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Republic of the Philippines
ENERGY REGULATORY COMMISSION
Pacific Center Building -S

San Miguel Avenue, Pasig City 0'

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IN THE MATTER OF THE
APPLICATION FOR
APPROVAL OF ADJUSTMENT
IN RATES PURSUANT TO
THE TARIFF GLIDE PATH
RULES, WITH PRAYER FOR
PROVISIONAL AUTHORITY
2016_has Fiji
ERC CASE NO

DAVAO DEL SUR ELECTRIC

• COOPERATIVE, INC.
(DASURECO)

X
Applicant.
---------------------------------------- X
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APPLICATION

APPLICANT DAVAO DEL SUR ELECTRIC COOPERATIVE,

INC. (DASURECO), through counsel, unto this Honorable
Commission, most respectfully alleges, that:

THE APPLICANT

• 1. Applicant is an electric cooperative duly organized and

existing under and by virtue of the laws of the Republic of the
Philippines, with principal offices at Brgy. Cogon, Digos City, Davao
del Sur;

2. It holds an exclusive franchise issued by the National

Electrification Commission to operate an electric light and power
distribution service in the City of Digos and all the municipalities in the
Province of Davao del Sur, namely: Bansalan, Hagonoy, Kiblawan,
Magsaysay, Malalag, Matanao, Padada, Sta. Cruz and Sulop, as
well as all the municipalities in the Province of Davao Occidental,
namely: Don Marcelino, Jose Abad Santos, Malita, Sarangani and
Sta. Maria.
FA
THE ANTECEDENT RULES AND FACTS

3. In 2009, the Honorable Commission promulgated the

Rules for Setting the Electric Cooperatives' Wheeling Rates (RSEC-.
WR);

4. The RSEC-WR envisioned a regulatory framework

whereby an Initial Tariff and a Tariff Glide Path shall be developed
for each Electric Cooperative (EC) Group for a Regulatory Period;

5. Pursuant to the RSEC-WR, in 2009, DASURECO filed

with the Honorable Commission an application for approval of
proposed adjustment in its rates, docketed as ERC Case No. 2009-
137RC;

6. The Honorable Commission approved the application,

• granting the cooperative at the end of the transition period, the
following initial tariffs on its Distribution, Supply and Metering (DSM)
Charges, among others, to wit:

CUSTOMER TYPE
CHARGES UNITS
Low Higher
Residential
Voltage voltage
Distribution Charges:
Demand Charge PhP/kW 219.68
Distribution System Charge PhP/kWh 0.5782 0.7595
Supply Charges:
Retail Customer Charge PhP/Customer/Mo 42.92 42.92
Supply System Charge PhP/kWh 0.6001
Metering Charges:
Retail Customer Charge PhP/Meter/Mo 5.00 35.94 35.94
Metering System Charge PhP/kWh 0.4326

7. It is provided under Article 7 of the RSEC-WR that during

the regulatory period, the rate of the ECs per group shall be adjusted
using the following formula, to wit:

Tariff x (1+ index 'i-Efficiency Factor "X" + Performance IncentiveS")

The Index '9", shall be an escalation factor to be used in adjusting the

rates to reflect the combined impact of inflation and load factor. There
shall be an efficiency factor "X" to account for the operational
efficiency of the ECs in setting their rates. There shall be a
performance incentive "S' which shall reward or penalize the EC for
above or below standard performance, respectively.

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The TGF is intended as a cap and the EC may move up to the cap, if
it is a positive adjustment. If the cap is lower than the current average
tariff, a reduction may be implemented.

LEGAL BASIS FOR THE APPLICATION

8. On May 2, 2011, the Honorable Commission promulgated

the Tariff Glide Path (TGP) Rules pursuant to Article 7 of the RSEC-
WR;

9. The TGP is a rate adjustment mechanism which provides

an opportunity for the ECs to adjust their rates once every three (3)
years. The rate adjustments may occur at the start of the fourth year
of the first Regulatory Period and every three years thereafter;

10. Under the TGP, the regulatory period is six (6) years for
each entry group. For the Third Entrant Group, the first regulatory
• period is from January 1, 2013 to December 31, 2018. DASURECO
belongs to the Third Entrant Group;

11. Further under the TGP Rules, the concerned EC shall use
the following formula in determining the TGP for the first to third
years of the Regulatory Period, to wit:

TGPA= TGP+ TGP +1 TGP +2 where

TGP= l n Xn + Sn
N= the first year of their Regulatory Period and succeeding Regulatory Periods

Except that for the first two years of the First Regulatory Period, "K' will be equal
to zero and thereafter shall not be less than zero. The TGP calculated for each of
. the three years will be summed to determine the possible rate adjustment the
starting on the Fourth Year of the current Regulatory Period.

THE PROPOSED RATE ADJUSTMENT

12. Applying the methodology embodied in the TGP Rules,

DASURECO calculated the values of the "I", "X" and "S' and came up
with the following results, to wit:

TGPA
TGP A (Excluding "S")
Year 2013 0.00% 0.00% 3.30% 3.30% 0.00%
Year 2014 0.00% 0.00% 3.30% 3.30% 0.00%
Year 2015 0.00% 0.00% 2.90% 2.90% 0.00%
Net Results 9.50% 0.00%

13. Application of the above values resulted in adjustments

on DASURECO's DSM Rates, as follows:

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 A. WITH PERFORMANCE INCENTIVE "S"
CUSTOMER TYPE
Low Higher
UNITS Residential Voltage Voltage

Distribution Charges:
Demand Charge PhP/kW 240.55
Distribution System Charge PhP/kWh 0.6331 0.8317
Supply Charges:
Retail Customer Charge PhP/Customer/Mo 47.00 47.00
Supply System Charge PhP/kWh 0.6571
Metering Charges:
Retail Customer Charge PhP/Meter/Mo. 5.48 39.35 39.35
Metering System Charge PhP/kWh 0.4737

B EXCLUDING PERFORMANCE INCENTIVE "S"

CUSTOMER TYPE
Low Higher

C Distribution Charges:
UNITS Residential Voltage Voltage

Demand Charge PhP/kW 219.68

Distribution System Charge PhP/kWh 0.5782 0.7595
Supply Charges:
Retail Customer Charge PhP/Customer/Mo 42.92 42.92
Supply System Charge Ph P/kwh 0.6001
Metering Charges:

Retail Customer Charge PhP/Meter/Mo. 5.00 35.94 35.94

Metering System Charge PhP/kWh 0.4326

14. Consequently, applicant respectfully prays of the

• Honorable Commission for the approval of either of the foregoing
calculated DSM rates.

SUPPORTING DATA AND DOCUMENTS

15. In support of the foregoing computations, the cooperative

is submitting herewith the following data and documents, which are
being made integral parts hereof, to wit:

Annex Nature of Document

Proposed TGP Calculation and supporting documents

using the prescribed templates:
A Index "I" Calculation
A-i Efficiency Factor "X" Calculation
A-2 Performance Incentive "S" Calculation

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B Monthly Financial and Statistical Report (MFSR)-

Sections B and E (2010-2014)

C Billing Determinants Template (kWh Sales, Number of

Customers, kW Demand) (2010 -2104)

D Sample Bills (per customer type) (2010 -20'14)

E Regional CPI (2011 -2014)

F RFSC/Reinvestment Fund UtilizatiOn (2012-2014)

G Consumer Complaints (Summary or Tracking Form)

(2012-2014)

H Audited Financial Statements (2010 -2014)

ALLEGATIONS IN SUPPORT OF THE PRAYER FOR

PROVISIONAL AUTHORITY

16. Applicant repleads the foregoing allegations as may be

material herein;

17. Applicant's current DSM rates were granted by the

Honorable Commission way back in January 2010 by virtue of the
RSEC-WR;

18. Over the years, the cost of its operations has significantly
increased, not only as a logical effect of inflation as well as certain
governmental requirements, but likewise due to the inevitable
expansion of its distribution network brought about by the extension
of its services to remote areas. More significantly, the cooperative
has been implementing the Sitio Energization Program (SEP) of the
Aquino government, such that the massive expansion of its
distribution lines up to the remotest areas has considerably increased
its Operational and maintenance costs, not to mention the increased
system loss which the cooperative is likely to absorb. All these costs
were not duly provjded for in its current rates and the general funds
being generated from its DSM revenues as granted under the RSEC-
WR are no longer sufficient to cover these inevitable costs;

19. Thus, the cooperative urgently needs additional funds to

be able to cope with the rising costs of its operations;

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20. Further, based on the provisions of the TGP Rules, for

cooperatives belonging to the Third Entrant Group, their initial tariff
shall be adjusted at the start of the fourth regulatory year of the First
Regulatory Period, which is January 1, 2016;

21. Considering the foregoing, applicant respectfully prays

that while the instant applibation is pending, it be granted a
provisional authority to implement either of the two (2) proposed rates
effective January 1,2016.

COMPLIANCE WITH PRE-FILING REQUIREMENTS

22. Finally, in compliance with the ERC Rules of Practice and

Procedure, applicant is likewise submitting herewith the following
documents, which are being made integral parts hereof, to wit:

. Annex Nature of Document

Affidavit in Support of the Prayer for Provisional Authority

Proof of furnishing copies of the Application to the

J to J-1
Sangguniang Panglungsod of Digos and Sangguniang
Panlalawigan of Davao del Sur

K and Proof of publication of the Application in a newspaper of

series general circulation in DASURECO's franchise area or
where its principally operates

PRAYER

WHEREFORE, premises considered, it is most respectfully

prayed of this Honorable Commission that pending evaluation of the
instant application or after due notice and hearing, as the case may
be, DASURECO be allowed to implement either of the following two
(2) alternative proposed new rates for its Distributiàn, Supply and
Metering (DSM) Charges, effective January 1, 2016, to wit:

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A. WITH PERFORMANCE INCENTIVE "S"
CUSTOMER TYPE
Low Higher
UNITS Residential Voltage Voltage

Distribution Charges:
Demand Charge PhP/kW 240.55
Distribution System Charge PhP/kWh 0.6331 0.8317
Supply Charges:
Retail Customer Charge PhP/Customer/Mo 47.00 47.00
Supply System Charge PhP/kWh 0.6571
Metering Charges:
Retail Customer Charge PhP/Meter/Mo. 5.48 39.35 39.35
Metering System Charge PhP/kWh 0.4737

B) EXCLUDING PERFORMANCE INCENTIVE "S"

CUSTOMER TYPE
Low Higher
Li UNITS Residential Voltage Voltage
Distribution Charges:
Demand Charge PhP/kW 219.68
Distribution System Charge PhP/kWh 0.5782 0.7595
Supply Charges:
Retail Customer Charge PhP/Custother/Mo 42.92 42.92
Supply System Charge PhP/kWh 0.6001
Metering Charges:
Retail Customer Charge PhP/Meter/Mo. 5.00 35.94 35.94
Metering System Charge PhP/kWh 0.4326

Other reliefs, just and equitable in the premises are likewise

I prayed for.

Pasig City, Metro Manila, January 25, 2016.

DECHAVEZ & EVANGELISTA LAW OFFICES

Counsel for DASURECO
Units 1609-1610, Tycoon Centre
Pearl Drive, Ortigas Center, Pasig City 1605
Tel. Nos. (02) 9101587; (02) 6619357

By:

NEL AttornNGELISTA
N
Roll No. 38075
PTR No. 1216158, January 08, 2016, Pasig City
IBP Lifetime Member Roll No. 010192, Bulacan Chapter
MCLE Compliance V Cert. No. 0008307, valid until April 14, 2019

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Republic of the Philippines
City of Digos) S.S.

VERIFICATION AND CERTIFICATION OF NON FORUM-SHOPPING

I, GODOFREDO N. GUVA, of legal age, Filipino and with office address

at the main office of the Davao del Sur Electric Cooperative, Inc.
(DASURECO), Cogon, Digos City, Davao del Sur, after being sworn to
according to law, depose and state that:

1. I am the General Manager of the Davao del Sur Electric Cooperative,

Inc. (DASURECO), duly authorized to represent the cooperative in filing the
instant application, the corresponding Board Resolution is attached hereto;

2. I caused the preparation and filing of the foregoing Application; have

read the allegations contained therein, and certify that the same are true
and correct based on my personal knowledge as well as authentic records;

3. DASURECO has not heretofore commenced any other action or

proceedings involving the same issues and parties before any court,
tribunal or quasi-judicial agency; to the best of my knowledge no such
action or proceeding is pending, and if I should learn that the same or
similar action or proceeding has been filed or is pending, I undertake to
report such fact to this Honorable Commission, within five (5) days
therefrom.

Further, affiant sayeth naught.

SUBSCRIBED AND SWORN to before me in Digos City, Davao del

Sur, this ____ day of JAN 2016, by the affiant who exhibited to me
21
SSS # 09-0841694-5:

Doc. No. ;
Page No. ; UNTIL DECEMB 1, 2017
ROLL0FPFOIkN'S 0.45612
Book No. ; ISP No. 0989296 . 12-2245 ø Davao City
flit Mc. 6196652 • 01-0446 • Dante occidental
Series of 2016.
4!7.•, ........