to the TransCo at a fair
market price. In case of disagreement on the
fair market price, the ERC shall determine
the fair market value of such asset, either
directly or through such dispute resolution
mechanisms as ERC may specify."

Further, Module B17.2 ofthe Open Access Transmission Service

(OATS) Rule provides that an end-user such as SAMC has the option
to finance the costs associated with the procurement and installation
of Connection Assets. This is the reason that SAMC owns the Salong-
Calaca 230 kV line, where it is the only entity connected before the
entry of SLTEC. With the connection of SLTEC on the Salong-Calaca
230 kV line, the same already functions as a Transmission Asset and
not as a Connection Asset. As provided in the OATS Rules,
Connection Assets: Those assets that put in primarily to connect a
Customer to the Grid and used for purposes of Transmission
Connection Services for the conveyance of electricity.

On the other hand, SLTEC's New Salong 230 kV Switching

Station does not fall in the category of a dedicated point-to-point
limited transmission facilities of a Generation Company since at
present an end-user, SAMC, is connected to said asset. Hence, the
provision of Section 5 of the EPIRA is not applicable. This is not also
subject to reclassification since from the start, as manifested by
SLTEC and NGCP, the New Salong 230 kV Switching Station was
designed and constructed to operate and function as a Transmission
Asset.

In SLTEC's Petition for Intervention, it manifested that ;/'

own" of the assets sought to be reclassified by NGCP, it has re di~j
ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 15 Of18

and substantial interest in the proceedings. SLTEC also clarified that

as far as its Salong Switching Station is concerned, it was designed
and constructed to operate and function as a transmission asset.
SLTEC's main intervention is for the reimbursement of NGCP within
the 3rd Regulatory Period of its cost for developing and constructing
the new Salong Switching Station, the cost of acquiring the Salong-
Calaca 230 kV Line from Steel Asia Manufacturing Corporation
(SAMC), and the cost for the rehabilitation, modification,
maintenance and reinforcement of the acquired SAMC transmission
line.

The Commission concurs with SLTEC's position in Section 9 (f)

paragraph 3 of R.A. 9136 (EPIRA) which provides that:

xxx "That in the event that such assets are

required for competitive purposes, ownership of
the same shall be transferred to the TRANSGO at a
fair market price: Provided, finally, That in
case of disagreement on the fair market price, the
ERG shall determine the fair market value of the
asset."

However, it is premature to raise the issue on the fair market

value considering that the petition on hand is for the reclassification
of the subject assets. The Commission believes that after the
reclassification, NGCP and SLTEC would negotiate for the fair market
value of the subject assets and in the event that the parties disagree,
NGCP and SLTEC would file with the Commission a dispute
resolution. Section 43(u) of R.A. 9136 (EPIRA) provides that:

"(u) The ERG shall have the original and exclusive

jurisdiction over all cases contesting rates, fees,
fines and penalties imposed by the ERG in the
exercise of the abovementioned powers, functions
and responsibilities and over all cases involving
disputes between and among participants or
players in the energy sector."

The Commission finds it irregular that the Salong-Calaca 230

kV Line of SAMC was purchased by SLTEC (a generating company)
and eventually be reclassified as a transmission asset. The Salong-
Calaca 230 kV Line was a connection asset of SAMC since it is a direct
customer of NGCP. With the connection of SLTEC to the connection
asset of SAMC, the latter should have turned over the said asset to
ERC Case No. 2014-111 MC
DECISION/19 January 2016
Page 16 of IS

NGCP. As to the New Salong 230 kV Switching Station, it is a

Transmission Asset from the beginning, thus, NGCP should have filed
a Capital Expenditure (CAPEX) application for the construction ofthe
said asset and may designate SLTEC as the main contractor for the
said project.

Based on the functional criteria of the Salong-Calaca 230 kV

Line, it ceases to be a connection asset of SAMC. Thus, the
Commission hereby approves the reclassification of the Salong-Calaca
230 kV Line from a connection asset into a transmission asset.
However, for the new Salong 230 kV Switching Station, records of the
Commission show that there is no application filed before the
Commission for approval of the said asset, thus, there is nothing to
reclassify.

On the other hand, MERALCO manifested in its Petition for

Intervention that if the petition is approved, the assets for
reclassification would eventually form part of NGCP's asset base
which in turn will be used as a factor in the calculation of its
Maximum Allowable Revenue (MAR). The MAR is primarily the
basis of NGCP's rates to its customers, thus it would impact on
MERALCO's rate to its customers.

The Commission concurs with MERALCO's position on the

effect of the assets as being part of the asset base of NGCP and the
effect on NGCP's Maximum Allowable Revenue (MAR).

Based on the documents submitted, the Commission finds

merit in the proposed reclassification of the Salong-Calaca 230 kV
Line. Thus, the subject asset should be classified as transmission
assets consistent with Resolution No. 16, Series of 2011.

WHEREFORE, the foregoing premises considered, the

petition filed by the National Grid Corporation of the Philippines
(NGCP) for the approval of the reclassification of the New Salong 230
kV Substation and the Salong-Calaca 230 kV Line into transmission
assets is hereby APPROVED with modification.

Accordingly, the Salong-Calaca 230 kV Line Connection Asset

owned by Steel Asia Manufacturing COrPoration (SAMC), is hereby
reclasiliied
"' atransmission
ass'i
 ERC Case No. 2014-111 MC
DECISIONj19 January 2016
Page 17 of 18

On the other hand, the New Salong 230 kV Switching Station

remains to be a Transmission Asset since it was designed and
constructed to operate and function as a Transmission Asset from the
start.

SO ORDERED.

Pasig City, 19 January 2016.

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Commissioner Commissi~e;'-

JOSEFINA PAT . MAGPALE-ASIRIT RONIMO D. STA. ANA

issioner Commissioner

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~/APV/N~P/ERC CASE NO. 2014-111 Me-Decision

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ERC Case No. 2014-111 MC

DECISION/19 January 2016
Page 18 of 18

Copy Furnished:

1. Attys. Luis Manuel U. Bugayong, Ronald Dylan P.

Concepcion, Mark Anthony S. Actub, and
Jacqueline Kate Saliente- Tamayo
Counsels for Applicant
National Grid Corporation of the Philippines (NGCP)
NGCP Building, Quezon Avenue cor. BIR Road
Diliman, Quezon City, Metro Manila

2. THE OFFICE OF THE SOLICITOR GENERAL

234 Amorsolo Street, Legaspi Village, Makati City
Metro Manila

3. THE COMMISSION ON AUDIT

Don Mariano Marcos Avenue
Diliman, Quezon City, Metro Manila

4. THE COMMITTEE ON ENERGY

House of the Senate
GSIS Building, Roxas Blvd., Pasay City, Metro Manila

5. THE COMMITTEE ON ENERGY

House of Representatives
Batasan Hills, Quezon City, Metro Manila

6. OFFICE OF THE CITY MAYOR

Quezon City

7. Attys. Esther Marie Amular-Bantog, Sheyna

Marie M. Extra and Jonathan C. Jo
Counsels for South Luzon Thermal Energy Corporation
(SLTEC)
KIn 117 National Road, Phoenix Industrial Park Phase II
Brgy. Puting Bato West, Calaca, Batangas

8. MANILA ELECTRICCOMPANY (MERALCO)

Attention: Atiys. JOSE RONALD V. VALLES, ROMMEL
1. YAP, FRANCIS DINO S. ANTONIO, and
PAUL B. SORINO
Counsels for the MERALCO
Lopez Building, Meralco ~e~
Ortigas Avenue, Pasig Cit;/j